Who Represents Whom?

Which of the two agents on a sale represents the buyer and which one represents the seller?

To date everyone has been ragging on the seller’s agents for what they are not doing for the buyer. The agent who enters the info into the mls is, by definition, the fiduciary representative of the seller, not the buyer.

Just checking that you know that.

Licensees do not sell houses by law. By law they represent one of the parties, either the seller or the buyer (sometimes both).

When a listing is entered into the mls, there is no buyer yet. So the person entering the data is entering the info as the representative of the seller.

I keep hearing about what buyers want that agent to do, when it is only the seller that matters at that given point in time. Only the best interest of the seller client can be the motivation behind what to enter and what not to enter.

Does everyone understand that? Doesn’t seem so.

ZIP, Zillow and ZAP – Part 2 of ?

OK. Everyone seems to get what ZAP is so far. Though many don’t see how it cuts your ability to benefit as a buyer with regard to commission issues. If the $9,000 on the table turns into $7,000, the agent’s gonna want to keep it all. If they are willing to pay that $2,000 to the lead generator, then why wouldn’t they agree to buy something for you with it? Same money, isn’t it? But once it’s gone…it’s gone. Either you have it, or the lead generator has it…your choice.

Darren points out, “I would think a well established (real estate agent) that doesn’t need to market themselves would also be reluctant to negotiate with you.” Joe says, “It sounds like you are describing a scenario where buyers can expect an agent to pay them some of the commish back in the form of washers and dryers, inspection fixes etc…”agent that feels less able to lavish unannounced gifts on buyers.”

The most common form of “negotiating” the buyer agent fee is for the agent to use some of the commission to pay for something for the buyer. It is generally not a direct negotiation, because the seller is paying the buyer agent, not the buyer. So the agent takes some of the commission that the seller is paying to the buyer agent and buys something with it for the buyer. As an example, a common thing the agent may buy that I am sure you have seen, is a home warranty. That can be purchased by the seller’s agent from his part of the fee (it will be a rider on the sign if that is the case) or it can be purchased for the buyer by the buyer agent from her portion of the fee.

Are you with me so far?

There are laws against handing money to the buyer. So you have to pay closing costs, or pay for repairs from the home inspection or include a washer and dryer in the sale and pay for it. It’s not about “lavish gifts”. The only way to negotiate a commission (paid by the seller) is to “gift” it to the buyer in the form of a “thing”. Even then, the lender has to approve that gift, or you have to be creative, so the agent cannot promise it up front. The lender will only allow so much of this to happen. If you are a cash buyer this is not the case.

Since the commission is in the loan, the thing that gets paid with it has to be in the house or in the purchase costs and the lender has to know about it and approve it, otherwise it is lender fraud and we all go to jail.

I’m going to stop here, because I sense from your comments so far that you may have questions on this. How do you think you get to negotiate the buyer agent fee? Did you think you could be handed a check? I’m curious…though not yellow, obviously.

Five more comments and we’re on again. I need to know what you are thinking to know how to proceed. I’m not the “Word Nazi” 🙂

Oh, Steph! ZIP is Zip Realty.

You can, by the way, reduce the purchase price of the house by the negotiated amount, but then you need to get the seller to sign it and sometimes they won’t. It is not as unilateral as paying for something with it. I commonly fix things in the house that come up in the home inspection that aren’t big things that the seller will do. Then the lender doesn’t need to see the repairs needed, which helps the buyer get his loan and it is not lender fraud because the repairs are fixed at closing and the money did go into the house in case the lender needs to foreclose. The value is in there. If you take that money and go to Hawaii…well then the lender will have a problem as all of the monies loaned and the downpayment need to be in that house at closing. There’s a huge law on this that goes on and on. I’m trying to keep it simple.

We have so many laws and rules and fines, you have no idea. Licensing laws, mls rules and they can fine you $5,000 a pop if you break them, RESPA Federal rules. There is no end to them and if you stacked them all up they would hit the ceiling.

