Frequently Asked Questions

Traditionally, real estate transactions were skewed to favor home sellers over home buyers. This was because brokers worked in the interest of sellers, either representing them directly or locating potential buyers for sellers. Over time, though, professionals for both sides of home property transactions have emerged. They are buyer’s agents and seller’s agents. Let’s examine buyer’s agents vs. seller’s agents to unearth what the
difference is between them.

Seller’s agents, or listing agents, are those that help people who want to sell their homes. They may perform a home audit and recommend updates for the homeowner to make in order to improve the appeal of the property. They’ll also guide a seller in determining a proper price for their home and developing marketing strategies to attract potential buyers. In the later stages of a real estate transaction, seller’s agents negotiate with buyers and their representatives to obtain an ideal final price for the seller as well. It’s possible for seller’s agents to handle matters for a seller and buyer, but you can count on them to assist the seller’s interests much more.

Buyer’s agents, on the other hand, work to aid buyers who are looking to acquire property. They’ll locate homes for sale that they believe you may be interested in based on your preferences. When you’re viewing a listing, buyer’s agents can examine it and communicate its value to you. Buyer’s agents will also walk you through the paperwork, make home inspection recommendations, and negotiate for you when coming to an
agreement with a seller. It’s essential to know that general buyer’s agents aren’t always entirely on your side, though. Many work in real estate firms that also take listings. Because of this, they may have sellers’ interests in mind as well as that of buyers. In other words, their priorities are split, and the buyer often loses out as a result. Thankfully, there are professionals that you, as a buyer, can turn to for true support; these professionals are called exclusive buyer agents. Exclusive buyer agents represent your interests alone. Their offices don’t accept listings, and every broker working in their offices specializes in working on behalf of buyers only.

1. What is the Prime rate?
The lowest rate of interest at which money may be borrowed commercially. When Prime is raised, it is harder to borrow and spend money in the economy, thus cooling demand, and this helps slow down inflation. (Inflation is the enemy of low interest rates.)

2. What does the Prime rate affect?
Short-term loans between banks, credit cards, home equity lines of credits (HELOC), and other lines of credit. (Anything that bases off of the Prime rate. AKA: "the federal funds rate" would be affected.)

3. How does the Prime rate affect fixed mortgage rates? The Prime rate has little 'direct effect' on most long-term fixed mortgage interest rates. Only credit cards, home equity lines of credit, and other lines of credit are typically tied to the Prime rate.

4. If the Prime rate is raised, will that directly affect fixed rate mortgages?
No. Not normally. And, if the market was already "prepared for the adjustment", it may not affect fixed mortgage rates at all. (Yesterday was this example. The markets were expecting up to a 1% hike, so, the .75% was not "shocking".)

5. What does it mean when the Federal reserve "Hikes Prime"?
When the Federal Reserve "hikes rates" they send the Prime rate higher, and that in turn that means the monthly interest payments on existing debt through certain programs will soon be higher. The price of any new lines of credit will be based on the new Prime rate as well. (Things like credit cards, and home equity lines of credits will feel this. In contrast, fixed rate mortgages will not feel a change, because they are not directly based off the Prime rate.)

6. On 07-27-2022, why *didn't* 30-year mortgage interest rates rise?
The Fed only raised the Prime rate by 75 basis points (.75%). So, this is not even the full 1% that many predicted. Mortgage interest rates responded "positively" to this yesterday. It looks like the market was "expecting" the full 1% and having only a .75% raise to Prime, was a relief instead of a shock. As an example, if the Fed would have raised Prime 1.5%, instead of the 1% predicted, that could have caused a shock in the markets that could have affected everything negatively (Stocks, mortgage rates, and lines of credit. Inflation is the enemy of low interest
rates.)