Why Hire a Real Estate Broker Instead of a Salesperson?

Drew Morgan, Corporate Broker of MorganHomes, standing confidently in the company's office, reflecting the leadership and trusted guidance behind the "Helping People Make Good Decisions" philosophy.

Why Should You Hire a Real Estate Broker Instead of Simply Working With a Salesperson?

Most consumers don’t realize there’s an important distinction between a licensed real estate salesperson and a licensed real estate broker.

To the public, both may appear to do the same job.

Both can show homes.
Both can write contracts.
Both can negotiate offers.

So why should it matter which license your real estate professional holds?

Because when one of the largest financial decisions of your life is on the line, experience, education, and accountability matter.

A Broker Has Achieved a Higher Level of Education and Experience

In California, every broker begins as a salesperson.

Before qualifying for a broker’s license, an individual must complete additional education, gain practical experience, and pass a far more comprehensive state examination than the one required for a salesperson’s license.

The broker’s license represents the highest level of real estate licensure in California.

That additional training isn’t just about passing an exam.

It’s about understanding contracts, agency law, risk management, disclosure requirements, negotiations, ethics, financing, and the legal responsibilities involved in complex real estate transactions.

Brokers Are Trained to Manage Risk

Buying or selling a home isn’t simply about marketing or negotiations.

It’s about identifying and managing risk.

Questions such as:

  • What disclosures are required?
  • Are there permit concerns?
  • Could easements affect future improvements?
  • Are there title issues?
  • What contractual protections should be included?
  • What liabilities exist for the buyer or seller?

These aren’t simply paperwork questions.

They’re questions that can affect your financial future.

Experience Helps Prevent Expensive Mistakes

The best transactions aren’t remembered because everything went perfectly.

They’re remembered because problems were identified before they became crises.

An experienced broker has likely encountered hundreds of situations involving inspections, appraisals, financing challenges, disclosure issues, title concerns, and difficult negotiations.

That experience often allows problems to be anticipated and resolved before they become expensive.

You Benefit From Better Judgment

Information is everywhere.

Judgment is much harder to find.

An experienced broker helps clients evaluate more than just price.

We help determine whether a property represents a sound investment, whether repairs make financial sense, whether a neighborhood supports long-term appreciation, and whether the transaction aligns with your personal goals.

Sometimes the best advice we give is:

“This isn’t the right house.”

Or…

“This isn’t the right offer.”

That kind of advice isn’t designed to create a commission.

It’s designed to protect our clients.

Accountability Matters

Every California real estate salesperson must work under the supervision of a licensed broker.

When you hire a broker directly, you’re working with the individual who carries the highest level of responsibility for the transaction—not someone who ultimately reports to another licensee.

For many clients, that provides an added level of confidence and accountability.

The Bottom Line

The question isn’t whether a salesperson can successfully help you buy or sell a home.

Many do an excellent job every day.

The better question is this:

When one of the largest financial decisions of your life is involved, why wouldn’t you want the highest level of education, experience, and accountability available?

At MorganHomes, we believe our role isn’t simply to help clients complete a transaction.

Our responsibility is to help them make good decisions.

Drew & Christine Morgan Signature

Why Work With an Experienced Real Estate Broker? − MorganHomes

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Finding a home is easy. Knowing whether it’s the right home takes experience. Learn how an experienced broker helps you make smarter buying decisions.

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Fed Interest Rate Hikes and Your Mortgage

By now you’ve probably heard that interest rates will soon be rising. The media reports simple sound bites such as, “Interest Rates Rise” which is of little help in understanding to which interest rates they are referring—credit card debt, student loan, small business loans or home loans?

Why are the Feds Raising Rates and What will it Mean?

The Federal Reserve rate making the news is set by the Federal Open Market Committee, which is part of the Federal Reserve. It is used as part of a monetary policy to attempt to help smooth the inevitable business cycles that the economy experiences. 

When we hear “The Feds are going to raise rates”, it’s important to note that specific change to the Federal Reserve overnight rate affects adjustable-rate mortgages. One must also watch Treasury Notes and Bonds for volatility in fixed rate mortgages.

The Federal Reserve keeping interest rates low helped us all through the 2007-2009 recession and again was employed during the Pandemic to help keep the economy from wild market force swings.

After the housing bubble burst in 2007, conforming loans actually had higher interest rates due to their greater propensity for default, while Jumbo loans enjoyed smaller rates of default as they were often tired to a properties with more equity.

But the Fed needs room to maneuver and raising the rate to more normal levels gives them some ammo in their arsenal in the event they need to employ their interest rate weapon again.

Since the attack on Ukraine, the feds have already signaled that they will slow any rate hikes this year for fear of stalling the economy. Once they begin raising rates it will serve to slow down the current high inflation by dampening spending.

This is a good illustration of how the Feds use this tool during recessions to stimulate or suppress the economy.

