Have you been wondering what the market is doing right now in Wyoming? In this episode of Wynot?, I’ll be joined by Abigail Rose to find out more about the current state of the housing market. We’ll explore the current housing inventory, look at the numbers, and give you some tips on getting your offer accepted.
Meet Abigail Rose
Abigail Rose is a real estate agent with Our303 Realty here in Cheyenne, Wyoming. Born and raised in the area, she’s had her license for almost two years. The market has definitely shifted since she first got her license; back then, it was at the peak of pricing. Now, interest rates have increased.
In March, Cheyenne’s inventory was about 77 homes on the market. Now, the inventory is pushing about 250 homes, which is a good thing for buyers. Abigail recently showed a buyer some properties, and they looked at five houses. Finding multiple properties in a price range a buyer could afford was unheard of a year ago.
However, with that being said, homes are sitting a little bit longer. Currently, the average days on the market in Cheyenne is 30. Previously, it was only about 30 hours.
Negotiations
One of the things people are concerned about is interest rates. Since they have increased, monthly payments are higher, and they might think they don’t qualify for as much. However, because there’s more inventory out there, people are a little more willing to negotiate and help these buyers out.
Abigail is seeing sellers giving concessions. This means they’re giving money to the buyers to help them either secure financing or pay some of their closing costs—which helps buyers out so they can purchase a home. Sellers also still need to get out of their homes, whether they want to downsize, upgrade, or move out of state.
In our current market, we’re seeing a dance between sellers and buyers, where sellers are giving more than they're taking. If you’re a buyer, there are always strategies that can help secure a home. One of the things that we like to do when a seller is willing to give a concession is to earmark that concession specifically to buy down their interest rate. We call this the Seller Buy Down Strategy. Let’s look at some numbers to see how it works.
Seller Concessions
Let’s say we had a $720,000 house and were going to do a 20% down payment. This means we have a $600,000 loan amount. With today's prevailing interest rate of 6%, what would it cost to get to 5.75%, 5.5%, or even 5%? Each step down is going to cost more money. If we were going to spend 3% (which would be three points), each point is 1% of the loan amount.
On a $600,000 loan, that would be about $18,000. To get all the way to a 5% interest rate, the housing payment might go down by $300 or $400 a month. Conversely, we could just talk to the seller about lowering his purchase price so that a buyer could afford it. If we wanted to get to the same payment that we have at that lower interest rate without a buy down, the price would have to lower by $60,000 from $720,000.
So what are the pros and the cons of this strategy? First, the buyer gets a payment they can qualify for. And instead of coming up with a $60,000 price reduction, the seller only needs to come up with $18,000 in concessions. For agents, if their commission fee structure is based on percentage, they get a higher commission at the higher purchase price.
The Our232 Difference
Abigail’s brokerage here in Cheyenne, Our323, has the flexibility to discount their commissions. This is based on their relatively low overhead. Abigail charges a flat fee for sellers that saves them thousands of dollars. This way, they don’t have to pay a 5% or 6% commission. So yeah, I do things a little bit differently.
When people hear about discount agents or discount brokerages, they often wonder if they still provide all the services as a traditional one. Our323 still does all of the professional services that a typical big box brokerage would do, just at a fraction of the cost. That's what they pride themselves on.
This is a good lesson for everyone. When you manage your overhead and reduce your expenses, you can afford to make a little bit less money and still live pretty comfortably. This is why monthly budgeting is so important. Having a budget and following it reduces your expenses, which is a great first step when you're considering buying a new home.
We’re Here To Help
If you're in the market for buying, things are looking at for buyers. So call your favorite agent—or Abigail—to get out there and start looking. By using some leverage from the seller, you can find a property with a monthly payment that’s affordable.
If you have any questions about loans or living in Cheyenne in general, feel free to reach out to me and I’ll be happy to help. I’d also be happy to connect you with Abigail Rose at Our323 Brokerage. Make sure you also subscribe to my channel so you never miss an episode of Wynot?, my show where we discuss all kinds of things related to living to or relocating to Cheyenne, Wyoming. Stay tuned to see what I feature next!
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