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hey guys it's Tim Russian here with the rooster Hearts group compass and I'm here with Pat Holland of Embrace home loans there are seller concessions coming back yeah so tell us Pat how's this work the the big word or the phrase is it depends but that's where the conversation with the needs and the wants of the buyer and the the time frame of home ownership and speculating on if the rates are going to come down next year um you know and you know today you know it's Sunday afternoon we've been already been we've been cranking all day you and I have been on the phone several times we negotiated a couple deals already today for our clients but the big strategy was this past week when we were working with one of our new home buyers there's the the opportunity for this client to either take a slightly lesser sales price or seller concessions the home was on the market a little bit longer it was on the market for 14 days they were considering a price reduction but we crunched the numbers and and we'll just talked about the sales price but it was 849 900 was it should we have kept the price or go 850 or go 8 30 or take the 20 000 so in that instance we showed our client that the difference between an 850 000 purchase price in an 830 000 purchase price was exactly a hundred and fourteen dollars a month so wait so financing off of a 850 versus putting ten percent down 10 down between so 850 or 8 30 it was a hundred and only 114 okay so and the cash to the table for the borrowers ten percent down of 850 was 85 000 10 down of 830 was eighty three thousand difference of you know two thousand dollars not that big of a difference so but the big thing was they thought there was going to be a more significant payment difference between 8 50 and 8 30. yeah it was exactly 114 dollars the sellers agreed to twenty thousand dollars in concessions Okay so I and after crunching the numbers with the borrowers we were decided to kind of build our own escrow account for our clients so we put that twenty thousand dollars and a nice little piggy bank for them and if they really wanted to they could take 120 or 114 out of there and you know over time you know if you do the math you take 114 divided by your 20 000 divided by 114 that's going to pay 150 plus payments over you know over the months to come but the speculation we were using is there is a very very good chance we are going to refinance next year and instead of even buying the rate down a quarter of a point or three-eighths of a point or even using a buy down we decided to use the seller's money to finance our closing or our refinance next year so for example if the rate goes from seven percent to six and a quarter that's a three three quarters of a point drop the borrower was going to benefit about 458 dollars a month that's big so okay so that was three or four times what the difference in going from an 850 to an 830. now granted if the rates don't fall did we lose or anything no we still have twenty thousand dollars of the seller's money that we they're putting in an escrow account we can put it in there yeah we find an account that might be making three percent compounded okay but the clients decided that they felt like okay I would rather have the twenty thousand dollars that I don't have to bring to closing now maybe there might be a couple things that they want to do to for the house but every indication when we come out of a recession with the one that we're in right now I mean we are in one um that we're going to see interest rates drop a little bit and the likelihood of their rate being lower than what it's going to be when we go to closing on I think it's the 30th of November is very high but either way we still they were very happy with the home price they were they had options we gave them all the options and they picked the one that was best for them and we're going to go to closing they're bringing twenty thousand dollars less we're going to keep talking we're going to set them up with an alert to watch you know when rates start to move a little bit so we're going to be letting them know that hey look there's a good opportunity and oh by the way if there's any bit of left let's just say oh it took a year and a half well they're still going to have eighteen thousand eight hundred dollars give or take or eighteen thousand five hundred in that kitty we use part of it to refinance and if they want to put an extra ten thousand dollars and actually reduce their principal at that point well there's another maybe eighty dollars or more their payment will drop so it's all about strategy it's all it's all about planning and more importantly it's about options and knowing what your options may be what do you think right now I keep using the words There's an opportunity but there's also a challenge yes and our goal as as Professionals in real estate is to be able to explain what the challenges are but then show what the opportunity is right now what's the challenge challenge is the interest rate yeah but the opportunity is that there's less buyers in the market absolutely right and so you're talking to people that are getting contracts uh ratified and those of the people right now that are making a decision based off of good knowledge to say I know what this looks like for me potentially with a refinance or how long I'm going to live in the house well and more importantly they're okay with the payment as it is right now no matter what no matter what and the thing is they are you know six months ago seven months ago and these are clients that we were working with that were competing and getting frustrated yeah