1400 Pinnacle Court #318, Richmond, CA 94801
Sales Activity
There were 2 sales at Brickyard Landing in the first quarter of 2025. Brickyard Realty listed both properties. We also represented the buyer in one of those sales. No other broker closed any of their listings during the first quarter of 2025.
Here are the first quarter sales:
Quarry Court and Brickyard Way Sales
1 two bedroom “B” plan sold for $585,000
1 one bedroom “A” plan sold for $482,000
There were no sales in the Pinnacle Court building.
Market Analysis
The market at Brickyard Landing was very slow during the first quarter of 2025. As anticipated, interest rates remained just under 7%. Because of the turmoil in the stock market, buyers were hesitant to liquidate savings in order to amass a downpayment. This forced sellers to lower prices in an attempt to entice buyers into making an offer. Even with lower prices, most sellers were not able to get their homes into contract.
Market Forecast
Interest rates were not expected to significantly drop this year. The Federal Reserve underscored this at their March 19, 2025 meeting when they left rates unchanged. But in the last week, the decline in the stock market has created a concern among financial experts that we may be headed towards a recession. If the Federal Reserve shares this concern, they may cut rates to try and stave off this economic downturn.
Meanwhile, this rapid deterioration in stock valuations has decreased the amount of funds available to potential buyers for use as a downpayment towards a new home. As stock prices continue to fall, many buyers are hesitant to liquidate their portfolios, preferring to wait and see if stock values increase later in the year.
Sellers who did not need to immediately sell in 2024 kept their homes off the market throughput the year. The hope was that prices would rebound in 2025. This price revival has not occurred. If sellers find they have a pressing reason to sell in 2025, they will need to list their homes at prices lower than 2024.
You can see this playing out here at Brickyard Landing. The two homes that sold this year closed at prices below those for similar condos that sold in 2024. Meanwhile, homes listed here by other brokers have been sitting for months without any offers. These brokers initially listed the homes at 2024 prices. After months of inactivity, the sellers dropped their prices multiple times. These homes still have not sold, and two owners finally gave up and took their listings off the market.
Conclusion
There will be little change in the real estate market in 2025. Sellers will be reluctant to sell until prices rebound, and buyers will wait for interest rates to decline and investment portfolios to increase. Only those who must make housing changes will do so.
Despite these challenges, homes at Brickyard Landing continue to sell. And Brickyard Realty closes more sales than all other brokers combined. We are the Brickyard Landing Specialist.
You can see our listings on our website. You can also see a history of homes we have sold. Brickyard Realty’s Facebook page will keep you updated on the Brickyard Landing Market.
As always, if you need additional information, or wish to discuss your confidential real estate needs, please contact us. And thank you for your continued trust and support.
Ida and Robert
Ida Abelson
Broker
Brickyard Realty
lic. #00817693
IdaAbelson@BrickyardRealty.com
(510) 672-0330 - voice and text
Sales Activity
There were 17 sales at Brickyard Landing in 2024. Brickyard Realty was pleased to be instrumental in 9 of those sales. This is more than all other brokers combined and maintains our position as the Brickyard Landing real estate specialist.
Here are those sales:
Quarry Court and Brickyard Way Sales
3 three bedroom “G” plans sold for $862,000, $875,000 and $899,000
1 two bedroom “F” plan sold for $600,000
4 two bedroom “C” plans sold for $680,000, $649,000, $619,000 and $580,000
5 two bedroom “B” plans sold for $635,000, $629,000, $620,000, $615,000 and $605,000
2 one bedroom “A” plans sold for $531,000 and $515,775
Pinnacle Court Sales
2 Penthouse sold for $1,299,000 and $1,200,000
Market Analysis
At the end of 2023, I wrote:
I anticipate that rates in 2024 will stabilize at about 6.5% [they had been as high as 7.25%].
But don’t expect this rate decrease to significantly increase either the number, or prices, of homes that sell in 2024.
Many buyers will wait until 2025 to see if rates and prices fall even further before committing to a purchase. Those sellers who can afford to do so will keep their homes off the market in hopes that prices will start to rise in 2025. My expectation is that prices in 2024 will remain flat or decline slightly.
This prediction turned out to be correct. Today’s interest rates hover around 6.5%. Brickyard Landing homes are still selling, but, especially in the second half of 2024, sellers had to lower their prices or offer concessions such as paying the buyer’s broker’s commission or providing credits for a potential special assessment, in order to entice buyers into making an offer.
Market Forecast
Very few lenders expect interest rates to significantly drop in 2025. This is underscored by the Federal Reserve signaling in December 2024 that it plans to only cut rates twice in 2025. This is a double whammy for the market.
