Rates Drop to Begin the Week

What a difference a week makes.

Last week, we saw rate costs become more expensive, prompting CCL loan officer Will Barnaby to write about the movement. At the time, he wrote:

“When investors feel that things are improving, money flows into stock and other higher return investments. When investors are fearful of losses money moves into bonds and securities.  Rates benefit when investors are trying to protect themselves from losses in securities, and rates are negatively affected when the yield increases.  Right now investors are feeling more secure and are moving money into equities and out of securities. As a result, rate costs are moving up.”

Well, this week rate costs have dropped, and significantly. The impetus is not the market (that is to say money flowing into equities)- as the Dow has currently moved above the 13,000 mark. Rather, rates are down due to concern about the impact of higher gas prices and uncertainty about the European debt situation. And if I had a penny for the number of times I have written “uncertainty about European debt” I would own a house by now. Take such concerns with a grain of salt.

Since the last time we checked in with a rate update (February 17), rate costs have improved by a half point for the 30-year fixed and nearly a point (!) for the 15-year fixed. This improvement matches the lowest rates we have seen this year and suggests you should call your loan officer to possibly lock in that rate.  The best 30-year fixed rates are 3.375 percent (3.507 percent APR) and 3.500 percent (3.561 percent APR)

The 15 year fixed rate has shown notable improvement. We want to draw your attention to the 2.875 percent (3.078 percent APR) against the 3.000 percent (3.076 percent APR). The closing credit given to the 3.000 percent loan is large enough that the APR actually comes out lower here, despite the bigger note rate.

Make sure to check in with our website throughout the week. We will have our usual Market Updates and Professional Insight posts, as well as a feature on the Palm Theater in San Luis Obispo for our SLO County Locals blog.

Is Zillow Good Exposure for your Home?

Some Agents wanting to list your home will tell you all the websites they’ll put your home on, including Zillow. The issue with Zillow is that they have this thing called “zestimates” which is Zillow’s automated home value tool. Ask any realtor about zestimates and you’ll see the reaction in their face. A zestimate for a particular home could be off 20% or more (either higher or lower).

If a Zestimate is showing the value for a particular home that’s higher than what you want to list your home at, then I’d say having it on Zillow is a positive. But, if the Zestimate has a price that’s lower than what you want to list it for, then you’re at risk of losing potential Buyers.

The problem is that some Buyers believe the zestimate price is accurate. So when they see your list price is higher, they may pass on even considering your home thinking you are unreasonable in your pricing and not worth dealing with.

It’s easy to check to see what the Zestimate is of your home before you sign a listing agreement with a realtor. If it’s lower than what you want to list at, put in the Listing Agreement that your home will not be displayed on Zillow or you can cancel the Listing Agreement. If you don’t put that in the agreement, then the realtor can just give excuses why they can’t remove it from Zillow once it’s there.

Listing Agent Representing Buyer Means Less Money for Seller

If you’ve read this blog for awhile, you know I don’t think “dual agency” is a good idea. Dual Agency is when the Listing Agent represents both the Seller and the Buyer. In a dual agency transaction, the Agent CAN NOT provide any guidance to either party in the transaction. All they can do is facilitate the transaction (the paperwork part of the transaction). The Agent can’t answer Buyer questions like “how much should we offer?” or Seller’s questions like “should we counter?”. Answering questions like this would mean that the Agent is not being neutral to both parties. If an Agent does answer questions like these, then either party can sue the Agent.

Redfin, a real estate brokerage, released a study they did of 22 areas and found that a home was discounted more from the list price in dual agency transactions. They found that the Seller received $9,000 less in dual agency transactions for home listed at $60,000.

So if a Seller starts with an Agent that is 100% working for them, once dual agency happens the Agent no longer is working for them, but 50/50 for both the Seller and Buyer. Now add that the Seller will get a lower sale price for their home and dual agency is just a bad idea for Sellers.