I’m just trying to give you the practical application. Everything has to be shown on the final closing sheet and the closing sheet will not allow a line that says “I handed the buyer a check after closing so he and his wife could go to Bermuda.” LOL Of course most of these laws were written before buyers had agents…that’s part of the problem.

The seller negotiates the fee…no problem there. But the buyer negotiating the fee that the seller set up front…a little more confusing. Hopefully it’s worth understanding. If not…then don’t comment and I’ll stop here.

ZIP, Zillow and ZAP – Part 1 of ?

OK, let’s “Get Real” for a minute.

On the one hand we have the consumer who wants what they need, no more; no less, for a price that seems reasonable.

Now, let’s look at the “service providers”, both as you know them, and as I know them as an insider. From an insider’s perspective there are three tiers of “service providers”. The traditional full service model, the “discounted” full service model and the stripped down to “you are mostly on your own” model. None of these are “good” or “bad” in and of themselves. It’s more a matter of what is good or bad for you, depending on your skills. But that’s for another day. Just wanted you to know that each of these is good for someone. Only question is which is right for you.

Technology has added a fourth option that is not a “model” in the “service provider” sense, but one that many consumers at present are opting for, which I will call ZAP.

I have to use analogies because I am somewhat limited by my insider position in discussing commissions and companies. Straight shooter that I am, being a little vague is not my normal modus operandi, so bear with me. Hopefully my descriptions and analogies will be obvious enough for you to follow. If not, you can ask questions in your comments or by email.

Let’s discuss and eliminate the ZAP option first, since it is not a “service provider”, but a place where many consumers get trapped without knowing that they are getting ZAPPED. It is worth mentioning here that ZIP is not a ZAP. Now back to ZAPs. The most obvious ZAPs have a button that says “Find a Realtor”, or something of that nature. When you hit that button to find a Buyer’s Agent or Seller’s Agent you are decreasing your ability to negotiate the commission, without knowing it. The technology whizzes who create these websites take a portion of the commission, without disclosing that to you the consumer. They do not provide a service to you, the consumer. They provide a service , for a fee, to the agent who is a “participant” at a cost. There are many of these and we call them “lead generating” sites, “bottom feeders” or “troll” sites.

Let’s take a specific example of how these work, and there are many of these available to you. Let’s say you are a buyer, rather than a seller, of real estate. You go to look at property on one of these sites, which is how they reel you in. You then hit the “I need a Buyer’s Agent” button and are connected with an agent. Let’s say based on the price of the house you will eventually purchase, that the commission will be $9,000 as pre-set by the seller of that house when he listed it for sale in the mls. When you connect with the agent by hitting that button, you have generally spent in that process of merely hitting a button on the website, the money you could have negotiated toward your closing costs or repairs or against the purchase price.

The agent who “gets you” has paid for you. He pays for you out of the $9,000 on the table in your “transaction”. Sometimes he pays it up front in a monthly cost of say $1,000 a month. So if it took three months for that agent to “get you ” (“the lead”), he has paid $3,000 for you. When you try to negotiate something for you from the $9,000, the agent has already given $3,000 to the 3rd party ZAP company, and so you get zapped, as your ability to negotiate has been diminished or entirely eliminated without your knowledge.

Some other sites are not “pay as you go” for the agent, but “pay as you close”. In that case the agent will owe the ZAP a percentage of the commission, if and when you close escrow. Again, the monies you may have been able to negotiate with your agent have been sucked up in advance without your knowledge.

Some of these sites operate like the one sided mirror glass of an interrogation room that you see on shows like Law and Order and the like. I find these lead generating “Big Brother” website options to be exceptionally creepy, but hey, that’s technology at its “best”, I guess. When you sign up to the site to view and save property, you are assigned to an agent in the queue without regard to whether or not it is a good match. Those who have paid in to “look at you look at property”, get the leads kind of like the way a lottery ball pops up to the top and gets “pulled”. I’m trying to give you the facts without editorializing, but it’s difficult for me as I find these sites intrusive and deceptive.