Existing homeowners may be thinking of selling their home in order to downsize and save money. But it may not make economic sense to sell a home with a 3% loan only to buy a home with a 6.5% loan. After running the numbers, many potential sellers are choosing to stay put.
Buyers who are renting may decide that they are financially better off continuing to rent. They fear locking themselves into a loan with what they perceive to be a high interest rate. By renting they can keep their downpayment in high yielding investments, such as the stock market. Many buyers are prepared to wait until loan rates and/or home prices decline before entering into a purchase.
The result is a market where sellers are reluctant to list their homes, thus decreasing the housing supply, and buyers are reluctant to commit to a purchase, which puts a downward pressure on prices.
Conclusion
There will be little change in the real estate market in 2025. Prices and loan rates should remain relatively level. Sellers will be reluctant to sell until prices rebound, and buyers will wait for interest rates to decline. Only those who must make housing changes will do so.
Despite these challenges, homes at Brickyard Landing continue to sell. The vast majority of these homes are being sold by Brickyard Realty. Other brokers know their buyers will ask difficult questions about the complex. When outside brokers have buyers for Brickyard, they contact Brickyard Realty, the “Brickyard Landing Specialist”.
Having lived and sold here for over 30 years, we know the answers to buyers’ questions, or know where to find those answers. Our buyers, as well as those represented by other Brokers, know our answers will be knowledgeable and in-depth. That’s why our listings sell while other listings sit on the market.
If you do decide to buy or sell, please contact Brickyard Realty, the Brickyard Landing Specialist. No Broker understands this market better than we do, and our experience gets results!
As always, if you need additional information or wish to discuss your confidential real estate needs, please contact us. Thank you for your continued trust and support.
Ida and Robert
Ida Abelson
Broker
Brickyard Realty
lic. #00817693
IdaAbelson@BrickyardRealty.com
(510) 672-0330 - voice and text
Sales Activity
4 Brickyard Landing homes sold in the third quarter of 2024.
Quarry Court and Brickyard Way Sales:
1 three bedroom “G” plan sold for $875,000;
1 two bedroom “B” plan sold for $605,000; and
1 one bedroom “A” plan sold for $515,775
1400 Pinnacle Court Sales:
1 Penthouse sold for $1,299,000
Market Analysis
As predicted in my earlier 2024 forecasts, sales activity in the third quarter remained flat and prices softened. At the beginning of 2024, the price for a 2 bedroom Brickyard Landing condo, by far the largest percentage of Brickyard Landing units, was hovering at around $650,000. In the second quarter, this dropped to about $625,000. Only one 2 bedroom sold in the third quarter; the sales price was $605,000. At the end of the third quarter there were two 2 bedroom condos for sale. Both were on the market for an extended period of time, and both were listed just under $600,000.
The trajectory is clear; prices declined during the first three quarters of 2024. I attribute this to two main factors.
The most important of these is interest rates. For months, the news was filled with insinuations that the Federal Reserve would lower interest rates by one quarter of one percent. Many buyers stood on the sidelines waiting for this decrease. With fewer buyers in the market, sellers adjusted their list prices downward in order to entice buyers into making offers.
The second factor had to do with some legal changes. Buyers must now enter into a written agreement with their Realtor before the Realtor is allowed to show property to their client. As part of this agreement, the buyer becomes responsible for paying their Realtor’s commission. Many buyers were unnerved by these new requirements and, therefore, stayed out of the market.
By the end of third quarter 2024, both of these issues were resolved in a way that should stimulate the real estate sales. On September 18, 2024, the Feds announced a larger-than-expected one half of one percent rate reduction, thus rewarding those buyers who waited before committing to a home loan. Meanwhile, the new real estate laws have been in place about a month. Buyers are more comfortable with the new requirements and have returned to touring properties. But the best evidence that our market is rebounding is that, in the past two weeks, I have put three Brickyard Landing properties into contract. Of course, the question is whether or not this uptick in sales activity will continue.
Market Forecast
At the end of September, when I began drafting this document, I wrote that, despite the turmoil of the upcoming election, the economic forecast for the last quarter of 2024 is optimistic. I expected one, and perhaps even two additional rate decreases in the last quarter of 2024. This would, hopefully, stimulate even more buyers to pursue a purchase in an effort to lock in an attractive loan rate.
I no longer feel confident in making this forecast. In the past weeks, two major storms decimated much of the Southeastern United States which will likely result in increased insurance rates. In addition, the war between Israel and Iran has escalated. War always unnerves both businesses and consumers. Either of these events could destabilize our economy. Both of them occurring simultaneously will certainly increase inflation. As a result, the Federal Reserve will be less willing to lower rates.
In addition, October’s jobs report shows that the economy is extremely robust. The workforce is growing, and wage increases are outpacing rising prices. This means the Federal Reserve is less concerned about stimulating the economy, so any interest rate decreases will be minimal.
