Do you know who your agent represents? A lot of people still believe that all Real Estate agents work for the seller, but that is no longer correct. All agents are able to represent the seller, the buyer or both. Not all agents choose to work with buyers and just concentrate on getting listings and selling their own listings. Other agents choose to work only with buyers and don't bother to list properties for sale. Most agents do both and that's where some of the confusion comes into play. How do you find a good buyer agent? Look for the initials ABR after the agent's name. It stands for "Accredited Buyer Representative" and indicates that this agent has pursued additional education and joined the Real Estate Buyer's Agent Council (REBAC). Generally this means that they want to work with buyers and enjoy doing so. The may still have their own listings for sale, but they will make sure to show you all listings that may meet your criteria. If an agent is only showing you their own listings, that's an indication that you may need to look for another agent. For more information about buyer agency, click here.

Just the other day, one of my clients asked me what I thought would happen with interest rates this year and whether or not she should lock in a rate now or wait a little longer. She is buying a new construction home that will settle in January/February of 2009. To get an answer, I contacted Richard Miller of Capital Mortgage Finance. He lives with this question day in and day out and here are his thoughts:

It's not as simple as stating a number that applies to everything.  There are rates for banks, rates for consumers, some for new, used, personal, homes, etc.  There are many different rates for different items.  When talking about mortgage rates, all lenders follow a similar guide, which is the bond market.  The 10 year and 30 year bond markets are a general guide to where rates will be any given day for a 30 year fixed mortgage.  Of course this rate can change at any time, so trends are sometimes difficult to find.
 
Historical data show that rates tend to move down in a recession and move up when inflation is high.  This coincides with the flow of money via the Federal Reserve in connection with the economy, and whether the economy is slow or hot.
 
Our current situation is unique.  Inflation is rampant with gas and food prices moving upwards, but the economy is slow and house prices have slipped.  At no other point in history have these three things occurred together.  The Federal Reserve is trying to figure out the next move, and no one is sure what it is.  Should rates go down, go up, or stay the same?  Let's look at all three.
 
Go down:  The Federal Reserve has set the Prime rate at one of the lowest levels ever to combat the slow economy and help shore up the financial industry which was hit with too many sub-prime loans and foreclosures.  The lower rates have helped, but rates are very unlikely to go lower, since lowering rates more would make inflation an even greater issue.
 
Go up:  Rates should go up to fight inflation and strengthen the dollar, all things that are hitting the pocketbooks of Americans today.  The down side is that if rates go up, the financial industry will have a more difficult time keeping the money flowing while they're trying to shore up the loan loss side of the balance sheet.  Obviously more expensive money to the Bank means a lower spread.  An unfortunate Catch 22.
 
Stay the same:  This is the likely outcome in the short term up to the Election.  Today and tomorrow (August 5 & 6, 2008) the Fed meets and we’ll have a better idea after they speak.  The best reason for status quo is that in the short term, Banks still need the lower short term funds rate, even though inflation is very high. Gas prices have moved downward by 20% in the last 30 days, which will help the inflation front.  Home prices are still shaky, and mortgage rates already include a risk premium making long term rates for a 30 year fixed fairly steady at @6.50%. 
 
Richard’s best guess is that mortgage rates will hover between 6.50%-7.50% through the election and then all bets are off, depending on who wins in November.

In the latest newsletter from the National Association of Realtors for the Senior Market, Real Estate Matters: News & Issues for the Mature Market, they talked about job opportunities for Boomers. It spoke to me directly since I am a Boomer and I am working my way through my 60s. I was fortunate that I found a new career in Real Estate. It allows me to be very independent and to work on my own schedule. For me that means 24/7, but that is by choice, not because anyone else tells me what to do.

When choosing a new career at this age, it’s important to find something that interests you but also takes advantage of your background and abilities. I had spent 30 years in the technology business in sales and marketing management. Since the Internet and technology have totally changed the real estate industry, it was a perfect fit for me. Back in the days of the listing book when everything was manual, I would have hated it.

As a Realtor, I also chose to focus on working with Boomers. From past experience, I know it’s difficult to try to be all things to all people. By specializing, I can be more knowledgeable about things that matter to people at an important time in life. Selling the family home, buying a new home or moving to a new area is a big decision. I can relate to these decisions and to the people dealing with them.

What can you take from your previous career into your second act?

 
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1. Location is number ONE. If you want a premium location on a golf course or on a pond you may find a resale home in a better location than the builder can provide.
2. Quick settlement. You’re ready to move and don’t have to sell another home before you buy. With a resale home, you can negotiate a 30 – 60 day settlement. With a “to-be-built” home, you may have to wait 6 – 9 months.
3. Freedom to choose a mortgage company and settlement company without losing “incentives” from the builder. Often the savings are balanced by higher fees.
4. No construction zone. Builders usually concentrate on one section at a time. If you buy in a section that is already complete, the streets will have the final paving and there won’t be the dirt and noise of construction.
5. Lower settlement costs. Typically, settlement costs are lower on a resale than they are with new construction. In Delaware there is a 3% transfer tax on each and every real estate transaction. On a resale that 3% is split between the buyer and seller; with most new construction, the entire 3% is paid by the buyer. You can also save on surveys and other costs.
6. Punch List complete. Every new home ends up with a punch list at about one year. If you buy a home that is a year or two old, those items have already been taken care of. Even major design flaws or construction errors are generally uncovered and dealt with in the first year.
7. Time to decorate. Builders usually recommend that you wait at least a year before painting or wall papering. That way, any nail pops or repairs that have to be made at that one year mark will be made before you do custom painting.
8. Model or elevation. If you know what model home or specific elevation or floor plan you want to buy, the builder may not have that particular home available within your time frame.
9. Price. In a buyers market, the price you pay for a resale may include a premium lot and upgrades that would cost you more from the builder. And, don’t forget about the expensive blinds and custom window treatments you won’t have to purchase.
10. Choice. When you look at the builder’s models, you may make a decision based on upgrades or décor and then find that the home you can afford looks nothing like the model. With a resale, you see exactly what you are buying and what is around you.

The media still reports a large inventory of new homes but where are they? Not in Delaware. The days of new home builders continuing to build regardless of sales are behind us. Much of that inventory was blown out last year as builders learned again about the rules of supply and demand. For cash buyers or those who have already sold their home, the selection of homes ready to be occupied is dwindling. This is good for sellers of  nearly new homes in sought after communities. And, when more buyers begin to sell their homes, resales will become even more attractive.

Demand is growing for retirement homes in Delaware but it has been delayed by the inability of buyers to sell their existing homes. When those markets begin to improve, just watch the inventory disappear and sales of existing homes grow. It's already begun.