OK, back to facts. The agent who “wins you in the lottery” of the moment, gets to see everything you are doing from the inside without your knowing he is watching you. He can see what properties you are viewing. He can see which ones you are saving vs. ones you are trashing, he can “get inside your head” a bit. He gets all of the info you have put in to register for the site. You then get an email from him, and maybe a phone call, saying “Would you like to go see X property”? You are dumbfounded and amazed and think he is absolutely clairvoyant! Or maybe you DO want to see that property and don’t think about how he “guessed” you might want to go see that property and you just go see that property without a second thought.

LOL OK, I can’t stop editorializing, can I? Don’t you find this just absolutely creepy? Maybe it’s me. I’ll stop here for today and will continue after some of you comment on this so far. Maybe it’s just me. What do you think? I’d like to hear from you before I go any further. After 5 comments I will go to Part 2 of ?

As to the Title of this entry, let’s review. We are mostly talking about ZAPs that ZAP you, the buyer consumer. ZIP is NOT a ZAP. While you all sit at the edge of your seats awaiting Zillow and it’s wonders, we’all (the insiders for lack of a better term) are sitting back expecting another exploitative ZAP type. Of course “No one knows, but the Shadow”, but at least know what to look for when it comes. My expectation is that it will not give you what you want. That being “What you need, no more; no less, at a reasonable cost” as noted in the second sentence of this entry above. (Someone let me know if that IS what the consumer wants, please. Thanks.)

But it will WOW you with it’s technology, reel you in, and then sell you off to the highest bidder. No one knows yet, but if you hear anything new about it let me know and I will decipher the code.

Five comments from YOU, the reader, and then we will move to the actual means a buyer has to negotiate their commission, unless they have already “shot themselves in the foot” by being totally or partially ZAPPED without their knowledge, from the ability to negotiate.

Have a good day! Look forward to hearing from you!

Ardell

Kirkland Real Estate

I find in my daily chats with people, that the public’s perception of Kirkland Real Estate is a far cry from its reality. So this morning, with one eye open drinking my coffee, I put together some stats for you to bring this point home. I think you will be surprised by this piece I will call “perception vs. reality” which also points out the “housing bubble” area of Kirkland.

For the purpose of these numbers, I have used the mls and not the tax records.

People ask me all of the time in passing, at parties, etc…”How can anyone afford to live in Kirkland?” General perception being that real estate prices in Kirkland are all over a million dollars. That is greatly because the consumer looks at what is for sale. Reality is in what has sold, not what is for sale. We call “for sale” that which has not sold and not particularly reflective of the marketplace.

We will be using an economic forecasting tool called the Rate of Absorption, which is further described in my blog.

Of the 2,042 properties sold in Kirkland (PO) in 2005, only 92, less than 5%, sold over a million dollars.

  • 616 (30%) sold for less than $300,000
  • 856 (42%) sold between $301,000 and $500,000
  • 349 (17%) sold between $501,000 and $750,000
  • 129 (6%) sold from $751,000 to a million dollars
  • Only 30 properties sold between a million and $1.2 million
  • Only 14 properties sold from $1.2 million to $1.3 million
  • And 48 properties sold higher than $1.3 million in 2005

Many people think that Kirkland is the town for millionaires. That is because they look at what is for sale creating this “perception vs. reality” issue. Only 2% of homes sold in Kirkland last year sold for $1.3 million or more BUT a whopping 26% of the homes currently for sale are priced over $1.3 million.

Now let’s get to rate of absorption before my client comes to my house to sign an offer on his way to work.

616 properties sold in 2005 under $300,000. 56 properties on market are priced under $300,000. That’s about a one month supply. If it takes a year to sell 616, it should take a month to sell 56.

856 properties sold in 2005 from $301,000 to $500,000. 63 properties are for sale in that range. That’s slightly less than a one month supply.

349 homes sold in 2005 between $501,000 and $750,000. 62 properties are for sale in that range. At a rate of 29 homes sold in a month, it will take about two months to sell 62 (two months supply on market).