Conclusion
Assuming there are no additional major upheavals before the year is over, I expect prices and activity through most of 2024 to remain relatively level. But if national and global events remain unresolved, buyers will feel insecure and will not return to the market. Only those who must make housing changes will do so.
If you do decide to buy or sell, please contact Brickyard Realty, the Brickyard Landing Specialist. No Broker understands this market better than we do, and our experience gets results!
As always, if you need additional information or wish to discuss your confidential real estate needs, please contact us. Thank you for your continued trust and support.
Ida
Ida Abelson
Broker
Brickyard Realty
lic. #00817693
IdaAbelson@BrickyardRealty.com
(510) 672-0330 - voice and text
Sales Activity
5 Brickyard Landing homes sold in the second quarter of 2024.
Quarry Court and Brickyard Way Sales:
1 three bedroom “G” plan sold for $862,000;
1 two bedroom “F” plan sold for $600,000 (required substantial repairs) and
2 two bedroom “B” plans sold for $620,000 and $635,000
1400 Pinnacle Court Sales:
1 Penthouse sold for $1,200,000
Brickyard Realty was instrumental in closing all 5 sales. We listed 4 of the homes. Of those 4 listings, we also brought in the buyers for 2 of them. The 5th home was listed by another Broker, but we had the buyer on that deal as well.
Bottom line – Brickyard Realty was involved in every deal this quarter, once again proving that we are the most successful Broker at listing – and selling - Brickyard Landing condos.
Market Analysis
The real estate market has begun to stabilize. Most buyers now understand that interest rates will not substantially decrease any time soon. And most sellers accept that prices have decreased since the price explosion ignited during the Covid lockdown. We can see this playing out at BYL.
In the first quarter of 2024, 4 homes sold. Brickyard Realty was involved in 3 of those sales. In the second quarter, there were 5 sales, evidence that more buyers are starting to come back into the market.
Prices have remained about where they were during the early part of the year. Homes that were well priced when initially listed sold quickly, some above asking price. Those listings that were overpriced continue to languish on the market.
As of this writing, there are 4 active listings at Brickyard Landing. Each of these properties is listed by Brokers other than Brickyard Realty. Two have been listed within the past 60 days. The third listing has been on the market for almost 6 months, and the fourth for over 8 months! Even though some of these listings have had massive price decreases, they remain unsold.
As evidenced above, it is imperative that listings are correctly priced at the outset. If not, the homes will sit on the market for many months, leaving an owner little choice but to lower the price. Unfortunately, by the time the price drops, buyers perceive that there is something wrong with the property and are reluctant to make an offer, even at a greatly reduced price. The seller, anxious to sell after many months of paying taxes, insurance, HOA dues, and loan payments, often accepts an offer at a price far lower than the home would have sold had it been priced correctly at the outset.
Here's an example. The home that has been on the market for 8 months was listed by another Broker for $695,000, a value that was far out of line with comparable sales. The price was lowered to $680,000, then to $639,000, and is now priced at $619,000. Brickyard Realty listed the same floor plan for $624,900. After only 3 days on the market, our seller accepted an offer for $635,000 and closed the deal 2 weeks later.
The other Broker’s listing was priced incorrectly at the outset. Even with a $76,000 price decrease and 8 months of marketing, it continues to languish unsold. My listing was priced correctly on day 1 and sold $10,100 above the list price after only 3 days on the market!
It’s not enough for real estate companies to list homes; they have to know how to sell them! That’s why it is imperative that homes are priced correctly at the outset. In addition, serious buyers ask difficult questions specific to Brickyard Landing and Brokers need to know how to respond to these concerns. This can only be done by a Broker who specializes in Brickyard Landing. As evidenced by our productivity, that Broker is Brickyard Realty.
Market Forecast
The Federal Reserve is generally pleased with the country’s economic stability. Assuming this stability continues, the Feds will entertain the idea of lowering interest rates towards the end of the year. But any such decrease will be very minimal.
Meanwhile, the number of homes on the market will remain flat. This will keep prices from fluctuating in the near future.
In simple terms, during the second half of 2024, there will be little variation in either interest rates or home prices.
There is one major change that is about to hit the real estate industry. Starting August 17, 2024, a buyer must enter into a written agreement before touring a home with a Broker. That will certainly cut down on the number of buyers who come to see a listing. But it also means that those who do come are serious about buying. If you would like more details about the origin or effect of this change, please contact me.
Conclusion
I expect prices and activity through most 2024 to remain relatively level. Should the Federal Reserve decrease rates, there may be a small uptick in the number of sales.
If you do decide to buy or sell, please contact Brickyard Realty, the Brickyard Landing Specialist. No Broker understands this market better than we do, and our experience gets results!
