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June, 2006 Newsletter

+++++++++++ June 1, 2006 +++++++++++++++++++

Introduction: Existing Sales Drop, New Sales Rise
Mortgage Rate Update: Rates Continue to Rise
This Month's Tip: Getting the Representation You Need

Introduction: Existing Sales Drop, New Sales Rise

Welcome to the June edition of the Home Buyer's Newsletter,
brought to you by the
Home Buyer's Information Center.

More mixed messages as in the month of April new home sales
rose compared to March while existing sales dropped around
2%. Existing-home sales eased in April on the heels of a
two-month rebound, according to the National Association
of Realtors®.

Total existing home sales – including single-family,
townhomes, condominiums and co-ops – slipped 2.0 percent
to a seasonally adjusted annual rate of 6.76 million units
in April from a downwardly revised level of 6.90 million
in March, and were 5.7 percent below the 7.17 million-unit
pace in April 2005.

David Lereah, NAR’s chief economist, said the decline was
expected. “Our leading indicator for pending home sales was
trending lower, and our forecast model is showing a modest
decline for the second quarter with sales leveling out before
rising in the fourth quarter,” he said. “Higher interest rates
are slowing home sales, but we see this as another sign of a
soft landing for the housing sector which remains at
historically high levels.”

On the new home sales side, sales increased from March but
declined from April, 2005. Sales of new one-family houses
in April 2006 were at a seasonally adjusted annual rate of
1,198,000, according to estimates released jointly May 24th
by the U.S. Census Bureau and the Department of Housing and Urban
Development. This is 4.9 percent (±11.5%) above the revised
March rate of 1,142,000, but is 5.7 percent (±9.8%) below the
revised April 2005 estimate of 1,270,000.

The median sales price of new houses sold in April 2006 was
$238,500; the average sales price was $298,300.
The seasonally adjusted estimate of new houses for sale
at the end of April was 565,000. This represents a supply
of 5.8 months at the current sales rate.

When reviewing sales numbers, it is important to keep a
couple of things in mind. First, these numbers are frequently
revised in upcoming months, often substantially. Second,
the existing sales number comes from the National Association
of REALTORS, a trade group whose livelihood depends on the
sales of homes.


Mortgage Rate Update: Rates Continue to Rise

Mortgage rates continued in their general upward trend in the month
of May, although the pace of increases may have slowed just a bit.
According to mortgage company Freddie Mac, the average
for 30-year fixed-rate mortgages stood at 6.62% for the period ending
May 25th after beginning the month of May at an average of 6.58%.
There was a similar trend in 15-year fixed-rate mortgages which began
the month with an average of 6.21% and ended the period with an average of

The slowing rate of increase may be a good sign, but be aware that
economic conditions can affect mortgage rates fairly quickly. Just one
report that shows inflation is trending upward faster than what was
expected could have an effect on rates almost immediately. Keep your
eye on the trend, lock in your rate when the time is right, and save
yourself lots of money in mortgage payments.

For current average mortgage rates, see the
rates page.

For more information on mortgages, visit the
Mortgage Section

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This Month's Tip: Getting the Representation You Need

Depending on where you live, the last 10-15 years has shown
some big changes in the way Real Estate Agents and their clients
interact when buying and selling properties. It is of utmost
importance for a home buyer to not only be aware of the
representation that is available to them but also to become
familiar with the extent and limits of that representation.
"Buyer Agency"--where a Real Estate Agent represents the
interest of the buyer rather than the seller--has changed
the face of the Agent's position.

Traditionally (prior to the rise of Buyer Agency) the
Real Estate Agent virtually always represented the seller.
Just as a car salesperson represents the car dealership
or an appliance salesperson represents the appliance
retailer (the sellers), the Real Estate Agent owed their
allegiance to the seller of the property. Obviously,
there was a good chance for confusion in this type of
relationship, since a buyer who spent numerous hours
with an Agent looking for, seeing and evaluating houses,
often had the misconception that this Agent was looking
out for their best interests. In actuality, though, the
Agent was bound, legally and ethically, to represent the
interests of the seller--someone who they probably never
had even met!

The advent of Buyer Agency changed that situation forever.
Now, a Real Estate Agent has the opportunity to represent--
and look out for--the person with whom they are working
with and spending their time with--the buyer. Information
that the buyer related to the Agent--if they are working
as a Buyer Agent--had to stay with the Agent. Under the
traditional agency relationship (where the Agent automatically
represented the seller) that information would have to be
relayed to the seller. For example, if a buyer told the
Agent "we want to offer $175,000 but we will go as high as
$190,000 if we have to" that information would--in fact,
has to, go directly to the seller. Talk about putting the
buyer at a huge disadvantage!

With the arrival of Buyer Agency, though, the home purchaser
gets to turn the tables a bit. Here, a buyer makes an
agreement with an Agent to represent their--the buyer's--
interest rather than the seller. With Buyer Agency, the
Agent can disclose to the buyer any information that is
available, even if that information could be considered
more of an advantage to the buyer than the seller. A
couple examples of information that could be passed on
to the buyer (if the Agent has access to the information
of course) might be the seller's reason and motivation for
selling or the level to which the seller is willing to

A Buyer Agent can share a wealth of other information with
a buyer. For example, an Agent should be able to develop
a Comparative (or Comparable) Market Analysis (a CMA) to
determine what a realistic selling price for a particular
property might be. A CMA lists all properties in the area
that are currently active, under contract and, most
importantly, recently sold and closed with the final sales
price. If the Agent had been representing the Seller,
they could not share this information with the buyer if
the CMA could put the seller at a disadvantage (if, for
example, the CMA showed that the house should be selling
for considerably less than the listing price).

We have a number of articles on the Home Buyer's Information
Center site that will give you a much deeper understanding
of agency in general, Buyer Agency in particular as well
as information on pricing.
Buyer Agency
Setting a Value on a House
Understanding CMAs

Next Month's Topic: Are We Entering a Buyer's Market?


The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched.
You can find the checklist

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a quick line

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.

Have a great month and good luck in all your endeavors!

The Team at the Home Buyer's Information Center

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