Why Every Offer Needs To Be Strong; Avoid Lowballing
One of the biggest misconceptions our pre-approved buyers have is that the market is soft because of today’s higher rates.
While it is a fact that today’s higher rates are keeping an enormous number of potential buyers on the sidelines, it is also a fact that inventory levels remain at record lows.
As a result, our buyers are up against multiple offers far more often than they expect – as there are still many more buyers than there are listings. So, when they make weak offers (believing the market is “soft”), they don’t get their offers accepted.
We have seen this play out so often in recent weeks that I was asked to blog about it.
We’re also still seeing an unusually large number of cash offers (something we’ve been seeing ever since rates climbed).
Solution: 12 and 14-Day Closing
When our clients are getting their offers accepted, more often than not it is because they are also offering to close in 12 or 14 calendar days.
We only offer 12-day closes to our strongest clients with very clean files (W2 income, ample cash, perfect credit, etc.), but we can offer 14-day closes to almost everyone.
Our fast closes often beat out cash offers and higher-priced offers with much longer closing periods.
Rates Spike Way Higher in Response to Hot Inflation Report!
The Producer Price Index (PPI) report came out hotter (higher) than expected today, making it that much more unlikely that the Fed will lower rates in the near future.
It was primarily service sector wages that pushed PPI up so much – with hospital care and legal and financial services leading the pack.
Now that we’re seeing wage increases work their way into inflation figures, it may take an actual serious recession and a much softer labor market to bring inflation numbers down.
Both of Julia LaRoche’s two most recent podcast guests though believe that the recession is already here or very likely still: (1) The Economy Is Weaker Than The Narrative Suggests | David Rosenberg; and (2) Why The Recession Already Started | Danielle DiMartino Booth
In any case, I don’t think the Fed will lower rates in March or at any time in the near future – for no reason. But, I do think rates will come down in response to universal recession signs, and I think the Fed will push rates even lower by responding to those signs with rate cuts (like they always do).
WHEN that will happen remains the big question. I thought it would be earlier this year, but it now appears that it will be later.