As always, if you need additional information or wish to discuss your confidential real estate needs, please contact us. Thank you for your continued trust and support.
You can see our listings here as well as a history of homes we have sold. Brickyard Realty's Facebook page will keep you updated on the Brickyard Landing Market.
Ida Abelson
Broker
Brickyard Realty
lic. #00817693
IdaAbelson@BrickyardRealty.com
(510) 672-0330 - voice and text
Sales Activity
4 Brickyard Landing homes sold during the first quarter of 2024.
Quarry Court and Brickyard Way Sales:
1 three bedroom “G” plan sold for $899,000; and
3 two bedroom “C” plans sold for $680,000*, $649,000, and $619,000
There were no sales in the 1400 Pinnacle Court building.
Brickyard Realty represented clients in 3 of the 4 sales, maintaining our position as the most active Broker at Brickyard Landing.
Market Analysis
Both prices and activity are down since the end of last year. This is true, not just at Brickyard Landing, but throughout the East Bay, including Marina Bay, Berkeley, Oakland, and El Cerrito.
As I explained in my last update, the fundamentals in the real estate market are unchanged. Buyers are still sitting on the side-lines, hoping that interest rates will decrease. Unless a buyer is in a situation where they must purchase a home now, most are content to adopt a “wait and see” attitude.
Because there are fewer buyers, sellers have limited options. If they can afford to hold on to their properties, some sellers are taking their homes off the market. They are betting the market will revive, at which time they will re-list the home.
Others are choosing to rent out their properties. But because of rental restriction laws, this can be a very risky thing to do in California, especially in Richmond. If you would like more information on the pros and cons of renting, please contact me. Converting your personal residence to rental property may have serious tax consequences, so speak with your tax advisor before deciding whether or not to rent your home.
For those sellers who must sell now, most have only one option – lower the asking price. I monitor the Bay Area market. Every day I see price reductions across all our local markets.
Market Forecast
The Federal Reserve has signaled that they are planning to drop interest rates this year. But any decrease will be minimal and very gradual. Despite these signals, some buyers continue to hope for a significant rate decrease. Those buyers are staying out of the market, content to wait for this to occur.
Other buyers who, in my opinion, are reading the market correctly, will understand that they should not anticipate major rate shifts any time soon. These buyers may decide to buy now while there is little competition from other buyers.
For sellers, the market will remain stagnant. Prices will be flat or decrease slightly, and sales will be minimal as buyers stay on the sidelines or make offers below the listed price.
The Fly in the Ointment
There is one wild card in this analysis. Some of you may be aware of a lawsuit filed against the National Association of Realtors (NAR). The suit claimed that NAR conspired to artificially inflate commissions for both buyers’ and sellers’ agents which resulted in higher home prices. NAR has agreed to settle the suit, but the courts still need to approve the settlement. All parties anticipate the courts will approve the settlement this summer.
Assuming this occurs, what will this mean for you?
Right now, when a seller lists a home, they agree to pay their Broker a commission. This amount is negotiated between the seller and the Broker and memorialized in the Listing Agreement. The Agreement also states that the listing Broker is obligated to take a portion of their commission and pay it to the buyer’s Broker. In effect, the seller is paying for the buyer’s representation as well as for their own.
Should the settlement be approved, this will change. The buyer will hire and pay for a “Buyer’s Broker”, and the seller will hire and pay for a “Seller’s Broker”. Before a Broker can show property to a buyer, the buyer will be required to sign a Buyer’s Representation and Broker Compensation Agreement. Part of this Agreement will spell out the amount of the commission the buyer will now be responsible to pay to their Broker.
Some believe that, as a result of this settlement, home prices will decrease, since the seller will no longer have to pay both Brokers. Others think that there will be no change in the net cost to either the Buyer or Seller. Here’s why.
When a buyer contemplates making an offer, they need to figure how much cash they have to pay for the home outright (all-cash offer) or how much they have to put towards a down payment in order to secure a loan. In addition, they will need more cash for closing costs (escrow and title fees, pre-paid HOA and taxes, loan origination fees, etc.). These costs can be significant. If a buyer also has to pay their Broker’s commission, that’s even more cash they will need.
Let’s look at an example.
Say you want to buy a home for $500,000. If you borrow a loan for 80% of the purchase price ($400,000), that means you will need:
$100,000 for the down payment; and
about $10,000 in closing costs
Total cash needed to close: $110,000
Under the proposed settlement, you would also have to pay your broker’s commission. Remember that the commission is negotiated at the time the buyer signs the Buyer’s Representation and Broker Compensation Agreement. As of this writing the average commission paid in the Bay Area to the buyer’s Broker is 2.5%. Assuming this percentage stays the same, under the proposed settlement you would need:
$100,000 for the down payment;
about $10,000 in closing costs; and
$12,500 for the buyer’s broker’s commission
Total cash needed to close: $122,500
For some buyers this additional expense could be prohibitive. This leaves them with three options. They may decide not to buy any home. They could purchase a less expensive home. Or they could decrease the amount they offer to try to keep their cash requirements at about $110,000.
