The Fed Just Cut Interest Rates: Is Now a Good Time to Buy a House?

Key takeaways:The Fed just lowered their interest rate benchmark by 0.5%, which may be good news for homebuyers waiting for lower mortgage rates.If you want to beat the competition, now is a great time to buy a house.Daily average mortgage rates dropped to 6.12% on Monday before the announcement, giving buyers thousands of dollars in buying power compared to July. Don’t wait to buy; buyers who were scared off by high rates have started entering the market, which may boost prices.As of Monday, September 16th, daily average 30-year fixed mortgage rates have fallen to 6.12%, their second-lowest level in nearly two years. This is a nearly 0.3% drop from the initial decrease on August 5th and far below the 7.5% peak in April. In fact, homebuyers today have gained over $30,000 (around $200 per month) in purchasing power since just the beginning of July. Median monthly housing payments fell to $2,534 on September 1st, the lowest level since January.Plus, the Fed announced a surprising 50 bps (0.5%) rate cut in their meeting on September 18th. More gradual 25 bps cuts are expected from here on out. Markets were expecting a faster round of cutting ahead of today’s meeting, so mortgage rates will likely tick up slightly in the next few days before leveling out. In large part because of steadily improving inflation, mortgage rates have slowly decreased since May and have fallen by over 1.10% since this time last year. Larger year-over-year improvements are possible as we head into October, which last year saw rates climb past 8% for the first time in over 20 years.More good news for homebuyers: total listings are also up 20% compared to last year, as more sellers enter the field. The market seems poised to give buyers a break. So, if you’re considering buying, you might be wondering “should I buy a house now or wait?”Is now a good time to buy a house? The short answer: Yes, if you have the means, it’s a good time to buy a house before the market catches up. Waiting for rates to fall further leaves you at risk for increased competition among buyers and subsequent price hikes from sellers. Sales are still sluggish, so now may be the time to act. Buying a house now means you’re also maximizing your investment potential. Lower rates save you money over your loan term and mean more of your mortgage payments can go towards building equity. It’s worth noting that the market has been topsy-turvy recently, though. For example, higher mortgage rates typically push house prices down, but they have had the opposite effect over the past two years. Also, declining inventory typically leads to more competition, but prices have been too high for many buyers to afford, causing some homes to sit unsold and others to sell in a few days.Additionally, economists aren’t positive about what will happen with mortgage rates in the coming months, and housing prices are still near a record high. This week started with good news, but it’s important to be prepared for any surprises that may come. Will mortgage rates fall further in 2024?Today’s mortgage rates reflect what investors think the Fed will do. Investors believe the Fed is done limiting inflation and expect a gradual decline in mortgage rates through the end of the year. In other words, economists don’t expect mortgage rates to drop significantly more than they already have, because rates have already priced in the recently announced interest rate cuts.How did we get here? In the past decade, there has been a severe shortage of homes. This is part of what caused the housing boom in 2021-2022; too many buyers were fighting for a tight supply of homes, leading to skyrocketing prices. Record-low mortgage rates also fueled the frenzy. (Low supply was partly due to a chronic underbuilding of homes since the 1980s.) However, in 2023 and 2024, as construction rebounded and inventory began slowly recovering, prices kept rising even as mortgage rates remained high. Higher rates typically cause a drop in demand and prices. However, this didn’t happen, because many homeowners had pandemic-era rates and were unwilling to give them up, creating a further shortage of homes for sale. This was a unique trend that continues today – the national median sale price hit a record high in June and many people are still avoiding the market altogether. Those who are buying are often doing so in affordable places like Texas and Upstate New York. Even though inventory is rising and sales are low nationwide, house prices are at record highs and show little signs of falling. However, the recent dip in mortgage rates has given homebuyers a burst of hope.Home sellers should get ready for competition Recent drops in mortgage rates sets the stage for more buyers entering the market, meaning more competition for listings. This is because house hunters scared off by high mortgage rates have been waiting on the sidelines for years, especially as inventory flagged due to sellers wanting to hold on to their pandemic-era rates (the lock-in effect). Now that rates are dropping, more buyers are deciding to enter the market. Should you lock in your mortgage rate today? If you have the means, now is a great time to lock in a low mortgage rate. Rates haven’t been this low in nearly two years. Lower rates mean you can qualify for a larger loan amount or enjoy lower payments within your current budget. If rates still feel too high, you can buy down your mortgage rate, too. All-cash buyers hoping to avoid mortgages altogether should also act now to avoid probable price hikes as rates continue to drop. Final thoughtsIf you’re in the market for a house and have been scared off by high rates, now is a great time to connect with an agent and start your home search. Rates are expected to continue trending slowly downwards, and the market is gaining momentum. The longer you wait, the more competition you’ll see.The post The Fed Just Cut Interest Rates: Is Now a Good Time to Buy a House? appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

