Buy the House or Buy the Rate? Why Price Matters More Than You Think

Buy the House or Buy the Rate? Why Price Matters More Than You Think

I hear this from buyers all the time:

“I think I’m going to wait until mortgage rates come down.”

And maybe you should.

But before you make that decision, I want to look at something else.

What if the house is $25,000 cheaper today?

What if it has been sitting on the market and the seller is willing to
negotiate?

What if the seller will contribute toward your closing costs or a rate buydown?

What if waiting for a lower rate means you eventually walk into a
market with more buyers and less negotiating power?

This is why I don’t want to look at the mortgage rate by itself.

I’m looking at the whole deal.

The House and the Rate Are Only Two Pieces

When I’m helping a buyer decide whether a home makes sense, I want to look at:

Purchase price.

Mortgage rate.

Monthly payment.

Cash needed to close.

Seller concessions.

Potential rate buydown.

Competition for the house.

And how long you think you’ll own it.

Those numbers work together.

A lower interest rate sounds great. Of course it does.

But if rates fall and suddenly more buyers jump back into the market,
what happens to your negotiating power?

Maybe the seller who would negotiate with us today doesn’t need to
negotiate six months from now.

Maybe the house costs more.

Maybe there are multiple offers.

Or maybe none of that happens.

That’s the point.

We don’t know exactly what the market will look like six months from now.

So instead of trying to predict it, I want to know whether there is an
opportunity sitting in front of us today.

What If We Can Negotiate the Price?

Let’s say a house originally came on the market at $600,000.

It has been sitting.

The seller has already reduced the price, and now they’re motivated.

That gets my attention.

Could we negotiate another reduction?

Possibly.

But I don't automatically want to grab the biggest price reduction we
can get and call it a win.

I want to know what that reduction does for you.

Because depending on your financing, using some of that negotiating
room differently could make more sense.

Maybe we negotiate seller concessions.

Maybe we use those concessions toward closing costs.

Maybe your lender shows us that using seller money toward a rate
buydown has a bigger impact on your monthly payment than another
reduction in purchase price.

Or maybe the price reduction is absolutely the better move.

This is why we run the numbers.

A Lower Price and a Lower Rate Do Different Things

This is where buyers can get caught up in the headline number.

“I got $20,000 off the house!”

Great.

But what did that do to your payment?

What did it do to your cash at closing?

What if we had negotiated $15,000 differently and it saved you more
money where it mattered to you?

There isn't one answer that works for every buyer.

Your down payment matters.

Your loan matters.

Your credit matters.

How much cash you want to keep in the bank matters.

And your plans for the house matter.

If you think you may own the home for 15 years, we may look at the
numbers differently than if you think you'll be there for three or
four.

Jill’s Insider Tip

When we find a house you like, don’t negotiate in a vacuum.

Before I write the offer, I want your lender involved.

I want to know what happens if we negotiate the price.

Then I want to know what happens if we negotiate concessions.

Then let's see what happens if some of that money is used toward your
interest rate.

If you don't already have a lender you trust, I have several great
lenders I work with and I'm happy to connect you with one.

Give me the options.

Then we can decide which one does the most for you.

Because my job isn't to come back and say, “Look how much money I
knocked off the price.”

My job is to help you structure a deal that makes sense for you.

And Don't Forget About Competition

There's another piece buyers sometimes overlook when they're waiting
for rates to fall.

You're probably not the only person waiting.

If mortgage rates make a meaningful move downward, more buyers may
decide it's time to start shopping.

That doesn't automatically mean prices will shoot up or every house
will have multiple offers.

But it can change the negotiating environment.

A seller sitting on the market today may be willing to talk.

A seller with three buyers interested in the house may feel very differently.

That's why I don't want to automatically dismiss today's market
because we don't love the rate.

Sometimes a slower market gives us leverage.

And leverage has value.

What If Rates Drop After You Buy?

This is usually the next question.

“What if I buy now and rates come down later?”

Depending on your loan and financial situation, refinancing may
eventually be an option.

But I would never tell someone to buy a house based on the assumption
that they can refinance later.

You need to be comfortable with the deal you're making today.

If refinancing becomes financially worthwhile later, great.

That's an opportunity we can evaluate when it happens.

But I'm not building your housing decision around something neither of
us can guarantee.

Jill’s Final Take

I don't want you buying a house because you're afraid rates might go up.

And I don't want you sitting on the sidelines because you're convinced
rates are going down.

I want to look at the house you want to buy and the opportunity we
have in front of us.

What's the price?

What's the payment?

How much cash do you need?

What will the seller give us?

How much competition do we have?

And how long do you plan to own the home?

Maybe the best move is negotiating the price.

Maybe it's negotiating money toward your rate.

Maybe it's keeping more cash in your pocket.

And maybe we run everything and decide this isn't the right house or
the right time.

That's okay too.

I’m looking at the whole deal.

Because getting a “deal” isn't about winning one number.

It's about making sure the numbers work for your life.

Want Me to Look at the Whole Deal?

If you're thinking about buying in the East Valley and you're trying
to decide whether to buy now or wait for rates to change, let's look
at the numbers before you make that decision.

If you need a lender, I can connect you with one of the lenders I
trust so we can compare actual scenarios instead of guessing.

Then I'll look at the real estate side.

Maybe we negotiate the price.

Maybe we negotiate the rate.

Maybe we should look at the move.

602-513-6209
JillHamilton.com
Jill Hamilton, REALTOR®
Buy Sell With Jill | West USA Realty

Related articles:

• “mortgage rates” / discussion about waiting for rates

• “seller concessions”

• “price reduction” / “negotiating the price”

• “rate buydown”

• “monthly payment”