Mortgage Rates Are Going Up

The Fed will start tapering mortgage purchases this year. The chart below shows what happened the last time they did this.

Rates should start going up which will help to cool this overheated seller’s market.

January 2021 mortgage rates hit an all-time low. A more balanced Real Estate market would be nice, but if rates climb too much it could start to drive down prices.

Housing Bubble?

The way I see this chart is 1955-1998 homes prices increased just .1% over inflation.

Then you have a nice increase from 1998 to 2006, but then it is offset by the decline from 2006 to 2012.

Since 2012 it has been rising, and especially this last year.

Over time, home prices can’t grow much faster than household incomes, so it seems at some point it will have to decline again.

National Association of Realtors Please Stop Hiding Listings

Hey, National Association of Realtors.

Please stop the MLSs from hiding Sold, Withdrawn, and Expired listings.

This is information the buyers and sellers need to know to decide what is the right price for a property.

Buyers can’t analyze comparables with no sold, withdrawn, and expired listings available for them to see.

They are being forced to go to a Realtor for that information.

I know you think hiding information from the public benefits Realtors, but it really does not, it just makes it more difficult for people to buy and sell homes, and that is not a benefit for Realtors.

Posted in MLS

NAR Sued for Not Allowing Contact Information in a Listing.

The National Association of Realtors (NAR) is being sued for not allowing any contact information to be put in a listing.

This has been a frustration for many of our sellers who would like to put their contact info in the MLS listing in case buyers have questions.

This would also give them an opportunity to meet a buyer directly, thereby selling with no buyer’s agent and saving the 2% to 2.5% buyer’s agent commission.

I think this is a good idea. Why not let buyers contact the agent directly or the seller if the seller desires. These are the two people who know the most about the property.

When the MLS hides information from the public, it is normally not in the public’s best interest. They hide information because they believe it helps Realtors.

Posted in MLS

National Association of Realtors (NAR) sues Department of Justice (DOJ)!

Well, that is an interesting twist, normally it is the Department of Justice that files the lawsuits.

Monday NAR sued the DOJ for investigating NAR.

NAR says they filed “a petition to quash a request by the Department of Justice that reneges on the terms of a settlement agreement that was approved by the DOJ in November 2020.”

I do think there are things NAR could do better at.

For example, stop the MLS from hiding sold, withdrawn, and expired listings so buyers and sellers can do accurate comparables without having to use a Realtor.

Allow contact information of the listing agent or seller in the listing so buyers can call the people who know the most about the listing. It makes sense to be able to speak to the people who know the most about a property, assuming they are willing to talk to buyers.

Allow the buyer’s agent commission to be negotiated and make sure the MLS follows this rule. For some reason, everything is negotiable other than the buyer’s agent commission.

Show what the buyer’s agent commission is so buyers understand better what the seller’s costs are.

Remove the rule that prevents non-MLS listings such as For Sale by Owner listings from being shown on the same screen as MLS listings. This rule hides all other listings that choose not to use the MLS. Right now it is either list on the MLS or your listing is not getting much exposure.

Allow Realtors to post another agent’s listing on Social Media if they think their buyers would be interested in seeing or hearing about it.

If I spot a good deal and want to post it on Social Media so my buyers will know about it that would be an ethics violation for me.

Posted in MLS

Real Estate Tax Credit

You could be eligible for a very nice tax credit if you own your home and no other Real Estate, and your Gross Income is under $60,000. Many retirees can take advantage of this as they don’t count assets, only income. You might have millions in your retirement account, but as long as you are able to take under $60,000 a year or less you would qualify.

The deadline for the application is the end of September, and you have to apply every year.

For more information see this page and scroll to the Real Property Tax Credit Information and Application links.

Can I Pay the Buyer’s Agent 0% Commission?

The answer is yes, you can put 0% commission into the MLS. However, is that really something you want to do?

So far no one that has sold through us has tried it. The reason is if you eliminate agents showing your property, you won’t have as much demand for your property, and the lack of demand means you might have to sell for less.

The question is how much less. If you save 2% to 2.5% buyer’s agent commission but sell for 4% less than you would have with more demand, the bottom line is you lost money.

There is no sure way to know if this will happen, so most sellers elect to pay the buyer’s agent commission to increase demand and hopefully sell faster and at a higher price because of that demand.

Keep in mind about 10% of our sellers don’t pay a buyer’s agent commission because there is no buyer’s agent. This is different than putting 0% in the MLS for the buyer’s agent commission. In this case, they offered to pay the buyer’s agent 2.5%, but a buyer came to us through our Website or through Zillow and they did not have an agent and were willing to let us represent them in the purchase. You can learn more about this option from our blog post titled “How to Eliminate the Buyer’s Agent 2.5% Commission“.

Backup Offers From a Seller’s Perspective

Our recommendation is not to take a backup offer and here is why.

When you take a backup offer, you as the seller have locked yourself into accepting that offer should your current escrow fall out. You could get an all-cash offer for a higher amount and it does not matter, you have given up the right to take a better offer.

However, the buyer in the backup position is not locked in at all. They can cancel at any time, and as a matter of fact, even if they have lost interest in your house, they do not have to cancel, they could just leave it in place and when you finally put them into escrow they still have the 7 to 12 day inspection period to cancel for any reason.

It also excludes you from going out to multiple buyers if you fall out of escrow to see if you can get a higher offer. Many times when buyers have another chance to buy a property they will increase their offer as they know last time they were too low.

I heard of one situation where the seller regretted putting an offer in a backup position because they have a higher cash offer. Now the seller is trying to get around taking it by withdrawing the listing and a lawsuit was filed by the buyer saying the seller must take their offer.

So in my opinion, why exclude yourself from taking a higher offer, and lock a buyer into a backup position, when they have no obligation to you and can cancel at any time.

You might wonder why some Realtors recommend taking a backup offer. They recommend taking it because it is better for them, not for you. They know if the current offer falls out, they don’t have to do any work as the backup offer automatically goes into escrow, and you can’t change Realtors. Once a backup offer is in place they lock their commission into place, even if they mishandle your current escrow and it falls out.

They are not recommending this because they think it will get you the highest-priced offer should you fall out of escrow. They know you are being locked in to the backup offer and can’t accept a higher offer even if it is all cash.