Colorado Real Estate Commissions: What You Can Expect in 2024

Understanding real estate commissions is key when buying or selling a home in Colorado, as they significantly impact your overall costs and negotiation strategies. With new rules introduced in 2024, the way these commissions are communicated has become clearer, giving both buyers and sellers more transparency and control over fees.Whether you’re entering the housing market for the first time or have prior experience, this guide will provide insights into Colorado real estate commissions and what you can expect from the market in 2024.Current state of the Colorado housing marketBefore diving into the specifics of real estate commissions, it’s important to review the broader market trends in Colorado. These market factors can influence both buying and selling decisions.Median Home Sale Price$594,200Housing Supply35,760 (+22.3% YoY)Homes Sold Above List Price20.5% (-5.9 pts YoY)Understanding real estate commissions in ColoradoWhat are real estate commissions?Real estate commissions refer to the payments made to agents for facilitating a home transaction. These fees, typically expressed as a percentage of the property’s sale price, are only paid upon closing. They cover the professional services provided by the agent throughout the homebuying or selling process.Who pays the commission?Historically, sellers have paid for both their agent’s commission and the buyer’s agent’s fees using the proceeds from the sale. Starting August 17, 2024, new rules will require buyers to agree to their agent’s commission rate in writing before touring.While buyers can still negotiate for the seller to cover these costs, this update allows for more transparent discussions. It gives both parties greater control over how much of the buyer’s agent commission, if any, the seller will cover during negotiations.Average real estate commission rates in ColoradoReal estate commissions in Colorado can vary depending on several factors, including the property’s location, current market conditions, and the agent’s service offerings. These rates are negotiable, allowing buyers and sellers to work out a fee structure that suits their budget.Here’s an example of typical real estate commissions based on median home prices in some of Colorado’s largest cities:CityMedian Home Sale Price1.5% Real Estate Commission3% Real Estate Commission5% Real Estate CommissionDenver$585,000$8,775$17,550$29,250Colorado Springs$464,000$6,960$13,920$23,200Aurora$475,000$7,125$14,250$23,750At Redfin, we strive to offer exceptional value. Sellers can take advantage of our listing fees, which start at just 1%.* For buyers, our fees vary by location but are designed to be competitive, helping your offer stand out and increasing your chances of success in the homebuying process.Can you negotiate real estate commissions in Colorado? Yes! Real estate commissions in the U.S. are not set by federal law, so there’s room for negotiation. The final commission rate depends on several factors, including the complexity of the transaction, the services needed, and your relationship with the agent.When negotiating commissions, it’s important to consider:The level of service your agent offersThe marketing plan for the propertyThe agent’s local expertiseSellers may have an advantage in negotiating lower rates if their home is likely to sell quickly or is in a high-demand area.Tips for a Successful NegotiationCompare different agents and their commission structures before making a final decision.Discuss the possibility of performance-based commissions, such as offering a higher rate for a quicker sale or a higher-than-expected selling price.If your property is located in a sought-after neighborhood, use that as leverage to negotiate a lower commission.Colorado real estate commission FAQsWhat are the changes to real estate commission? There have been two notable changes: First, buyers must now agree to their agent’s commission rate in writing before beginning home tours. Second, in some markets, agent commission details are no longer visible on MLS listings. Learn more about the real estate commission changes here. How do the changes impact buyers in Colorado? Buyers are now required to sign a contract with their agent outlining the commission rate before viewing homes. However, buyers can still negotiate with sellers to cover part of their agent’s fees during the offer process.How do the changes impact sellers in Colorado? Sellers will continue to negotiate the buyer’s agent commission with their listing agent, if any. Any changes or requests regarding these terms will be handled through negotiations during the sale process.How do you find a real estate agent in Colorado? If you’re looking to buy or sell a home in Colorado, Redfin can help. Contact a Redfin agent to get started today.How can you avoid fees? Selling a home on your own, also known as For Sale By Owner (FSBO), allows you to skip paying commission fees. However, FSBO transactions require more effort and responsibility, including marketing your property, coordinating showings, and handling all paperwork. *Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.The post Colorado Real Estate Commissions: What You Can Expect in 2024 appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

