Tim Hall:
Licensed Real Estate Broker, actively selling since 1993. Co-founder of Re/Max Central Properties, with my wife, Bell Hall, and team-leader for a team of 7. BA from Capital University and a US Navy Veteran CU-60 U.S.S. Saratoga. Father of 3 - Alicia, Erica, and Amber; and grandfather of 1, Ava.
Home > Blogs > Greater Dayton Home Report > Archives > 2008 > January > 29 > Entry
FED Targeted to lower rates on Wednesday
FED Targeted to lower rates 1/2 point on Wednesday
Last week, the Federal Reserve cut their key interest rate by three quarters of one percent, down to 3.5 percent. It is anticipated that there will be another cut of 1/4 to 1/2 after the meetings conclude Wednesday.
As I told you in the last post, it is difficult if not impossible to PERFECTLY time locking a rate on a loan. The rates fluctuate constantly. So by the time the rate reaches your target level, it is too late to start the process. Refer to the last post on how to win in this scenario.
Moving UP in a DOWN Market
So what to do in the interim? Start shopping! The softening of the overall market has made for some irresistable deals, in otherwise solid areas. Here’s a thought: Perhaps you can buy “up” a couple levels without paying any more than you would have for a base home just 18 months ago. We recently concluded negotiations for a family that will end up living in an awesome home, golf course community, for a substantial discount. It helped that the “seller” was a relocation company. This is a well known source for better than market deals, even in a stronger market!
It doesn’t mean that you can’t just sit tight, refi your home and pocket the savings because you surely can! But, honestly, it also could mean buying up at a nice discount. If under more normal conditions your home is worth $150K, and we assume you have to discount by 10% due to the soft market, that nets you out at 135K before expenses. Assume you wanted to buy a home for 225K. If that seller must offer a similar discount to move the home now, then you could buy it for $202,500. So you sacrificed $15,000 to save $22,500.
Now reverse the situation. Your home appreciated 3% so instead of $150,000 it can sell for 1$154,500 for a GAIN of $4,500. That same move-up home appreciated for 3%. It is now going to sell for $231,750 or a GAIN of $6,750. So you gained $4,500 but lost $6,750. Can you see why people move up in down markets?
What if you don’t know what you can get out of your home, realistically! Great question. Sometimes, as a broker, I will take offers based upon my seller finding, and contracting, on a home of their choice within a certain number of days, usually not more than a week. since the inventory is plentiful, there are many great homes to chose from, and this can work out quite nicely.
Food for Thought!
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