A lot of Listing Agents will give a commission discount if they represent the Buyer too. While that might make up the lower sale price, the Seller still doesn’t have an Agent that is looking after their best interest.

When you are interviewing Agents to list your home, ask them if they would also represent the Buyer. Then ask them how this is beneficial for you, the Seller. That should give you an indication if the Agent’s priority is to represent you vs. making more money for themselves.

Rate Update

Rates costs got a bit worse as the week wore on, and by Friday, February 17, we saw about a quarter (0.25) price decline across the board. The pricing might have been affected by a few of the strong economic numbers that came out last Thursday, as money moved out of bonds and back into stocks. In this case, concern about European (Greek) debt took a back seat to optimism about the U.S. economy.  At the time of this writing on Friday at noon, the Dow had edged up about nearly 50 points to 12,952.56.

January housing starts exceeded expectations and improved 1.5 percent from December. The 699,000 unit pace marked a 9.9 percent jump year-over-year from January 2011.

Yet again, weekly jobless claims dropped. For the week ending February 11, initial claims decreased by 13,000 to 348,000 overall. The four-week average fell for the 10th time in 11 weeks to 367,000.

With the cost increase, we are highlighting the 3.5 percent rate for the 30-year fixed (3.602 percent APR) and the 3.0 percent rate for the 15-year fixed (3.239 percent APR).

Lastly, we just want to highlight a great piece written by Central Coast Lending loan officer Jason VanDyke about refinance. We writes about the somewhat surprising notion that at times it can be better NOT to take the lowest available interest rate. Make sure that when you are shopping for a loan officer, they are putting together a plan customized to your individual situation and needs.

$25 Billion Deal Aims to Help Struggling Homeowners

Last week, Federal and State officials, and five of the nation’s largest home lenders announced a $25 billion settlement aimed at helping struggling homeowners and stabilizing the housing market. The deal marks a settlement for charges that the banks executed improper foreclosures, and aims to help homeowners by helping them reduce their principal and/or refinance.

The plan will attempt to extend help offered for underwater homeowners. The Home Affordable Refinance Programs (I and II) aimed to expand refinance eligibility (by eliminating Loan-to-Value restrictions), but it was limited to homes backed by Freddie Mac and Fannie Mae. This new program will again expand availability of refinance beyond loans backed by such Government sponsored entities (GSEs).

For recent homeowners, the plan has three key components: principal reduction, refinancing and foreclosure payments. It will target as many as 1 million homeowners for an average of $20,000 per borrower in principal reduction and 750,000 underwater homeowners to refinance to lower interest rates.  The plan also will give homeowners who had their homes foreclosed upon between January 1, 2008 and December 31, 2011 up to $2,000 each.

For a more complete rundown, including complete allocations of dollars and our commentary on its effect, see our article on our website HERE.

Interest rate costs have improved over the past week, and we are now at the lows we saw two weeks ago.  With the cheaper cost, we are advertising 3.375 percent (3.582 percent APR) for the 30-year fixed and 2.875 percent (3.187 percent APR) for the 15-year fixed.

Last week we saw a bit of choppy behavior on the market, largely based on the continuing roller coaster of the Greek Debt issue.  Today, the Dow finished at 12,874.04 and the S&P 500 finished at 1351.77.

Less Photos on Zillow, Trulia, Realtor.com

The San Diego MLS today announced that 3rd party sites that get MLS listings through “listing syndication” will soon be limited to 4 photos per listing. This means that sites such as Zillow, Trulia, and Realtor.com will not be able to display all the photos that are part of the MLS Listing. The San Diego MLS is giving the sites 60 days to implement the new policy or the sites will no longer receive MLS listings.

This new policy is meant to drive people to Broker and Agent sites, like SloCountyHomes.com. If the local Central Coast MLS adopts this policy as well,  SloCountyHomes.com will still be able to display ALL the photos for a listing.