Tag Archives : home purchase

On August 17, a historic change reshaped real estate transactions, following a settlement by the National Association of Realtors (NAR). This impacts how compensation is handled, bringing more transparency to the process for both buyers and sellers. But what exactly has changed, and how does it affect you as a consumer of real estate services?

Understanding the Changes in Real Estate Compensation

While compensation in real estate transactions has always been negotiable, the way this compensation is paid might change. When selling a home, the homeowner now has a choice of whether to pay a buyer’s agent or not. This option has always existed, but a recent lawsuit and the resulting rule change have drawn more attention to it.

Benefits for Consumers
This shift is advantageous for consumers as it brings more transparency and disclosure about who pays what and how much. For professional real estate agents, this change also highlights their value—or lack thereof—to consumers.

To enhance this transparency, the Georgia Association of Realtors has updated the forms used in transactions. For instance, the Exclusive Seller Brokerage Engagement Agreement, the document used to engage a client when marketing and selling their home, now provides more details about compensation paid to both the seller’s broker and the buyer’s broker. Real estate professionals can now better explain how compensation works, the choices sellers have, and the pros and cons of offering or not offering compensation to a buyer’s broker. Ideally, this conversation should have been happening even before the rule change, but that was not always the case.

New Requirement for Buyers
Another significant rule change requires buyers to sign an agreement with their real estate agent before they start looking at homes, whether in person or virtually. This document has been in use by many Realtors, including The Curtin Team, but is now mandatory. The Georgia Association of Realtors has updated this document to clearly state the compensation the buyer’s broker will receive. Known as the Exclusive Buyer Brokerage Engagement, this document outlines scenarios where a buyer’s broker may be compensated, whether directly from the buyer, the seller, or the seller’s broker, and specifies the amount and services covered.

At The Curtin Team, we have always trained our partner agents to begin a relationship with a buyer by meeting to understand their goals and educate them on the process—including how we are compensated and the benefits of signing an engagement to work together.

Types of Compensation for Buyer’s Brokers
Compensation for brokers working with buyers can take various forms, including but not limited to:

– A fixed-fee commission paid directly by the buyers.
– Concessions from the seller.
– A portion of the listing broker’s compensation.

I am thrilled that this practice is now required, bringing more transparency to our industry. I believe it will elevate professionalism and encourage those who may not best serve buyer clients to pursue other directions. This change presents an opportunity to showcase our value.

Industry Impact
“This isn’t a significant shift for us, but our industry has never seen anything like this,” said Joanne Curtin, Founder of The Curtin Team. “We have more buyers coming to us now seeking expert guidance, and we are confident in providing a superior customer experience by having these conversations and highlighting potential value gaps between Realtors,” she added.

We are already seeing a shift in buyer engagement and increased transparency. Buyers might want to limit the number of days they agree to the engagement or restrict the contract to specific homes.

Changes in Communicating Compensation
Another new rule states that offers of compensation cannot be communicated on Multiple Listing Services (MLS). What does this mean? If a listing broker gets a seller’s approval to make an offer of compensation to a buyer’s broker, it cannot be shared on an MLS. However, it can be communicated through other marketing avenues. Therefore, it is more crucial than ever to hire a real estate professional with a strong marketing presence and a solid local agent network.

Benefits of Offers of Compensation
Offers of compensation benefit both buyers and sellers. For buyers, it ensures access to representation throughout the homebuying process, helping them achieve homeownership on terms that best suit them. For sellers, it attracts more buyers and broadens the pool of prospective buyers by lowering the barrier for those who may not be able to afford to pay buyer agent compensation out of pocket.

For Sellers
Compensation is negotiable. The amount you pay should reflect the value you receive. Your real estate professional should guide you through the available options and help you make the best choice for your home sale. Trust your real estate professional, but if they cannot clearly explain your options and justify their compensation, seek a second opinion.

For Buyers
In Georgia, it’s “buyer beware.” Due diligence falls on the buyer, so having a professional guide you is wise. Asking a Realtor to show you a home without signing an agreement is not an option. If someone is willing to break the law and do it anyway, consider whether that is the person you want representing your best interests. Now more than ever, a strong relationship with an experienced real estate team is crucial!

We are here to answer your questions and provide guidance. Please reach out if we can assist you.

In this Agent Spotlight video meet Heather Woodruff, a dedicated buyer’s agent on the Curtin Team. Originally from Boston, Heather made the exciting move to Georgia with her family, bringing her extensive real estate experience from the Boston market to the vibrant communities of Alpharetta, Roswell, and East Cobb.