But in order to only need about $110,000 cash, the seller would have to agree to drop the price from $500,000 to about $450,000. At that price, a buyer’s out-of-pocket expenses would be:
$90,000 for the down payment (80% of $450,000);
about $10,000 in closing costs; and
$11,250 for the buyer’s broker’s commission
Total cash needed to close: $111,250
In these cases, home prices might very well decline if sellers agree to significant price reductions. However, there is another option.
It is important to understand that the proposed settlement only states that the seller will no longer be required to pay the buyer’s Broker’s commission. It does not state that the seller is prohibited from doing so. Instead of dropping the price to $450,000, the seller could keep the price at $500,000 and agree to pay both buyer’s and seller’s brokers. That way the buyer would only need $110,000 cash to close. In this scenario, home prices would not come down.
Conclusion
Needless to say, nothing will change unless and until the settlement is approved. And, as can be seen from the above example, even if it is approved, the net cost to both buyer and seller might remain the same. But it’s just another level of uncertainty in the already unstable real estate market. Bottom line, I expect prices and activity throughout 2024 to remain flat or decline slightly.
But let’s not forget this is also a presidential election year, and it promises to be a raucous 7 months. So buckle up and hold on. And if you do decide to buy or sell, all the more reason to contact Brickyard Realty, the Brickyard Landing Specialist. No Broker understands this market better than we do, and our experience gets results!
As always, if you need additional information or wish to discuss your confidential real estate needs, please contact us. Thank you for your continued trust and support.
You can see our listings on our website. You can also see a history of homes we have sold. Brickyard Realty’s Facebook page will keep you updated on the Brickyard Landing Market.
Ida
* The recorded sales price was $690,000. This price does not reflect a $10,000 credit from the seller to the buyer at close.
Ida Abelson
Broker
Brickyard Realty
license #00817693
voice and text: (510) 672-0330
www.BrickyardRealty.com
Below are questions sent in by visitors to our website. If you have a real estate question just send it to us and we'll try to find the answer.
Start by getting your credit in order. Go to Annual Credit Report.com. There you can order free copies of your credit report and find resources to help you clear up any credit problems. The better your credit, the easier it will be for you to get a loan, so it's well worth your time to try and clean up your credit report before you apply for a loan.
Next, review your spending and savings habits. You will need money for a down payment. If you don’t have the money already saved, start saving now. If someone is planning to gift you the funds, see if they would be willing to do so sooner rather than later. Why? Let’s say your parents plan to give you $10,000 towards your down payment. You find a home you love, make an offer, and the offer is accepted. You call the folks, tell them the good news, and they send you the money which you deposit into your savings account. Suddenly you get a call from your lender asking where this money came from. You will now have to go through some hoops to prove the money is, in fact, a gift and not a loan. The folks may have to sign a document stating that they never intend to have you pay back the money. Often people don’t like having their motives questioned and I’ve seen situations where this has caused a rift between parent and child. If, however, you have the funds in the bank before you apply for the loan (usually 3 months will do the trick) the lender usually will not question the source of the funds.
OK – you’ve cleaned up your credit and stashed away the down payment. Now you need to find a home. Before you go house-hunting you need to know your price range. Start by talking to your lender to see how much you can borrow. Add your down payment to the loan amount and you’ll have a good sense of the price range the lender thinks you can afford.
But that’s only half the story. You need to do some soul-searching before your start house-searching. Let’s say the lender says you can afford monthly payments of $2,000 per month. Presently, you pay rent of $1,000 per month. That’s $1,000 less per month you presently pay for rent than you would need for your proposed loan payment. But at the end of each month when you look at your checkbook, the balance is $0. What happened to that extra $1,000? If the answer is you spent it on movies, vacations, and going out to eat, you need to decide whether or not you can live without these luxuries. Remember, you are not just buying a home; you are also buying a lifestyle. If you cannot- or will not - live without these “extras” then you either need to scale back on the price of the home or keep renting.
You've checked your credit, saved up for the downpayment, and decided on an appropriate home price. Now all you need is a great Realtor to help you find your new home. If you need help finding one, just let me know!
Before you buy any investment, you need to ask yourself some basic questions.
First, are you emotionally prepared to be a landlord? If the toilet starts to leak on a Friday night, will you be willing to cancel your weekend plans so you can meet the plumber out at the property? If the tenant stops paying rent, can you handle the emotional upheaval that comes with an eviction?