Here’s where it gets very interesting (to me anyway).

While only 129 homes sold last year between $751,000 and a million dollars, there are currently 47 for sale. That’s a 4-5 month supply carrying over from last year. Add that to people who list their homes in the next 4-5 months and you have an oversupply.

While only 11 homes sold last year between a million and $1.2 million, there are currently 30 for sale. Let’s call that a 3 month supply.

21 sold from $$1.2 to $1.3 million and 14 are for sale that’s about an 8 month supply coming out the gate into the new year.

And now for the Piece de resistance! !! (apologies to the French)

While only 48 properties sold over $1.3 million…there are currently NINETY (90) N I N E T Y!! for sale!!! That is almost a TWO YEAR supply! I’m not shouting at you, but I find that incredible. Next they’ll be saying the bubble is bursting because there is pressure on this high end! Oh yeah, they already said that just yesterday in the King County Journal.

Yesterday one of my agents posed this question. Her client was buying a condo for $142,500 and was worried about “the bubble bursting”. I have a client today buying a condo for $99,900. Is HIS bubble going to burst? Of course not. Unless you are up in the air in “bubble territory” over a million dollars, you don’t have to worry about the air getting too thin.

Have a good day! If you would like me to find the bubble range in your neighborhood, just ask as a comment, or email me. While Dustin has “dubbed” me “the Kirkland Specialist”, I have actually sold more property outside of Kirkland than in it, at present. I have sold real estate in PA, NJ, FL, Sacramento and L.A. (kind of two states) Seattle and Eastside. So ask any question you like, about any place you like.

Seabrook, WA – Buy or Not To Buy?

(Marian is a friend of mine who has been following the Seabrook development on the coast of Washington. Based on many interesting conversations that we’ve had about this development, I thought it would be fun let him write updates about the process of buying into this development. -Dustin)

Buy or Not To Buy?

That’s a question to all of you Seattle beachcombers who like ocean sunsets, salty air, sand dollars and beach fires. If you’ve been taking your family down to Newport, Cannon Beach or Seaside in Oregon, now you have a comparably beautiful alternative on Central Washington coast. We are not talking Long Beach or Ocean Shores. We are talking about Seabrook.

I fell in love with this part of the Washington coast several years ago, before anyone announced plans to develop properties in this area, when our family visited the Griffiths-Priday state park. It reminded us of Oregon Coast with its sand cliffs, dunes and beaches. Seabrook is being built just north of the park, on adjacent 88 acres of land on a bluff overlooking the beach and the ocean.

seabrook layout

I have to give kudos to Casey Roloff and his team at the Seabrook Land Company for making their vision of building a town on the undeveloped part Washington coast a reality. Using the New Urbanism approach and building a dense, pedestrian-friendly neighborhood with the public amenities of a small resort and the atmosphere of a beach town, they hit a jackpot. Seabrook is a runaway hit! Just 15 months ago, new 3 bedroom/2 bath “cottages

Meet a Realtor Who Doesn't Sell Houses…

The NY Times ran an article a few weeks ago on how hard it is for new real estate agents to break into the market (I’d like to the article but it is now behind a password-protected wall, so instead I’ll just link to the Property Grunt’s excellent summary and analysis). This article got me thinking of a way that I could still be very useful to my clients without actually buying or selling any homes.

What’s that? A Realtor who doesn’t buy or sell any homes?

For the next six-months or so, I really won’t be in a position where I can dedicate a significant amount of time to helping clients. (higher priorities! ) But what I would really enjoy doing over the next few months is staying connected to the business by helping buyers and sellers find appropriate agents.

Say that again?

Mariel Kicking a Soccer BallIn my office alone, there are almost 100 real estate agents who would love to have your business (assuming you’re buying or selling a home) and while I don’t know all of these agents, I do know the successful ones . What I would like to do is use my inside knowledge of successful Seattle agents to connect individuals with the right agents.