Heather shares her journey of restarting her business in Georgia and the joy she finds in exploring her new surroundings. The move has brought her closer to extended family, and she loves the friendly atmosphere and beautiful spring weather of the South.

Before embarking on her real estate career, Heather was a pediatric physical therapist. Her passion for helping others seamlessly transitioned into real estate when she sold her own home and fell in love with the process. This inspired her to make a significant career change and become a realtor.

Heather holds several special designations in real estate, including being an Accredited Buyer’s Representative (ABR), Seniors Real Estate Specialist (SRES), Real Estate Collaboration Specialist in Divorce (RCS-D), and certified Real Estate Negotiation Expert (RENE). Her genuine love for getting to know people and her attentive listening skills make her an exceptional agent who truly cares about her clients’ needs.

Don’t forget to like, comment, and subscribe to the Curtin Team channel to stay updated on more enriching content like this!

WATCH THE FULL EPISODE HERE

Remember your friends who bought a house right at the beginning of Covid 19? At the time, we thought it was risky, as time went on we see what an amazing opportunity it was to purchase. Similarly, we may be looking back at those friends who purchase in the first few months of 2024 in the same light. There’s hesitancy with Buyers right now between interest rates, an election year and uncertainty in the real estate market.

Our data points to a rising market. The Federal Reserve has already indicated they will ease interest rates in 2024. Waiting for lower rates, like the majority of Buyers will do, means you’ll likely pay more. That’s because as mortgage rates drop, housing demand will surge, driving prices up. As mortgage rates drop, Buyers will come flocking back into the market, driving up competition. So as prices rise, and competition rises, we will be back to multiple offers and Sellers back in the driver seat. There is a window now with a more balanced market. Over the next few months, Buyers don’t necessarily have to make a rushed decision with little due diligence period and reduced negotiating leverage, giving Buyers more time to make an informed decision.

Home prices in our area rose over 6% from the start of 2023. Home prices are expected to continue to rise throughout 2024. Several factors are contributing to home price appreciation in our area. Despite the new home construction that is going on all around us, the new home inventory is still falling short of the housing stock we need. This problem goes back to the recession of 2009-2011, home building came to a screeching halt. For 3 years, we didn’t see any new building, and builders haven’t closed that gap. Adding to that were supply chain issues caused by Covid 19, to some degree builders are still dealing with short supply and labor. There’s still not enough being built at a fast enough pace to meet demand. Couple this with the homeowners who are not willing to part with their 3% mortgage rate, there are not enough homes on the market. Supply and demand dictates prices. More supply of Buyers, less supply of homes equals rising prices. Additionally, we continue to have a healthy supply of Buyers relocating to our area from out of state, attracted to the lifestyle and affordability compared to many other metro areas. Many out of state Buyers purchase in the late Spring and Summer (choosing to move in between school sessions). Waiting will place you in direct competition with these Buyers who often have company support and a tight timeline, making for tough competition. Often they are willing to pay asking price or above to secure their housing quickly and get settled in their new job and state.

If you’re renting, and you’re financially able to purchase, you should consider buying now. The sooner you purchase a home, the sooner you start building equity through mortgage paydown and price appreciation. Your costs are fixed, unlike rent that is likely to be increased each year. And when mortgage rates fall, you can consider refinancing. There’s peace of mind having predictability with your monthly housing costs. Inflation, interest rates or a change in your landlord’s situation will not impact your housing or payment situation once you’ve locked into a fixed rate loan in your own home. There are tax advantages you may be missing as a renter as well. Consult with your CPA for how these tax breaks would apply to you as some income limitation may apply, here are a few common ones.
 Mortgage Interest- you can deduct your mortgage interest.
 Real Estate Taxes – you can deduct state and local taxes in the year you pay them.
 Home Office Deduction – if you’re a small business owner who works from home and use part of your home exclusively for the primary place of business, you can deduct many home expenses.

Tom Curtin, CEO of the Curtin Team, and Ben and Candice Thorton from Capital Mortgage Solutions, LLC, actively discuss cooperative buying and aiding first-time homebuyers. They dispel myths regarding down payments and explore alternative financing methods. It is revealed that a primary residence can be purchased with as little as a 5% down payment, and some loan programs mandate even less. Furthermore, they delve into the possibility of gift funds, which parents, friends, or close family members can offer. Conventional guidelines dictate that gift funds must originate from a direct family member or fiancé. 401k loans are also an option for individuals who lack a family member or employer to help with the down payment. Borrowing from a 401k to make a down payment on a home has no impact on the debt-to-income ratio.

