Comments on: NAR should put its money where its mouth is

By: Boston renter

Boston renter — Mon, 22 Dec 2008 23:42:24 +0000

Wow bostonrealestate, way to show the customers that all you care about is getting the last dollar of your commission. Seems to me that a productive agent would rather make the sale and get 2.5% rather than not make the sale and get 3.0% why doesn’t it look like that to you? Because you are not making any sales? With that attitude I would not be surprised.

Thanks John for another interesting post.

By: John Keith

John Keith — Mon, 22 Dec 2008 23:24:46 +0000

Hi.

Scott, good point about the loan assistance being illegal. You could make the commissions “rebates” and the buyers can decide what to do with it.

NAR estimated that half a million (500,000) buyers would take advantage of a subsidized loan rate, if it went as low as 4.5%. I don’t know how they came up with that number.

By the way, NAR is suggesting other incentives. One iinvolves the $7,500 tax credit that was passed by Congress this year. NAR is suggesting that the credit be forgiven, in effect giving homeowners $7,500 in cash.

NAR also wants to forbid banks from entering into the real estate business. They’ve been pushing that for years.

By: Scott

Scott — Mon, 22 Dec 2008 23:10:16 +0000

First, I’m a loan officer, not a real estate agent, so I may be off on some of my assumptions. As such, I’m going to defer to your numbers (Agents are really splitting 5-6%, not 3-4%?)

Anyhow, at 5-6% – a 1% contribution to getting a lower interest rate, EVEN IF IT WERE LEGAL (it’s not) – would be slightly less than a 20% drop in income for the real estate agent. Considering many agents in crowded markets like Boston struggle to get by on $35,000 to $45,000 a year, a loss of $7,000 – $9,000 in income is pretty significant. Let’s see what they’d get in return…

Currently the BEST buy-down rate being offered by a reputable bank is 50 basis points per 1%. Most places are around 35 – 40 bpp per 1%. That means, on a $300,000 loan, a $3,000 (1%) would drop the rate from 5.5% to 5%.

In other words, the payment from $1,703.37 to $1610.46

That’s less than $100 a month savings for about 10 homeowners for every struggling real estate agent making less than the homeowners you are considering subsidizing.

If $100 a month is what is forcing people into bad situations, maybe they should reconsider signing a $300,000 loan…

By: Best Idea Yet

Best Idea Yet — Mon, 22 Dec 2008 05:53:15 +0000

BTW, I meant to add that the best “fix” at this point is to let real estate valuations return to “normal” levels and to approve mortgages based on income, assets, and creditworthiness, rather than race, gender, or ethnic origin. Sure, it will frustrate some politicians, but I prefer not to repeat this painful experience.

By: Best Idea Yet

Best Idea Yet — Mon, 22 Dec 2008 05:50:51 +0000

Seems to me the problem is one of fundamentals: income is too low to support the prices (at least nationally).

Here in Boston, if we lose a few thousand white collar jobs earning $125, 150K+, I suspect it will have a significant impact. Unemployment is up to 5.9%; how high will it go, and how much will the six figure wage earners be affected?

I suspect homes are still slighly overvalued in the BH, SE, NE, Charlestown, BB neighborhoods, and job losses among the high wage earners will start forcing the situation.