The second question you must ask is whether or not you are financially prepared to carry the cost of owning property for at least three months. There will be times when the property is vacant or when repairs are needed. This will require you to come "out of pocket" to cover these expenses. You simply can not assume the rent will always be there. If you do not have a reserve from which you can draw when problems arise, you will soon find yourself in financial trouble.
Next you need to consider what type of property to buy. This will be dictated, to some extent, by your finances. Assuming you are looking at a small investment property (1-4 units), you need to decide if you want a multi-family or a single family home. Multi-family units are more expensive to purchase and maintain. However, the vacancy risk is spread out over a number of units. For example, if you have a single family home as a rental, when it is vacant, all your rental income is gone. If you have a duplex and one unit is vacant, you still have rent coming in from the other unit. On the other hand, the more units you have, the more maintenance is required, both in terms of managing the property as well as managing the tenants.
If this is your first rental, you may want to consider a condominium. You will have to pay homeowners dues, but you will be relieved of many maintenance issues such as gardening, roof, exterior paint, etc. Before you buy, make sure to check whether or not the Homeowners Association restricts the number or type of rentals. If you don't, you may find that you have purchased a home that can not be rented. It's hard to manage property and harder to manage people. Of course, you can always hire a property manager. But that becomes an additional expense that must be factored in to the cost of ownership. And you need to be prepared to manage the manger.
Then there is the question of rental control. Check both state and local ordinances to see if there are any rental restriction policies governing the property. And you should also see if there are additional fees for rentals in your community. These could be fees required by a local rent board, or your city requiring that you get a business license.
The bottom line is, you must approach real estate investing as a business. And, as such, it requires research to make sure you know what you are getting yourself in to, both financially and emotionally.
In a word - "yes". Instead of calling the listing agent, you should have had your own agent make an appointment to show you the property.
Look at it from the listing agent's point of view. They took the time to meet you at the property, show it to you, answer all your questions, maybe even give you pricing comparables for the house and advise you on the best structure for an offer. You used their time and their expertise. But you didn't want them to get paid for that.
Instead, you handed the fruits of their work over to another agent. In effect, you said that their time and knowledge were worthless. Sure, they would still get part of the commission if you bought the home through another agent. But you increased their work without increasing their pay. And you took up their time that they could have spent working with their own clients.
No wonder they were upset - wouldn't you be if someone did that to you?
With that wide range of advice, it's no wonder you're confused! Without seeing your home, it is impossible for me to give you specific suggestions, but I can give you some guidelines to help you sort out what is the best course of action.
First, you need to have an accurate perception of your home's condition. From your question, I am assuming we're not talking about serious structural problems (broken stairs, falling retaining walls, etc.). Instead, you are asking about cosmetic issues. For most of us, it is very difficult to see our home as others do. You might want to ask a friend to walk through the home and give you an honest assessment of its cosmetic condition. You want to stress that you are prepared for some brutal comments and will not be offended to learn that the clown collection you have so prominently display in your living room looks ridiculous to others, or that the sea-green color you chose for the bathroom makes people nauseous.
Now that you have your list of "problems", prioritize them. Some problems are cheap and easy to fix and you should do them. Clutter usually comes under this category. Pack the clowns away. Remove excess furniture and clear away some bric-a-brac. You might consider renting a storage space if you don't have room in your home to hide these items. But you don't need to go overboard. There are some Realtors who believe that a home should be "sanitized", that all personal items like photos and mementos should be removed. I don't agree. I like showing a place that feels like someone's home rather than a motel room.
Next, consider doing upgrades and repairs that are inexpensive. Are there areas that need a fresh coat of paint? If you can do this yourself, this is a relatively easy and cheap fix and will certainly brighten up the home. One of the agents suggested you replace the carpet. If that carpet is not damaged or badly stained, perhaps a deep cleaning would make it acceptable. Small repair jobs should certainly be considered - recaulking bathtubs, fixing cabinet doors, replacing broken electrical faceplates - all these can be done for minimal amounts of money and effort.
Now to the big ticket items. This category usually includes things like remodeling the kitchen or bath, replacing carpet, etc. These take time and money. Do you have both? If not, then this is a moot point. But the bigger question is, should you, for example, remodel your kitchen before selling? In my opinion, unless the kitchen is in very bad condition, the answer is no. A home with a remodeled kitchen may sell faster than one without, but you almost never get back the money you spent for the remodel in the sales price. And more to the point, the buyer may not like what you're done.
As an example, let's say you decide your carpet needs to be replaced. Not that it's torn or horribly stained, but it looks "tired". So you spend $5,000 and install a lovely, good quality tan Berber. A buyer walks in the door, and says, "this is a nice house, but that tan carpet will look terrible with my furniture. The first thing I'd need to do is rip up this carpet and put in a different color. So I'll offer $5,000 less to make up for the cost of a new carpet." Now you're out $10,000 - $5,000 for the carpet you installed and $5,000 in reduced sales price. Instead, you might consider listing the home "as is" but with a $5,000 credit to the buyer for new carpeting. That way, the buyer can put in what they like and it has only cost you $5,000.