Can You Negotiate Real Estate Commissions? Yes, and Here’s How

When buying or selling a home, understanding real estate commissions is essential. These fees, typically a percentage of the final sale price, compensate agents for their services in guiding you through the process. However, contrary to popular belief, real estate commissions aren’t set in stone and can be negotiatedWith recent changes due to the NAR settlement, you may be confused about how agents are paid and whether you can negotiate real estate fees. In this article, we’ll break down how commissions work, how Redfin handles them, and provide tips on negotiating to save you money.What is real estate commission, and how much is it?  A real estate commission is a payment the homebuyer or seller makes to their agent(s) for their services in helping them purchase or sell a home. The commission is often a percentage of the final home sale price and is exchanged during the final transaction at closing.A common misconception is that there’s a set fee or percentage for real estate commissions across the industry. In reality, commissions are negotiated between the agent and the homebuyer or seller, and can vary.Can you negotiate real estate agent fees?Absolutely! Real estate commissions have always been negotiable, and that remains true even after the recent real estate commission changes. Commissions aren’t regulated by law, and can vary by area, giving both buyers and sellers the opportunity to negotiate these fees.5 Tips for negotiating real estate commissions Negotiating realtor fees can seem like a daunting task, especially if you’re a first-time homebuyer or seller. However, negotiating real estate fees has always been allowed and there aren’t any laws against doing so. Let’s take a look at some of the strategies that can help you lower commission fees. 1. Do your researchUnderstand the typical commission rates in your area so you have a starting point for negotiations. Rates can vary depending on the market, the property type, and the agent’s experience.2. Leverage competitionInterview multiple agents and use competing offers as leverage to negotiate lower fees. Agents may be more willing to reduce their commission to win your business.3. Highlight your situation If you’re selling a high-value property or buying in a hot market, mention this to the agent. A quicker sale or higher price point may motivate them to lower their fee.4. Ask about discounts for repeat businessIf you plan to sell or buy another property with the same agent, ask if they’d offer a discount for your loyalty.5. Be upfront about your budgetSome agents may be willing to adjust their fees if they know you’re working within tight financial constraints, especially if it helps close the deal.How does Redfin stand out when it comes to commissions?At Redfin, we’re committed to offering consumers the best value, which is why we charge sellers a listing fee as low as 1%.*For buyers, our fees vary depending on the market but remain competitive, as we understand that these costs can influence whether your offer is accepted or not. We also provide extra savings through our Sign & Save program. If you decide to hire your Redfin agent before your second home tour, we’ll reduce our fee by 0.25%.A final note on negotiating real estate commissions Negotiating real estate commissions can seem intimidating, but it’s a perfectly acceptable and often beneficial part of the home buying or selling process. By doing your research, comparing agents, and understanding your leverage, you can potentially lower fees and save money. Remember, real estate commissions are flexible, and with recent changes in the industry, transparency and negotiation have become even more important. Whether you’re a buyer or seller, don’t hesitate to discuss fees with your agent and advocate for the best deal possible. *Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.The post Can You Negotiate Real Estate Commissions? Yes, and Here’s How appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

What is a Buyer Agency Agreement, and Is It Required?