For example:

  • Are you looking for a condo in Downtown? I know an agent who specializes there!
  • Are you looking to buy land in Woodinville? I know a different agent who specializes there!
  • How about a modern-style home in Seattle? I know a different agent who specializes in modern homes.

Regardless if you’re trying to sell a home, condo, boathouse, townhome, etc., I’ve come into contact with a highly successful agent who specializes in that field. Talk with me, and I’ll connect you with the right person.

Why would I do this?

It is really a win-win-win situation. You get the best representation possible, a successful real estate agent gets one more client, and I can continue to help people in a small but important way. (I’ll also get a small referral fee from the agent…)

By the way, my recommendations are not limited to just people moving to Seattle. I know a few listings agents who go out of their way to please, so if you are currently a Seattle-area homeowner looking to list your house, talk with me before you list. I’m confident that no matter how good your realtor is, I can get you a better one!

Real Simple Syndication (RSS) for Real Estate

Duck Flapping WingsI can tell from some of the questions I got from my past post about RSS feeds that I was going over some people’s heads. As the resident geek here at Rain City Guide, I feel it is my responsibility to explain RSS feeds and why they are so cool… So let’s begin with the big picture…

Who cares about RSS?
Imagine that you could create a newspaper that only included content that you were interested in. Mine definitely would not include tables if yesterday’s stock quotes! But what would it include? My ideal newspaper would be completely personalized to my interests and include this type of information:

  • Current world, local, real estate, transportation, and tech news
  • Commentary from my favorite writers on world news, local news, real estate, transportation and tech issues
  • The latest photos of my friends and family
  • A photo and description of every new home that came on the market in Anna’s market area
  • Upcoming local events
  • Blog articles written by people who are moving to Seattle

But wait! I’ve already got that newspaper and it is delivered (digitally) to one place every day. Even better, it is delivered continuously throughout the day as new articles appear. My newspaper is ALWAYS up-to-date. It includes selected articles from the New York Times, the Seattle Times, the Seattle PI and 4500 other newspapers!. As a matter of fact, I’ve created such an awesome newspaper that I rarely search the web anymore for new content. Just about all the content that I could possible be interested in gets delivered to me! And best of all, this newspaper with articles, commentary, data and photos personalized to my tastes is delivered to me FREE!

How does this work?
Through the magic of RSS.

What is RSS?
RSS stands for Real Simple Syndication. The idea behind RSS is that a website (newspaper, blog, photo site, etc) publishes a text file on their site with a very specific (RSS) format so that other sites can “ping” this one text file to find the latest news, information, photos (or home listings!). The text file is pretty ugly to look at (here is Rain City Guide’s RSS feed), but that is beside the point, because users should never be looking at a raw RSS feed. Instead, users (that means you!) should get a feed reader that will parse all the ugly text and reformat it in a nice, easy-to-read package.

Have a lost you yet?
Stick with me, and I hopefully you’ll start to see what makes RSS feeds so cool (at least in a geeky sort of way!).

Ducks at LakeWhy go through all the hassle to get a site’s RSS feed when you can just go to the site whenever you’re interested in reading their content?
The beauty of the RSS feed is that updated information is brought to you! Ever since I’ve started using a feed reader, I find myself searching the web for interesting information a lot less because interesting information is brought to me! To give you an idea of the diversity of feeds available, here are some of the things that are delivered to the inbox of my feed reader every time new information is published:

I mention these items just to give you a picture of the diversity of feeds that are available. In reality, over 100 of my feeds are all from bloggers, but the options for different feeds are massive and growing every day. I’ve really enjoyed being able to read articles and see photos from all of these sources within one place (a feed reader!), which brings me to…

So where do I get one of these feed readers so that I can create my own on-line newspaper?
There are a ton of feed readers available. Some of them are desktop-based and some are web-based. Most of my experience has been on the following three web-based options, so I’m going to limit my opinion to these three, but feel free to search beyond my experience:

I began using MyYahoo years ago, and then a while back (months? years?) they added the ability to add any RSS feed to a user’s MyYahoo page. I took advantage of this and enjoyed it so much that MyYahoo page became extremely cluttered. I clearly needed a better option which is when I turned to Bloglines. Bloglines allows you to categorize your feeds into an unlimited number of folders and it does a great job of keeping track of which articles you’ve already read, making it extremely popular and easy-to-use program. Plus it is 100% web-based so that if you log into the service and read an article on one computer (let’s say at work) then when you log in from home, your home computer will know that you’ve already read that article… Bloglines is a great way to keep up on your favorite news, blogs, etc.

