Wednesday, January 30, 2008 - What do Rate Cuts Mean to Buyers and Sellers?

The Federal Reserve ("the Fed") cut key interest rates another half of a percent today. I've had quite a few buyers and homeowners ask me if that means mortgage rates will drop some more.

The answer is a resounding "It depends".

The actual Fed Funds Rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. However, mortgage rates aren't generally tied to the Feds Fund Rate. If you have credit cards or loans that are tied to the prime rate, then you could see a change in those rates (though this depends on your actual loan agreement).

Mortgage rates are affected by the bond market, which tends to try and anticipate what the Fed is going to do, as opposed to being directly tied to the Fed's actions. The stability of the overall economy has a lot more to do with mortgage rates than what the Fed does. If the bond market thinks that inflation is under control, then rates should go down. If the bond market thinks the Fed is off it's rocker, then rates would likely go up.

Quite often, the rates do both...drop initially and then rise. Or, they do the opposite. There's just no knowing for sure what the bond-buyers and sellers are going to do. Some say that the cuts could cause inflation fears and that would send the long-term rates higher.

The best advice for those wishing to refinance or those planning to buy is to know your goals and look at the big picture. Worrying over an eigth of a percent here and there can drive you nuts and you'll never move off of dead center.

Stay tuned...

(C) Susan Pruden.

Thursday, January 10, 2008 - Realtors Do More Than Just Sell Houses

As many of you are all-too-aware, once you volunteer to serve on one committee, it's like a sign hovers over your head that says, "Ask me! I don't know how to say no!" Then you're on two committees, then three, then your chairing committees and it can all get overwhelming.

That happened to me several years ago and now I have it down to the ones that really mean something to me. I serve on the PGCAR (Prince George's County Association of REALTORS) Forms Committee, where our goal is to make the 3 pounds of contract paperwork actually cover all the necessary bases. Right now, we're working on a new disclosure that goes into effect here in Prince George's County on January 22nd. Any seller who lives in a Special Tax District must disclose that to a potential buyer before the ink is dry on the contract. It's a good disclosure, aimed primarily at new construction, that only affects three communities, one in Bowie, one in Laurel and one in Greenbelt.

The two committees that are nearest and dearest to my heart are the PGCAR Legislative Committee and the MAR (Maryland Association of REALTORS) Legislative Committee. This year, MAR was very active on a number of issues that affect homeowners. MAR defeated a proposed a sales tax on property management services that would have hurt those least able to afford housing and would have "worsened Maryland's ranking as the 7th most expensive rental market in the country" (this from the current issue of Maryland REALTOR).

Another bill that would have had a major impact on Maryland homeowners who were planning on selling would have created a Maryland Resident Real Estate Withholding Tax. All Maryland residents would have had a 4.75% withholding tax on any gain from the sales of their real estate, if the net proceeds exceeded $250,000 or $500,000, based on the seller's tax filing status. MAR successfully worked to defeat this legislation. Since most sellers are using their proceeds towards another property, this could have created a real money crunch.

These are just a couple of the bills that we worked on last year. I think that the general public isn't aware how much we REALTORS advocate for homeowners, buyers, landlords and tenants.

(C) Susan Pruden.

Thursday, January 3, 2008 - New Year, New Cell Phone

How great it is when your current cell phone contract expires, your cell phone starts to misbehave and Consumer Reports reviews cell phones and providers -- all in the same month?

As you are probably aware, cell phones are a major part of any real estate agent's life. I know we survived without them 'cause I remember those days faintly. But now I text, email, take the occasional picture, and -- oh yeah -- even talk on my cell phone. Via text and email,  I successfully negotiated an offer on one of my listings while in we were in Las Vegas in November, with the buyer's agent here in DC and the seller in Maine.

Anyway, the point of all this is that I need a new phone. My Treo 650 is about to give up the ghost. My contract is up this month and, fortuitously, this month's issue of Consumer Reports has a feature article on cell phones and cell phone providers. Of course, to read the whole thing online, you have to subscribe, but you can pick up a copy at the newstand.

With such heavy email and text use, I'm leaning toward the Blackberry Pearl. Any reviews from Pearl owners out there?

(C) Susan Pruden.