Monthly Archives: December 2008

What is a buyers agent, and why would I want to use one?

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Posted previously on Active Rain

We see many folks out there who simply do not understand the value of having a buyer representative to help assist in looking out for their, the buyers, interests… why is that?It seems sometimes, consumers feel that they might get a better deal when the purchase a house IF THEY USE THE LISTING AGENT. I must say, that I have not seen a buyer save any money without a buyers agent to represent them… So it cant be that they actually save any money… so why not use a buyer representative?

Consumers seem not to understand that the listing agent is by default looking to get the best price for the seller, so there is of neccessity a conflict of interest in this scenario: How does an agetn represent the interests of the buyer while also representing the interest of the seller? In short, in cannot be done. They may claim to represent neither party, but then what is the advantage to that? So now neither party would have a dedicated representative.

So still, I am at a loss as to why a buyer would not want representation that was for their interest EXCLUSIVELY. You see, many agents will say that they can represent the interest of both parties… they call this DUAL AGENCY. Imagine that? THis would be like having one lawyer represent both you, and the guy who hit you in teh car accident the other day… would you like that? Would you think that you were being well represented? Of course not… but then, why feel that you are being represented when the scenario is the same, but this time pertains to the purchase of say a $300,000 house? The house is likely to cost more than the car accident, yet when it comes to the car, we want our own representation… hmmm…

Buyers: Please visit our page that helps describe the benefits of a buyers representative, and read also the role of the listing agent… these articles apply nationwide, and what ever the name they call it, listing agents represent the seller, buyer agents represent the interest of the buyer, and dual agents exist in neverland, representing neither the buyer or the seller… yeah, right. There is a contract with the seller, and the lising agent gets paid based on maximizing the sale price.

Let us know if we can explain this better for you.

Why Buy Rhode Island Real Estate Now?

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Now is really a good time to buy real estate in Rhode Island! Why? Cuz…

No really, we are hearing that some people are awaiting the new administration of Obama to seek property purchases because they feel that the talk of interest rates going to 4% (really 4.5% has been mentioned) is going to save them tons of money. Is it?

Currently, rates in RI for good credit risks are running about 5% to 5.5%, or near all time lows, given inflation, deflation, and the like. These are great rates, but is it the rate that matters? Of course. But how much of a factor is the rate in the overall purchase of the property?

Generally, as prices rise, interest rates fall… of course, for the recent market, rates have been falling WHILE prices have also been falling. Unusual, but not unheard of. Yet, people will wait for rates to come down further, and perhaps fail to note that the housing market price levels have been stabilizing. Stabilizing means not dropping as precipitously as they have been in recent months. In some markets, prices are actually beginning to fix at current levels, or even appreciate. Not many markets I grant you, but some. As interest rates go lower, the housing price indexes are ceasing the decline, and stabilizing. So if a buyer waits for too long, prices will go up, removing any benefit from the lower rate.

You see, in real terms, houses appreciate generally at between 3% and 5% per year… A 30 year loan generally ends up costing about 2 times what the loan amount is. As prices move, rates move too, and in general terms, a house will cost the same, over the life of the loan, as a ratio of the cost of money to the cost of the property vary, somewhat inversely… for that given market.

We expect that rates may come down somewhat in the next few months, but we are seeing at the same time, that prices are stabilizing. One could argue that the prices are stabilizing BECAUSE of the lowering rates. If the rates move further downward, prices will stabilize even more, and perhaps begin to increase at the normal rate. It becomes a wash… same cost regardless, over the life of the loan.

Of course, most people these days do not remain in the property for the life of the loan. And so they argue that the cost of the house is different than what I state above. Perhaps, But in mortgages, the interest is paid up front in the loan life, and so the cost of the money is eaten by the borrower after perhaps 3 years or so of payments… perhaps as many as 6 years… but the average homeowner remains in a property for about 7 years. So they pay for 30 years worth of interest anyway, regardless of the fact that they do not stay in the house that whole term.

In any event, the market is stabilizing in RI despite the very high unemployment rate of over 10% now. We anticipate that the market will further stabilize over the next 6 months and begin recovery in that time frame… interest rates may be marginally lower in the next few months, so now is in fact a great time to buy.

See our home buyers section for details, and watch our interest rate news postings for mortgage data. Visit us at www.HomeSalesRI.com for a wealth of useful information about purchasing real estate in Rhode Island and Southeastern MA.