Childhood neighbors ready to sell home but buyer doesn’t want to break the bank with high interest rates
Jun 20, 2023Marketwise for the Bay Area News Group and its flagships The Mercury News and East Bay Times | Published: June 17, 2023
By Pat Kapowich
Q: We are waiting for interest rates to go down before we purchase a home. We have a property in mind. However, on last night’s news, the report said two more interest rate hikes would occur this year.
My parents’ longtime neighbors have passed away. Their home was in a trust. The kids I grew up with have inherited the property. The eldest two adult kids now supervise the estate. These co-successor trustees have agreed to sell their family home to us. All adult siblings agree. They know we are waiting for interest rate improvement. But next year’s lower interest rate is too far away. One of the adult siblings wants a quick sale. Since Bay Area home prices are so high, the slightest interest rate change can help or hurt. How can we keep a “hold” on this Silicon Valley property near my parents without breaking the bank?
A: We are in a historic housing-constrained market. The common belief is that lower mortgage rates mean more properties for sale. That is only sometimes true. Lower interest rates will result in more homebuyers, multiple offers and larger overbids.
You’ll regret not buying the family home in your old neighborhood before the adult kids change their minds. Don’t risk that opportunity. They will change their minds soon enough. Adult children in agreement to sell privately to a friend or neighbor is rare. Full stop. The local multiple listing service and its syndication to hundreds of real estate websites would generate lucrative offers.
To make the purchase now, consider adding discount points to your home sale. Discount points are prepaid interest on a home loan. Homebuyers can have the seller pay discount points, pay themselves, split the cost or add the cost of the discount points on top of the purchase price. Using discount points will result in lower, more affordable monthly payments over the life of the fixed-rate loan.
Conversely, the 3-2-1 interest buydown is another option to buy now. Say the 30-year fixed interest rate was 7%; applying the 3-2-1 buydown method, in the first year is at 4%, the second 5%, the third 6% and at 7% for the life of the loan. Or until you refinance.
The days when homebuyers could buy in the Bay Area neighborhood they grew up in have dwindled. Defy that trend. Call your loan officer to start the homebuying process before the successor trustees call you to stop it.
Questions? Or are you or someone you know navigating life’s transitions? Let lauded negotiator Pat Kapowich make your next move easy. Visit Kapowich’s website for free area housing data, insights and trends. Or put his artful blend of specialized credentials, decades of experience and endorsed skill set to work for you. Kapowich instills confidence when buying, selling, relocating or resizing homes. Do not just make a move — make the best move. Contact him today, Realtor Pat Kapowich, a career-long consumer-protection advocate.
Office: 408-245-7700; SiliconValleyBroker.com
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