Ducks PlayingI’ve also been playing around with Google’s new feed reader called GoogleReader. It’s a great option as well and I really like that it has an “relevance” option that brings the things I’m most likely to be interested in to the top of my list of things to read.

What’s next?
My hope is that if you’re new to RSS feeds, then at least you are starting to see that they have a ton of potential. They are everywhere and Scobleizer (over at Microsoft) would even argue that they are essential for new web companies! Feeds are only going to become more popular, so if you want to be a web-savvy individual, it is time to hop on the band wagon and try it out!

And if you’ve made it this far, you’ll start to notice orange RSS “badges” all over the web. These badges are letting you know that you can read this site’s content from your blog reader.

For simplicity’s sake, I’m going to assume you are using GoogleReader… To add Rain City Guide to GoogleReader, here is what you need to do:

  1. Go to GoogleReader
  2. In the search box, type is “Rain City Guide” and click “Search for New Content”.
  3. Where you see “Seattle’s Rain City Real Estate Guide”, click on the Subscribe button. This will add Rain City Guide’s RSS feed to your GoogleReader.

It is that simple to add a feed. In addition, most sites offer an “+ to XYZ” buttons like this one (Add to Google) from Google. There are bunch more feed readers on the market, and I’ve tried to make it as easy as possible to add Rain City Guide, so I’ve added a button for all the ones that I’m aware of on my sidepanel.

Also, if you are interested in real estate feeds, feel free to grab the real estate feeds that I follow by downloading this file to your hard-drive and using the “import” feature within GoogleReader to add these feeds. (To do this you will need to (1) click on “Your Subscriptions” and (2) on the pull down menu that says “more actions”, click on “import”. Then (3) just follow the instructions to import the XML file.)

So why all the big fuss about RSS feeds? And what does this have to do with real estate?
I’ve been playing around with some ideas I have for an RSS feed of real estate listings and before I announce anything, I needed to have a post I could turn to where I could say “This is what an RSS feed is and why you should care!” There’s nothing I’m ready to present yet, but if you’re interested in being an alpha-tester, let me know and I’ll pass along a link soon enough!

Inbox: Where to Live Based on the Quality of Seattle Public Schools?

I’ve been having a dialog with one of my readers who is looking forward to moving to Seattle. His last email summarized some of the research he has done on Seattle schools, and I thought the entire email is so good that it deserved a wider audience:

Dear Anna —

I’ve got another issue you might want to explore on your blog, and get readers’ feedback. Do people looking to buy real estate in Seattle base their choice of neighborhoods on the quality of schools? From my understanding of the Seattle public school system, it seems that one does not need to consider high schools among ones neighborhood selection criteria, since at least in term’s of today’s system, there’s no admission advantage (other than just being close) that accrues to living in the “reference area” of ones preferred high school. However, there does appear to be an advantage to living in the reference area of ones preferred elementary and junior high schools. And if budget cuts ultimately mean cutbacks in school choice (though that has been averted for the time being), then it’s likely that it will be even more important. So, what this means is that if school quality is important to you, you should look at the neighborhood elementary and junior high schools.