Check out our previous blog post about the real cost of waiting to buy –
https://www.curtinteam.com/the-real-cost-of-waiting/

If you’re considering continuing to rent, maybe you think it’s best to wait until prices come down, or maybe you’re waiting for interest rates to come down. Or maybe you just don’t see the value in taking on the responsibility of owning a home. But did you know home ownership is one of the largest factors in building wealth? It is the differentiator between those that bought and those that continue to rent. How big of a difference can it really make, you ask? Let’s look at the tale of two friends, Harry and Randy, and really dive into the numbers to see what a difference buying a home now and continuing to rent will make in a 7-year period.

Harry Homeowner just purchased his new home for $400,000. He used FHA financing and put 3.5% down, or $14,000. His loan would be $392,755 because of the up-front 1.75% mortgage insurance that gets rolled into the loan on FHA loans. His monthly payment would be:

Principal & Interest – $2,613
PMI – $273.42
Estimated Taxes & Insurance – $474
Total payment = $3,360.76

After 7 years, Harry will have paid $181,546.66 in interest and $34,171.22 in principal, leaving a loan balance of $351,829.02. Harry has gained $34,171.22 in principal paydown, which can also be looked at as a forced savings. But wait – it gets better. Harry will also gain equity. The average equity increase annually is 4% (in metro Atlanta, it’s been 5% average.) After 7 years at an average of 4% annual appreciation, Harry’s home is now worth $526,327. That’s a gain of $126,327. Adding in the principal paydown of $34,171, Harry is sitting on a nice $160,498 gain. Harry could access some of this equity through a Home Equity Line of Credit and perhaps purchase an investment property (smart choice Harry!) or decide it’s time to upgrade and roll those gains into a new home and start the process over.
Another scenario that would likely have occurred for Harry is that because of the gain in the property value and equity, the PMI would drop off – most likely Harry would have refinanced his house and the payment would have reduced by $300-$400, so Harry’s payment in year 7 would be estimated to be around $2,900.

Randy Renter is renting a cool two-bedroom apartment in a hip, walkable location for just $2,000/mo. Instead of making a mortgage payment, Randy is a disciplined dude and he is saving the difference in his rent payment and what his friend Harry is making in a mortgage payment. So he’s saving $1,360 per month.
Randy is smart with his money, and he’s invested it in a mutual fund and was able to obtain an average annual return of 12%. Randy would now be sitting on a cool $167,000.
Aha you say: “So buying is not the right move! I’d actually have more money by saving money by renting (assuming you’re as disciplined as Randy) and not buying.”
However, we didn’t factor in that rent continues to increase every year. So in reality, Randy’s fixed cost of living continues to increase, while Harry’s fixed housing cost is locked in (and likely reduced when he refinances). Let’s rerun this scenario factoring the rent increases and consequently the savings decreases for Randy.
Average rents increase by 6% per year in our area. Randy’s two bedroom apartment rent looks like this over 7 years:
Year 1 $2,000
Year 2 $2,120
Year 3 $2,247
Year 4 $2,382
Year 5 $2,525
Year 6 $2,676
Year 7 $2,837
At the end of 7 years, again Randy is super disciplined and did not touch any of his savings, he now has $138,855 saved.

Let’s compare.
Harry has $160,498 in equity/net worth.
Randy has $138,855 in equity/net worth.
Harry has a fixed monthly housing payment.
Randy also has a monthly payment that will continue to rise and is beyond his control.
Randy can buy too, but the same house Harry bought 7 years ago will cost Randy a lot more.
It has been said “the best time to plant a tree was 30 years ago, the second-best time is today.” The same can be said of real estate. Don’t wait to buy real estate, buy real estate and wait!

The Curtin Team’s CEO, Tom Curtin and Director of Sales, Christy Smith explain the benefits for first time home buyers in today’s market. One of the biggest advantages of buying a home today is the stability and equity you get. Waiting a year or two can cost you tens of thousands of dollars in equity loss. And as rental rates continue to rise, a fixed rate mortgage payment stays the same. Also, many sellers and lenders are now offering to pay closing costs and buy downs on rates. Large down payments often scare off first time homebuyers, but some loans require as little as 3.5% down. As an example, the down payment on a $400,000 house can be as low as $14,000. And there are many ways to get that down payment including finding places in your budget to cut back and save, loans from family, or loans against a 401K to cover some or all it. The news of interest rate hikes shouldn’t scare off potential home buyers either. If rates go down, refinancing is available and if rates go up, you’ll be glad you locked in a lower rate.

