The interest rate hike last week and its impact on mortgage rates

The interest rate hike last week and its impact on mortgage rates

Welcome to Ask the Colorado Dream House Team

Topics:
✔️ The interest rate hike last week and its impact on mortgage rates. 
✔️ How buying and selling a home can be a win-win for both parties
✔️ How you know if your offer is too low which may be insulting to the sellers

Full Transcript:

00:01                                     Hi everyone and welcome today’s show of ask the Colorado Dream House team. I’m your host, Dan Polimino, coming here from Denver, Colorado. Hope you’re doing well this weekend. If you’re new to the show, welcome. We talk about everything that is real estate buying, selling, or investing in real estate, and it doesn’t matter what part of the country you live in, you can be here in Denver or you could be someplace in California, Texas, Florida, or Arizona. Uh, what we talk about here comes from years and years of experience and thousands of transactions. So use this information to help you strategize your particular real estate strategy. Uh, we are always open and welcome to questions so you can leave them right here on Facebook. We’ll sometimes use those questions here on the show, or you can call us at the Colorado Dream House team [inaudible] to five or a team@Coloradodreamhouse.com. And if we can help you buy, sell, or invest in real estate, we would love to do that.

01:02                                     Two things we’d like to accomplish. Every show. We like to give you some market information and we’d like to answer your questions. So let’s get to the first segment today, which is called news you can use, and I don’t know if you saw about a week ago, right around the 20 first, uh, the Fed chair, the new Federal Reserve Chair, Jerome Powell, made his first rate increase of [inaudible]. Now he’s kind of telegraph this and came out and said that he expects to do three rate increases over the entire year. And this was the first of three rate increases. He raised the Fed rate by 25 basis points. And the question is, well, what does that mean for you as well? When they raise the Fed rate, this is the money which they loan banks, it puts downward pressure on mortgage rates. And so what did mortgage rates do with powells announcement? Nothing.

01:58                                     They didn’t do anything because they had already anticipated this. They knew that Paul was going to raise the rate, and so they had started raising their own rates. So this increase, this announcement of a rate increase was already baked into the cake. OK? Uh, the mortgage interest rates that you’ve been seeing for the last several weeks already anticipated a rate increase. And if you take a look at rates today, they’re hovering right around four point two for a 30 year fixed. I’ve seen some as high as four point four for now, for all of you who think the sky is falling and [inaudible] is absolutely crazy. I just want to remind you that back in the year 2000, the rate was eight point two percent and that was just before we got into a real boom and then the crash and then the recovery. But again, when I bought my house, the interest rate was eight point two, one.

02:58                                     So four, four, four, four point two, five looks pretty good right now. Now listen, that doesn’t mean that you know, you can just sit on the sideline and not do anything because again, I, I take Paul that his word, I do believe there’s going to be two more rate increases and some people are speculating that we could be pushing that five percent mark, that we may see a five percent interest rate. Now that’s a dramatic jump from four percent to five percent in the course of 12 months and that is significant dollars to you on a month to month basis. And again, depending on what price home you’re purchasing, it could be three, $400 more a month when you move a full point. So again, don’t sit on the sideline. If you were thinking about buying a home and interest rate is important to you because you’re getting a mortgage, don’t wait for the next two rate increases.

03:54                                     All right, that’s the news you can use. Ah, Dear Colorado Dream House team. I have heard you say when you’re buying or selling a home, you try to make it a win. Win for both parties. Can you explain? Yeah. You know, this is a deal where the seller wants to sell and get the highest price for their home and with as little money out of their pocket for inspection items and they’re hoping that it appraises in the buyer wants to buy the home for the best price they can and get everything fixed and it just sets itself up for a natural confrontation. It does. And so I say to people, listen, you want to buy this home in, you want to sell this home and let’s just come together and let’s give the buyer a couple of wins that they can feel good about and let’s give the seller a couple of wins that they can feel good about and let’s have a smooth transaction where the buyer ends up being really happy that they got the house they want and the start their life in that brand new home and the seller is really happy because they got the price they wanted and they get to move on with their life.