However, if one looks at the Seattle city schools in comparison to suburban schools in terms of grade scores (as tabulated by the Seattle Times School Guide), quite a few elementary schools (e.g., Lowell, View Ridge, Wedgwood, Hay, Lawton, North Beach, Whittier, etc.) compete with the best suburban schools (Mercer Island, Bainbridge Island, etc.). However, at the junior high school level, all but a few junior high schools (Eckstein, Tops, Washington) fall out of step with the best suburban schools. And at the high school level, only the Center School ranks with schools on Bainbridge, Mercer Island, Bellevue, Issaquah and the Northshore. The obvious conclusion, then, is that if you seek top notch schooling in the upper grades, your choice comes down to having your child compete for a place at a few select Seattle city public junior highs or high schools, or else looking at private schools, or moving to the suburbs.

What do you think of this analysis? What other school related-factors are there to consider?

I hope you don’t see this as too self-serving. It strikes me as it is a fundamental part of buying real estate, but is rarely fleshed out in public, probably because of the hot-button racial issues involved.

(I’ve left the writer of this email anonymous at his request)

When he asks if any other factors should be considered, I think of some of the specialty programs that different schools offer. For example, all of the 5th grade students at Greenwood Elementary School are taught how to fly airplanes (Cessna 172’s). I imagine that some parents would be willing to give up a few test score points to know that their child was in a more stimulating environment.

What other specialty programs are there that might be of interest to parents moving to Seattle?

What other school-related factors should he consider in looking for a home in Seattle?

I would definitely like to open up his questions to other readers, so please feel free to leave comments below.

Interest Rates: When is the Best Time to Lock?

I always advise my clients to lock in their interest rate at the earliest opportunity. Gambling with a client’s interest rate is never advisable. In my business, I have a standardized system in place that we adhere to for all of our clientele. A mortgage loan cannot be closed without locking in a rate, and there are three
main elements to take into consideration:

  • Interest Rate
  • Points
  • Length of the lock

Locking in on a rate does not obligate the client to commit to the loan until the loan is actually closed. The lock simply eliminates any risk of the borrower being exposed to market volatility. It provides the security of having time to complete the mortgage and Real Estate transactions with some sense of order. The lender must disburse funds to complete the transaction within the rate−lock period, or else the original commitment to provide a loan at a certain interest rate will expire.


When a lender permits an extended lock−in period, the borrower will usually see either a higher interest rate or more points associated with the loan. The lender does this to minimize their own exposure to market volatility; hence the borrower pays for the lender to take on this risk.

For example, a 30−day rate lock commitment may cost the consumer one−half point, while a 60−day rate lock commitment could cost 1 full point. If the borrower needed an extended lock period, but did not want to pay points, the lender could make up the difference in the interest rate. In this case, typically, a 60−day lock would have a higher interest rate than a 30−day lock.

In my business, our standard procedure is to lock in a rate as quickly as possible once we have received the loan application. My team and I let our clients know that while interest rates fluctuate daily, most lenders do not want to lose any business. We know that in many cases, if there is a significant rally in the market that causes interest rates to drop .25% or more, we can ask the lender to renegotiate the rate. or understand that we will take the loan to another lender.

Often the lender allows for a renegotiation of the rate to avoid losing the loan to another lender. If we allow our clients to sit on the fence and not lock in a rate quickly, we would leave them exposed to market volatility. Then, if rates do increase, the borrower may be unable to qualify for the loan they want, which is a situation we try to avoid at all costs.

By knowing our clients’ needs and working intimately with them to make the right decisions, my team and I are proud to say that we have many clients who are raving fans.

home search progress…

house Values House Values launched a new site today that combined aerial photography with real-estate listings and extensive neighborhood information. The Seattle Times notes that Home Pages “has information covering 92 percent of the nation’s metro areas.”

HomePages combines aerial photography with neighborhood demographics. When you click on an icon, neighborhood data such as local school information is given such as the student-teacher ratio, average class size and even the name of the principal. Of course you can view all the homes for sale , but I really like that it displays the homes in relation to neighborhood amenities — libraries, restaurants, theaters, churches, banks, police and fire stations among them. If you are interested in seeing where the future of real estate search is heading, this site is definitely worth checking out.

By the way, don’t overlook the value in their House Invaders’ game… 🙂