“I’m loving the high interest rates.” That’s the text I received from Aria, my top buyer agent, this past week. We ratified contracts for five buyers over the last 10 days with virtually no competition, negotiated several home inspection contingencies, and secured inspection concessions between $10,000 and $25,000 for multiple buyers. Only one buyer paid full price on an already well priced home, but kept all contingencies and still has the opportunity to negotiate after inspections. You can understand why Aria is happy.
Glass House Real Estate started 16 years ago as a buyer’s brokerage. That was our DNA for the first 10 years, and before the pandemic, multiple offers and overly aggressive posturing by sellers were much less common. Over the last several years, despite higher rates and rising prices, a nice home in a nice neighborhood would still get multiple offers, or at least enough interest that the seller didn’t have to negotiate much on price or terms. Right now, we’re finally able to have those conversations again without worrying that asking for too much will cost our buyers the house.
This is the fifth October in a row of elevated interest rates. I couldn’t believe it when I started typing that, but here we are, four years after rates shot up in the fall of 2022, in an all too familiar pattern. In previous years, it was easier to imagine an imminent rate drop, whether because of concerns about a slowing economy or because, during the last two Octobers, the Fed was already cutting rates. Those cuts didn’t necessarily translate directly into lower mortgage rates, but they gave sellers a reason to believe a better market was coming.
And in many cases, that optimism was rewarded. Rates would ease, buyers would come back, and a home that had been sitting would suddenly get renewed interest. If you weren’t under pressure to sell, waiting could feel like a reasonable strategy. This year, I’m less convinced sellers should count on that same outcome. Buyers are facing even higher home prices on top of expensive financing, and sellers need to give them a reason to move forward today. The possibility of a better market a few months from now doesn’t do much for the buyer looking at their monthly payment right now.
A buyer called me Monday about a home they saw over the weekend. They weren’t actively in the market but liked it enough to consider pursuing it. The agent hosting the open house told them the sellers would “review offers on Tuesday.” I immediately told them to ignore that deadline because I was confident the sellers were shooting themselves in the foot with that strategy. Tuesday came and, as expected, there were no offers. The home is still available, and a buyer now has even more reason to come in below asking or request concessions.
For sellers, the good news is that we ratified five buyers while they were getting interest rate quotes above 7%. That says something about the buying power in Northern Virginia. These buyers are well qualified, and for many, higher rates have come alongside stronger investment portfolios. The ability to negotiate aggressively, keep contingencies, and properly do their due diligence without a manic rush is enough for motivated buyers to get out there and make a deal.
So while high interest rates absolutely suck for just about everyone, it’s refreshing to have real leverage again. Our buyers still have to be comfortable with the payment, but at least they can negotiate what they’re getting for it.