04:59                                     Let’s make it a win, win for both parties. Now you’re saying, well then doesn’t that. Isn’t that the way it works now? No, it doesn’t. We sit in an extremely contentious atmosphere where the whole mindset right now is, how do I get over on the other guy? How do I get one better than the guy that I’m negotiating with on the other side of the table and as a real estate agent, I find myself many times is trying to be an impartial referee between the two parties to see if I can make it a win win, but ultimately it’s your decision about how you want this transaction to go. It can either be smooth, easy, and pleasant, or it can be as contentious as hell. It’s really up to you. All right, dear Colorado Dream House team. How do I know if my offer is too low and I may be insulting the seller?

05:52                                     Great question. You know, I understand your position as a buyer. Again, you want to see if you can get the best price you can on that house, but if you go too low, you will insult the seller. You will start these negotiations off on what I call the wrong foot, and then that becomes a contentious transaction. So don’t do that. Go back to your real estate agent. It’s one of the reasons why you have a real estate agent representing you on the buy-side. Ask them to pull the comparables on that home before you write your contract, before you write your offer, talk about what homes are selling for in the neighborhood. Are they selling at 96 percent of asking price on average, what are the average days on market? Are there any exact matches to that house that have sold within the last three or six months?

06:38                                     Talk about what the data is telling you and then make a decision on how to make a fair offer, and if you make a fair offer, you’re probably not going to be insulting the seller and the seller will counter you. Trust me. I’ve represented plenty of sellers where the offer comes in so ridiculously low that we just turned to them and say, I’m sorry, you’re offer is rejected. And then the buyer’s agent says, well, aren’t you gonna Counter? Aren’t you gonna counter enhancers? No, we’re, we’re not going to counter. When you decide that you want to be reasonable about the price, then we’ll have a conversation. So don’t go down that road because it gets things off on the right foot, but rely on what your agent tells you as data and what you know and believe to be true about the comparable sales in the market.

07:25                                     All right, dear Colorado Dream House team. What is a post occupancy agreement? Well, it simply goes like this buyer makes a contract offer to seller and they set a closing date of say, May 1st buyer as a little inducement to the seller says, and we’ll give you two weeks after closing to stay in the house. It’s called the post occupancy agreement. Now, why would a buyer do that? Well, maybe the seller needs to stay in the house a couple of weeks after closing. Maybe they’re buying another house and they need the money from the closing and then they can move out. But maybe the kids are trying to finish school and they need a little more time and they don’t want to disrupt them at the end of school. There’s lots of reasons for a post occupancy agreement. Maybe somebody just needs more time to find a replacement home. Alright, but post-occupancy agreements work well in the state of Colorado because the real estate commission came up with a special form that really outlines exactly what the responsibilities of the buyer and the seller are during this post occupancy.

08:27                                     Whether or not there’ll be rent paid, whether or not this a security deposit, how are you going to handle renter’s insurance and liability insurance? What about the utilities? Who’s paying the gas and the electric and the water all spelled out on this one page form that’s really done very, very well. It can be a very simple process. Now listen, the form isn’t perfect. It doesn’t answer all of the questions and it doesn’t solve all the problems, but it does better than most I’ve seen in other states and that’s a post occupancy agreement. If you want to talk to me about how it can help you on the sell side or how it may help you on the buy side. A lot of times we’ll see buyers agents that are competing for a house, say to me, would it be beneficial to your seller if I give them a post occupancy agreement with our offer to the top of the pile?

09:14                                     There’s lots of ways you can use it. Again, call me seven to zero, four, four, six, six, three to five, and let’s talk about how we can use it to your advantage. Alright, that’s the questions for this week. I want to remind you about our 2:50 marketing guarantee. If you’re thinking about selling your home, interview the Colorado Dream House team and take a look at our marketing plan and then we invite you to interview our competition and look at their marketing plan for your home and if their plan is better than ours, you can hire them and we’ll pay you $250. If that simple again, for details, go to Colorado dream house.com forward slash [inaudible]. All right everybody. Have a great week. We’ll talk to you next week.

 

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