The bottom line is that you need to start by looking at your home through a buyer's eyes and getting a real sense of what needs to be done. Do those things that are cheap and easy. Next, consider those things that will give you the most "bang for your buck". And finally, for those items that are expensive and time consuming, consider a giving a credit-back to the buyer.
You are wise to be skeptical. Remember the old adage "if it looks too good to be true, it probably is"? That applies here.
Contrary to what you may think, an agent's primary job is not to market your home to potential buyers. Their job is to market your home to other agents! Why?
Every agent has a "stable" of clients. At any moment in time, I have dozens of qualified buyers with whom I am actively working, who may be interested in your home. And if I got your listing, I certainly would advertise the home to them.
But each agent I know also has their "stable". So when I interest an agent in your home, I am, in essence, contacting all their clients! When an agent lists a home on the multiple listing service, they are advertising to all other agents that the home is available.
Sometimes an agent will offer to cut their commission in exchange for being the only agent who can sell the home. As the seller, you see a dollar savings in the commission. What you don't see is how expensive this "savings" can be.
First of all, it may take longer to sell your home since you have severely cut the numbers of potential buyers. And because the home is not being allowed to respond to market forces (i.e. the greatest number of buyers looking at the home), you will never know if the sales price you ultimately settle for is the best you could have gotten. Prices can really escalate when there is competitive bidding for your home. The more agents involved, the more likely you are to be in this enviable situation.
So if you agree to this agent's suggestion of an "exclusive", you may be invoking another old saying - "penny wise and pound foolish"!
Here are some guideposts to consider when shopping for a loan.
Avoid any lender who suggests or requires you to falsify information on your application. If you’re caught, you could be prosecuted and, if convicted, penalties range from fines to jail term. Even if the bank does not prosecute, they could require you to immedaitely pay back the loan in full. Do not allow yourself to be pressured into borrowing more than you need. The only reason a lender wants you to borrow more money is to increase their commission.
And, along the same lines, don’t be pushed into accepting monthly payments you can’t afford. Even if you qualify for higher payments, your lifestyle may not allow you to use every spare penny to pay your loan payment.
Every lender is required to provide you with loan disclosures within three days of applying for a loan. If your lender fails to give one to you, they are breaking the law. The disclosure must include the loan’s annual percentage rate (APR) as well as an itemized list of closing costs. The APR is a formula that takes into account both the rate and the fees of each loan. It is a way for you to be able to compare loans of varying terms.
Be wary of terms that change during the course of the approval process. It is possible that rates and terms may legitimately change during the weeks of loan approval. But be sure to get an explanation from your lender. And if anything smells funny, back up and review all the paperwork again. You might even consider contacting another lender.
If your lender tells you it’s OK to sign blank forms, cancel the deal. You should NEVER sign a blank form.
And finally, if the lender refuses to give you copies of what you are being asked to sign, RUN!
ARM’s, or Adjustable Rate Mortgages, were designed in the 1970’s to help those who might not qualify for more traditional, fixed rate loans. As the years went by, ARM’s got “twisted” until today we have a myriad of loan products with a multitude of features.
However, all ARM’s have one thing in common – the interest rate “adjusts” rather than stays “fixed” over the life of the loan. So whatever ARM rate your loan agent quotes you, one thing is certain – it will change as the loan matures. How often the ARM rate changes is up to the bank. Some adjust monthly, some yearly. But how much it changes is a function of its index.
An index, in lending terms, is the benchmark a lender chooses as a baseline for your loan. In simple terms, it is the wholesale rate the lender pays for money. As the cost of money constantly changes, so too does the baseline interest rate used to calculate your loan payments. This is the component of your loan that “adjusts”. Lenders use different indices. These indices vary in both rate and stability. Some, like the 11th District Cost of Funds, are quite stable, i.e. they move very slowly and in small increments. Some, like the T-Bill Rate, move rapidly. Ask what index your loan is tied to, what that index’s rate is, and how often and how widely it fluctuates.
The next most important factor affecting your loan rate is the margin. To continue the retail analogy, this is the lender’s profit margin. There is no magic formula for this number. It is simply what the lender feels they need (or can get) to make lending profitable. It is the combination of the index rate (wholesale cost) and the margin (profit) which determines your loan’s interest rate (retail cost).
Points and fees are the final pieces needed to understand the loan puzzle. Like margins, they are added on as a source of additional profit for the lender. The higher the margin, the lower the points. For example, a lender might offer a loan with a margin of 2.5 and 1 point, or the same loan with a margin of 2.75 and ½ point. Each point equals 1% of the loan amount.