and now they they we yes their payment unfortunately has gone up about twelve to thirteen hundred dollars more than it was a year ago with the interest rates but they were in a position where they they were they still needed a house they were tired of paying somebody else's rent by the way their rent was going to go up 240 dollars going into next year so they just said they've had it so the and now they have you know from not I don't want to be a tax person here but they now can itemize their their tax returns moving forward and they're gonna and now they actually own something that's going to potentially appreciate well you just need to know what what options you have I mean and sometimes yes have we seen a few of our clients kind of go to the sidelines a little bit absolutely and they're just affordability is I mean it doesn't matter if you're going to the grocery store maybe you don't get everything you go to the grocery store for maybe you make a little couple changes here and there in your overall um finances for the holidays and travel and so everyone's making adjustments right now um but I will say the moment we do start to see the market turn I I do believe all those people that were on the sidelines they're going to re-engage and we still have a problem of inventory yes so um it's not like all of a sudden we just have a ton and ton of inventory like it's just magically the problem is it's it's still there yeah and in fact when it happens again there might even be that pent-up demand that causes the same thing with home prices just to shoot straight up again and I don't know if you want to touch on that a little bit a little bit I think about I'm thinking about this kind of opportunity right now for potential buyers I think first-time home buyers are the ones got pushed out because they didn't have enough money down or they were they didn't want to take on the risk of waiving everything yep but I also leaded open house last weekend and six of the eight people that came to the open house they all had a home to either sell or rent out oh contingency so I I told them this is your opportunity like right now where you can actually use that home sale contingency or rental or rental contingency we've got another client right now that you're in the process of getting her home I don't know I don't know much I'm on the listing side for rentals but I know we've already talked about it she does have to rent her place out in order to buy but that you know what the ever rentals we people are looking for rentals left and right right now and especially where hers is you know it'll be easy but yeah having that little contingency there I mean we're seeing them great I had two closings this month that had home sale contingencies it was great yeah and I mean we did a few during the pandemic and it made it work and really just like made the it gave Assurance to the listing agent the seller however if you have 10 offers we've got your chance you don't have a chance unfortunately this is how it is and like right now may be the opportunity so yeah inventories down we really don't see it getting much better um getting to the next year I feel like we're still going to have low inventory levels uh just basically because people are staying their homes longer sure they refinance at two and a quarter a few people are still years ago so people are married to their rate right now they love that and that interest rate and I just read an article that even though the this part of the market real estate market has cooled home renovations has not correct it's still going up and so that this tells me as someone in the industry in his YouTube that there's not going to be the inventory they're actually living in their homes longer and just making up the updates but for everyone else that needs to buy a house just letting you know that we still see that the inventory levels are going to be rather low going to 2023. so what does all this mean if home ownership is something that you have planned for your near future the sooner you can get in touch with the professionals that are going to be working with you and I always I put a video out not too long ago Tim it's about having a winning team somebody that really is in it for the long term because buying a home is not a click here get a house it truly is a process understanding what you're trying to do now where you're going to be maybe three five seven years and is that house or is that home going to be part of your overall wealth portfolio for today and tomorrow because as we all know real estate is the single biggest portion of an individual's overall wealth portfolio um I want me to rephrase it most people most individuals that in the house happens to be that biggest sector of one item of the of their portfolio is typically real estate so knowing that you're in the right program that you have options with it for today and tomorrow um that you have a place in your shelter for you and your family I mean it's all about planning and it's about knowing what the options are and again going back to affordability making sure that whatever Loan program that we're putting them in whether it's an adjustable rate mortgage whether it's a fixed rate product that they are protected for short term and long term so it's all about planning yeah get your winning team start the process early check the boxes feel comfortable with what you're doing make sure the price range in there is in their comfort level I know you'll find them the right house depending upon the area and just that way when we know we can we just hit the ground running hard and when the opportunity is there we can strike foreign