The Curtin Team’s CEO, Tom Curtin and Director of Sales, Christy Smith explain the benefits of mortgage rate buy downs for buyers and sellers. Like many practices in the world of Real Estate, mortgage hacks depend on Buyer/Seller goals, timelines, and preferences. Buy-downs are unique, though, because they offer direct benefits to both Buyers and Sellers in the short term and long term. They allow houses to be sold more efficiently, less stress with high monthly payments for Buyers, and less interest payment over time. If you are in the market to either buy or sell a home, don’t forget that there are ways for you to save money during the process.

The real estate market is constantly shifting. Do you know how to position yourself for success as a buyer or a seller? Our team of real estate experts will be available to answer your questions on August 10 at 10am (Eastern Time). Dial into our Zoom call and join us for an informative Q and A.

Register Here
After registering, you will receive a confirmation email containing information about joining the meeting.

Are higher interest rates going to cause a real estate market crash? We’ve been getting some variation of this question a lot lately. The reality is no one knows exactly what will happen yet there are some fundamental truths to consider. I once heard someone say that an economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today. With that, let’s start with some facts.

This year, the Federal Reserve raised its interest rates by half of a percentage point. This is its largest rate increase since 2000 and the first time since 2006 that the Fed has increased rates in back-to-back meetings.
It’s important to understand why interest rates are rising. Primarily, raising interest rates is one of the most powerful tools the Federal Reserve has to control the economy and inflation. During a recent news conference, Fed Chairman Jerome Powell explained “inflation is much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down.”
Bringing down inflation without causing a recession is a difficult task that requires careful precision. By raising rates, the Fed hopes to cool the housing market without stopping it altogether – quite the balancing act.
As rates increase for borrowers, some buyers are forced out of the market because they can no longer afford homes that have appreciated so much in value. But interest rates will have to go up significantly to soften housing prices and curb inflation. We don’t expect to see prices go backwards, but they also can’t keep appreciating at 20% per year.
Serious buyers view rising rates as a reason to buy sooner, not to wait any longer. When house hunting, budgeting with a higher rate in mind can be greatly beneficial. For example, base your expected payment assuming that it will eventually have a ½ percentage higher rate. If rates go up, you’ll be in budget, and if they don’t move, you’ll have a cushion built in.
Rental rates have increased, too, so first-time homebuyers are still looking to buy because purchasing a home is less expensive than renting in most cases. The most reliable hedge against inflation is a fixed housing cost in the way of a fixed mortgage. As a renter, there is no protection against rising costs of rent because of very few rent-control laws.
These factors lead many to wonder: Will rising interest rates cause an eventual price crash? With the financial crisis of 2008 still fresh in our memory, it’s easy to see why people might expect home prices to fall. This time, however, there are many differences. I remember back in 2006 when banks were handing out “no doc loans” that asked for your personal finances with no written proof. This created artificial demand by making it easy for just about anyone to “qualify” for a home loan or refinance their current home. Today, purchasers and those refinancing homes face much higher standards and stricter guidelines from mortgage companies. Because of this, purchasers can afford the mortgage they’re taking on and there are less defaults. The speculative buyers who were purchasing homes and reselling them six months later for quick gains are not as prolific as they were in 2005-2007. The price drop seen during The Great Recession was caused mainly by the financial crisis, which led to a foreclosure crisis. When foreclosures flooded the market, prices dropped. The fear of another huge foreclosure event in today’s market is just not as realistic as it was a decade ago.
There’s still a very real housing inventory shortage that is driving demand. Even with higher interest rates, buyers are relocating away from big cities and are viewing Northern Atlanta as valuable. With continued demand, supply issues delaying new construction for the foreseeable future, and relative affordability in housing in our area, we expect rising rates to slow real estate sales somewhat, but they will not be stopping completely any time soon.

Mortgage rates rose today, but rates overall are at historical lows. The average rate on a 30-year fixed mortgage is 4.47%, according to Bankrate.com, and the average rate on a 15-year mortgage is 3.64%. On a 30-year jumbo mortgage, the average rate is 4.48%, and the average rate on a 5/1 ARM is 2.96%. These rates are just averages and subject to change daily. For current rates contact your preferred lender.

During the pandemic we had historically low rates. The factors that most affect the rate increases today are inflation and economic growth. But rates can change for various reasons. Overall though, rates are expected to continue to go up this year.

Does this mean you should cancel your home buying plans? Absolutely not! Even though rates are higher than in 2021 they are still very low. 30-year fixed rates were in the high 5%’s just a few years ago.

Buying a home isn’t just about interest rates though, it’s also about making a lifestyle choice. It’s best to find right house for you when the time is right for you. Home values have historically risen and now is a good time to get in to your dream home.