What will happen if rates drop?

By
Real Estate Agent with Friestad Realty

There is a lot of talk this weekend on a national level of the possibilites of a rate cut by the Fed on Tuesday.  There is also a lot of talk of Government intervention into this whole sub-prime lending mess.  As a Real Estate Agent and business owner in Shreveport Louisiana I have some mixed emotions about both.  First and foremost, I belive that a correction in the market is good for the strong Realtor and for the wise investor.  I am not in favor of a rate cut!  A few years ago, money was hard to find, but deals were easy to find, so a wise real estate investor could make some serious money.  Secondly, is it really good for America for people that have no business buying homes getting into special progams that promote home ownership?  What are people learning when they own rather than rent a home?  What we are seeing is that they are learning they made a giant mistake!!!  Landlords serve a great service...when things go wrong they are there to repair them.  The sub-prime market...people buying homes that do not have the credit or history that proves wise money management in my humble opinion shoud go away.  My daddy taught me that if it seems too good to be true it probably is...and we do not need the government to intervene with our tax dollars.

As real estate agents we owe it to our community to not sell homes to people that cannot afford to buy them.  I am so tired of getting offers where the seller pays the down payment, the closing cost, the prepaids, everything.  Why is the buyer buying a home???  I think we as agents, both Real Estate and Mortgage lenders have become focused on our commission, our own greed, and we are doing our clients a dis-service.  I have felt no greater joy to meet with a first time home buyer, explain that they need to spend 6 months getting their finances in order and then sell them a home 6 months later.  I can also say that I know that unless an unforseen event occurs in that family, they will never have to face losing the house!

In my opinion, we need to focus on the client...not the rates...not the newest programs...not the work-arounds...but really focus on the what is best for the client.

Scott Friestad

www.shreveportagents.com

Comments (7)

Kathleen West
Trademark Realty Group of Palm Coast - Palm Coast, FL
Flagler County & Palm Coast Realtor

Great post!!! 

Sep 16, 2007 02:33 PM
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Scott, nice blog. You are correct on many points. Insurance rates are more important to us in Southeast Louisiana. When a couple has to pay $4000 in homeowners insurace for a 175k home we are in deep trouble. These are in areas that had no Katrina damage or have never never flooded. That is with a lot value of 80k, does not make sense to me. Where has Blanco been hiding? 

Sep 16, 2007 02:50 PM
Simon Conway
Orlando Area Real Estate Services - Orlando, FL
Errrrrrr - excuse me....but this is called "The Market" and we should leave it alone because it will always find its own level. Who are you to decide what someone can or cannot afford? That is up to the lender. And the greedy lenders are now suffering - that too is the market. And those who should have known better about buying a home are also suffering - once again the market. In the middle of the boom, sellers were unreasonable - often raising prices in the middle of negotiations; asking BUYERS to pay some of the sellers' closing costs - and buyers were stepping up to do just that. Now we have a different market and round and round we go. I invest as well and trust me - sellers are going to be making big concessions to me if they want my signature on the closing statement.
Sep 16, 2007 03:02 PM
Scott Friestad
Friestad Realty - Shreveport, LA

Simon, I think you and I agree...let the market do what the market will do, no governemnt interference needed!

Scott

www.shreveportagents.com

Sep 16, 2007 03:14 PM
Brad Snyder
Sierra Vista Realty - Sierra Vista, AZ

Scott,

You made some great points and I also agree with Simon. It is not our job to qualify our clients, it is the client and the mortgage folks who should be making the decision on what a client can afford.

Thanks for the post.

Sep 16, 2007 03:16 PM
Simon Conway
Orlando Area Real Estate Services - Orlando, FL
Scott - then we are on the same page, but of course the Government doesn't decide whether or not to cut or increase Fed rates. I think they should cut them because I believe the country's economy needs a boost.
Sep 17, 2007 12:27 AM
Scott Friestad
Friestad Realty - Shreveport, LA

Yes...you are right.  That was my opinion based on the rate being higher makes it harder to get money...for the investor.  In our market, everyone is an investor and the price of investment property shot through the ceiling.  When rate begin to climb and stated programs begin to disappear, investment opportunities came back.  For the average consumer wanting to buy the first home or move up or down, a rate decrease would be good.  For the agent, a rate decrease would be good.  Again, I feel like we should care more about the client...even if it means helping them prepare to be a home owner...then to simply sell them something we know they cannot handle.

So, hopefully I am totally unclear now. :)  The investor side of me hopes the rate is left alone, but the agent in me is hoping for a full point cut.  I realize neither of these is going to happen.

Scott

Sep 17, 2007 12:35 AM