A buyer agency agreement outlines the formal relationship between a homebuyer and their real estate agent. But is it something you really need, and how does it impact your home search? With the recent National Association of Realtors (NAR) settlement, which took effect on August 17, the way real estate agent fees are communicated and negotiated has changed. Whether you’re searching for a condo in Chicago or a home in Miami, this Redfin article covers everything you need to know about buyer agency agreements and how these new rules might affect your experience.What is a buyer agency agreement?A buyer’s agency agreement, also known as a buyer’s representation agreement, is an agreement signed by a prospective buyer. It authorizes a licensed brokerage firm, and usually a specific real estate agent, to represent the buyer in buying a home. The specifics of these agreements vary, but they usually outline the agent’s role in assisting with the home search, negotiations, and closing process, and specify how the agent will be compensated if a purchase is made. While the terms can vary by market and brokerage, the agreement confirms the buyer’s commitment to work with that agent. The length and terms are usually negotiable, offering flexibility for both the buyer and the agent.Redfin’s buyer agreementsRedfin’s approach to buyer agreements is designed to be flexible and straightforward. Before the first home tour, Redfin requires clients to sign a simple fee agreement, which can be done online with one click. This agreement doesn’t obligate the client to use Redfin—it merely outlines the fee Redfin would charge if they represent the buyer. We think consumers should have a chance to get to know their agent before being asked to sign a contract to work exclusively with them. At Redfin, clients are only required to sign a formal buyer’s agency agreement when submitting an offer (unless required earlier by local law). If the offer isn’t accepted, there’s no obligation to continue working with Redfin, and clients can cancel the agreement at any time.Buyer agency agreements at other brokeragesAt other brokerages, buyer agency agreements may come with different terms and conditions. Some agreements could require you to pay an agent for their time and services, even if you decide not to purchase a home. This might include covering costs related to home tours, research, or administrative work. Additionally, many brokerages now ask for exclusive buyer agency agreements to tour, which bind you to work with that agent for a specific period, limiting your ability to switch agents or avoid fees if you don’t proceed with a purchase. Always review the agreement carefully to understand your obligations before signing.Is a buyer agency agreement required?The new industry-wide rules require a written agreement that explains the agent’s fees before touring. Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home.Some agents at other brokerages require buyers to sign a full buyer agency agreement before touring, obligating them to work exclusively with that agent for a set period of time. Redfin does not.What happens if you don’t sign a buyer agency agreement?While you can work with an agent without signing a formal contract, doing so can lead to complications. For example, without an agreement, there may be misunderstandings about the agent’s obligations, and the agent may not prioritize you over clients who have signed agreements. Additionally, without a formal agreement, you won’t have clear terms regarding commission or the agent’s duties, which could lead to issues later in the process.Buyer agency agreement FAQs1. Is Redfin requiring a buyer agency agreement to tour?No. The new rules require Redfin to get your agreement on our fee before we tour a home with you. We show the fee on Redfin.com when scheduling a home tour. You can sign the fee agreement with one click. Unlike the forms used by other brokers, this agreement doesn’t obligate you to use Redfin; it exists only to set the maximum amount Redfin can charge to be your buyer’s agent.2. Can I work with more than one real estate agent at a time?It depends on the type of buyer agency agreement you sign. If you sign an exclusive right-to-represent agreement, you’re committing to working with just one agent. However, if you have a non-exclusive or open agreement, you can work with multiple agents and only pay the one who helps you purchase a home.3. What happens if I find a property on my own?It depends on the terms of your agency agreement. If you find a property on your own, you should still inform your agent, especially if you’re under an exclusive agreement. In some cases, your agent may still be entitled to the commission even if you found the home without their assistance. This is why it’s important to clarify how the agent will be compensated before signing the agreement.4. What should I do if I’m unhappy with my agent after signing an agreement?If you’re unhappy with your agent, many agreements will have a clause allowing you to terminate the contract under certain conditions. It’s important to review the termination terms before signing to ensure you can exit the agreement without penalties if the agent’s services are unsatisfactory. At Redfin, you can sign our agreement and cancel it later, by emailing your agent that you wish to cancel.5. Do I have to pay the agent if the deal falls through?In many cases, the buyer does not owe the agent any commission if the deal falls through, provided you haven’t breached any terms of the agreement. However, it’s essential to review your contract for any specific clauses that might address this scenario.6. Can I switch agents if I’m under contract with one?You can switch agents, but only if your agreement allows it or if you’re able to terminate the current agreement. Switching agents while still under contract with one may lead to legal or financial issues, so it’s important to understand the termination and exclusivity clauses in your agreement. The post What is a Buyer Agency Agreement, and Is It Required? appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.