Week in review

YOU KNOW WHO IS LOOKING FOR STOCKS? NOBODY! Last week's volatility in the stock market stabbed at the hearts of both the Stock and Bond markets, with home loan rates swinging higher and lower throughout the course of the week. Economic news releases took a backseat to the massive movements in Stocks. Amazingly, when all the smoke cleared, home loan rates were unchanged to slightly improved for the week overall.
What happened? First, remember that the Stock and Bond markets compete for the same investment dollar. This means that when Stocks are worsening and investors are selling off their holdings, some of that money gets moved over into the Bond market, which helps home loan rates improve. And vice versa, when Stocks move higher and investors are buying into the Stock market, some of that money comes back out of Bonds, which causes home loan rates to worsen.
Last week's volatility began with the Chinese Stock market plunging, setting off a string of worldwide stock selling. Our own Stock market was ripe for a reversal lower, and money flowed out of Stocks and into Bonds, helping home loan rates improve. The next day, Stocks began to rebound, moving money back out of Bonds and causing home loan rates to worsen. But the "see-saw" action continued for the balance of the week - and may not be done yet, causing high amounts of volatility in Stocks and Bonds - and therefore, home loan rates.

Compiled by TeamResults Affiliates as a service to our clients. Always seek advice from your own experts. E-mail TeamResults@Century21.com with questions, comments or concerns.

All about real estate commissions

Every buyer and seller wants to save on commissions paid to a real estate broker. We've had discussions before about when to ask for discounts and negotiating the commission amount. So far we haven't talked about what the commission really is and how it works. That's what we're going to do today. {FYI: for the purpose of this discussion, BROKER and AGENT are used interchangeably}


First off, the usual and customary real estate commission is at or around 6%. Business and investment property can be in the upper 10% area. ALL REAL ESTATE COMMISSIONS ARE NEGOTIABLE BETWEEN THE CLIENT AND BROKER.


Usually the seller pays the commission through sale proceeds at the close of escrow. The great majority of real estate sale transactions involve more than one broker (or agent). The seller's agent takes the listing, lets say at 6%. This agent begins a marketing program and lists the property in the local MLS (multiple listing service).


Another agent (most likely) may bring a client over to see the house and write an offer to purchase. If the seller accepts the offer, the other agent will be paid 3% of the 6% commission when escrow closes. This is called the 'Split'.


As an example, lets assume a sale price of $100,000. At the close of escrow the commission settlement may look something like this:


Sale Price: 100,000 x .06 = 6,000 /2 (split 50/50) = 3,000 to each broker.


This example doesn't account for fees and costs each agent incurs in the course of doing business which easily can eat up 1/3 of the commission paid on each transaction. So the take-home pay for agents in our example might only be $2000 and since they are usually self-employed; at least 30% of that will get set aside for taxes. Leaving 1,400 to pay the rent and keep the lights on.



So that is what the commission is. It's a fee for a service and that fee gets split between the service providers. Again, the commission is always negotiable and your transaction may have higher or lower amounts than our example. Every transaction is different and the workload for each transaction is different also.

For tips on negotiating the commission on your purchase or sale, e-mail John.Wall1@Century21.com or Call (562) 449-8421. I'd be happy to help.

Median Sales Price LA County

Los Angeles County – The median sales price for single family homes rose 6.5% since this time last year. Even with a 12.9% drop in sales, prices have remained strong and continued to climb. Homes may sit a little longer on the market, but, there is no longer a rush on housing.

The market is correcting itself (as any free-market should) after a steady climb for the past couple of years. Although, many realtors and professional real estate players are calling this market a “buyer’s market”, many buyers disagree. According to the Los Angeles Times today, Mr. Brandon Brennan has been trying to purchase a home by making [buyer’s market] offers only to be rebuffed by seller’s who can’t even be bothered to counter-offer.

Home-sellers know that offers will come in and someone will come along with a fair market value offer. That is the offer that sellers are holding out for. Brennan finally closed on a home, eventually paying more than he had hoped, but less than the original asking price, and only beating other offers by offering to close the deal within 2 weeks.
So for seller’s I guess, I’d say it’s a seller’s market and to buyer’s I would say it’s a buyer’s market. For a market analysis of your home please give me a call at 562-433-1914 or e-mail john.wall1@century21.com. Buyer’s too – for a complete Buyer Potential Report use the same e-mail link.