Fees are also variable. Some lenders charge a separate fee for each service they provide – appraisal, documents drawing, underwriting, etc. Others charge a single flat fee for all these services. What matters is the total cost.
One last note…most lenders allow for a variety of payment plans on ARM’s. You can chose to pay the fully amortized 30 year rate or the fully amortized 15 year rate. You may decide to pay only the interest. Some lenders even allow you to pay a reduced payment. This usually results in “negative amortization” where the monthly payment is insufficient to cover even the interest due, so the balance is added back on to the loan principal. This will result in a larger loan balance.
When you are trying to compare ARM’s, be sure to ask about the index, margin, and points and fees. Lending is filled with confusing jargon. Don’t allow a loan agent, using a few unfamiliar terms, to arm-twist you into getting a lousy loan!
Over the years, lending guidelines for the purchase or refinance of a home have become increasingly standardized. For example, credit scores must not exceed specified numbers, and down payments must meet a lender’s minimum criteria.
All of these come under the heading of “underwriting guidelines”. And one of these is how to calculate the borrower’s “top and bottom ratios”. No, this does not refer to a borrower’s ideal bust and hip measurements. Rather, it is a formula to assess whether or not the borrower can meet their loan payment obligations. If a borrower falls within certain ratios, the lender feels comfortable with the borrower’s ability to repay the loan. Here’s how these ratios are calculated.
The “top” ratio refers to the monthly cost of running the property divided by the borrower’s monthly gross income. The lender calculates the proposed monthly mortgage payment, adds the monthly property taxes, insurance and homeowner’s dues (if any). This number is divided by the borrower’s gross monthly income and the resulting number is the “top” ratio.
The “bottom” ratio is calculated the same way, except that, along with the property costs, the lender includes all other regular monthly expenses. This would include such items as child support, alimony, car payments, credit card payments, student loans, boat docking fees, etc.
Let’s look at an example of how to calculate a "top" ratio. Say a borrower makes $50,000 a year and wants to borrow $100,000 at 7% for 30 years. The monthly payments would be $662. Property taxes and insurance might be $250 per month, bringing the total monthly expense for the property to $912. The borrower’s monthly gross is $4,167, and when that is divided by 912, the result is 22%, well below 28%, the maximum lenders like to see for a “top” ratio.
Now let’s calculate a "bottom" ratio. To do this, take the "top" ratio expenses and add in other monthly expenses like $300 for credit cards and $175 for a car loan. Add this to the monthly $912, and our borrower now has a projected monthly expense of $1,387. Divide this by the monthly gross and you have a “bottom” ratio of 33% which just meets most lender’s guidelines.
Many lenders have a variety of loan programs for borrowers who don’t fit into these ideal ratios. But they are generally at less favorable rates and terms. And many of them will be adjustable rate loans, rather than fixed rate.
While it is still possible to convince an underwriter to consider “extenuating circumstances” when reviewing your loan, more and more, the human element in underwriting is being replaced by cold numbers. The trend in the industry is towards computer programs designed to evaluate a borrower’s credit-worthiness. And though they may be efficient, computers are rarely sympathetic.
Generally, when a borrower applies for a loan, the rate "floats", or moves up or down with market conditions, until the loan is approved. So if rates rise between application and approval, you get the higher rate. Conversely, if rates go down, you get the lower rate.
If rates are on the rise, a borrower might want to "lock in" their rate early on, before rates go any higher. This is called a rate lock and it can offer a borrower peace of mind.
Simply stated, when a borrower locks in the interest rate, the borrower gets the rate as contracted, whether rates move up or down. In a climate of rising rates, this can be very appealing. But there are a few things to be aware of before you turn the key on your rate lock.
Many borrowers believe that, once they lock in their rate, the rate is secure until they close escrow. This may not be the case. Most lenders will lock the rate for 30 days. Unfortunately, the average escrow is 45 to 60 days. So be sure to ask your lender the exact date your lock will expire.
If your lock does expire prior to closing your escrow, how do you protect your rate until closing? You could delay locking-in the loan by waiting 15 to 30 days after you have a signed purchase agreement. If you suspect rates may drop in the short term, this could be a wise strategy. But in a rising interest rate market, you could end up with a higher rate.
You could ask the lender to extend the lock-in period. Most lenders will allow this - but for a price, usually a small additional loan fee. You will need to weigh the cost of the extended lock against your guess as to whether rates will go up, down, or remain level.
Finally, some lenders offer the option that, if you lock in and rates go up, you have the contracted rate. But if rates go down, they will give you the lower rate. This option seems to be getting harder to find, but it's worth asking your lender if they offer it.