What Effect Interest Rate Hikes will have on Home Loans?

As we discussed in an earlier blog,  the Federal Reserve rate—does not necessarily mean home loans will follow suit—though some often do. 

  • The 10 year Note (typically affects 15 year fixed rate mortgages)
  • The 30 year Bond (typically affects 30 year fixed rates)
  • The Federal Funds Rate (affects Adjustable Mortgage rates)

As interest rates on Treasury notes rise, banks can raise the interest rates on new fixed rate mortgages. That means home buyers will have to pay more each month for a loan which in turn takes away purchasing power. Typically, when interest rates rise, home prices fall. When housing prices fall, the economy slows.

One of the rates most often discussed is the 10-year note. This frequently serves as a benchmark for setting long-term rates like commercial and residential mortgages. This rate is not directly set by the government. It is determined by market forces, often as simple as supply and demand.

Although today’s rates aren’t crazy by historical standards, they are higher than they have been in years, and that’s likely to have a small effect in the housing market — though we don’t see housing prices to declining significantly.

“More than a decade of chronic underbuilding and millions of millennials moving into the homebuying stage of life has created a significant imbalance between housing supply and demand,” McBride from Bank Rate said.“While rapidly rising mortgage rates may temper the demand somewhat, don’t expect home price appreciation to come to a halt. A more modest pace of appreciation is the likelier outcome.

More About Mortgages

Conventional mortgages fall into two main categories: “conforming” and “nonconforming” loans.

Conforming loans are home loans that are purchased by government entities such as Fanny Mae and Freddie Mac and must meet their guidelines such as the amount of down payment. These organizations make the access to more mortgage loans available. These tend to be smaller loans.

The Federal Housing Finance Agency (FHFA) raised the 2022 Conforming loan limits in California. This allows some mortgage loans that were previously labeled “Jumbo” to now be placed in the Conforming loan limit category. Conforming loans in California generally come with better mortgage rates and easier underwriting requirements.

A ”Jumbo” loan is considered a non-conforming loan, when it is in excess of the loan limits allowed for a conforming loan. 

What Are The 2022 Conforming Loan Limits in the Bay Area?

San Francisco, San Mateo & Santa Clara all have the highest limits available—$970,800 for a conforming loan.

What Does this Mean for You?

If you’re a homeowner thinking of selling, higher rates could impact the amount buyers can overbid for your home, as higher rates impact purchasing power.

If you’re a buyer, it means money will cost you more going forward so finding a home sooner rather than later could save you thousands of dollars. Every time there’s a tick up in interest rates buyers get more anxious about completing a purchase—so expect more short-term competition.

Our belief is that a modest rise in the fed rate will have a nominal effect on interest rates, but since lenders can react in any way they choose, all bets are off to definitively say how the upcoming rate hikes will impact our local housing market.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Why Are Interest Rates So Low and What Does it Mean to Me?

Unasked2 copy Whether you are thinking of buying or already own a home the current historically low interest rates may help you save thousands of dollars.

Rates in the last week have averaged the lowest point since records were first kept over 30 years ago. Refinancing today may help you save hundreds of dollars in monthly interest payments but even more important are the long term savings.

Rates are low right now because the financial crisis in Europe is driving the appetite for U.S. bonds which in turn raises the price and lowers the yield (interest) payment. And since mortgage rates roughly track the 10 Year Treasury Bond you can see where rates are headed and why. Rates are the lowest they’ve been–period.

If you think about the past 30 year trend of interest rates, which have averaged around 9%, it’s easy to guesstimate that the odds are good rates will be higher in the future rather than lower. What does that mean to you? If you are considering a purchase it means that there are two ways to look at it: if you buy a home at today’s rates either your monthly payment will be substantially lower or you can buy a considerably larger home for the same amount of money. In fact a payment on a $1,000,000 home ($800,000 loan) would be around $4,234 per month as opposed to $6,437 at the average historic 9% rate. But that doesn’t even begin to tell the whole story.

Not everyone stays in their home for Fhfb_contract_rate30 years but this offers up a substantial savings in interest payments. Most people aren’t aware of the long term costs of home ownership so you’ll be interested to note that at today’s rate your total interest payments over 30 years would total $725,000 and at the historical 9% rate it would be as high as $1,517,000–over double the interest payment for the same home. What could you do with an extra $793,000?

Perhaps rates will never be as high as they were back in the late 70’s and early 80’s but rates have still averaged 6.7% over the last 15 years during a time of historically low rates.

Case-shiller MSANow combine this with the recent decrease in home values and it’s hard to argue that waiting to buy a home will significantly benefit you.

$8,000 Tax Credit Extension to September 30, 2010

What’s the big brouhaha about yet another extension of the $8,000 tax credit for first time homebuyers?  
Bird house Senator Harry Reid wants home buyers to have until September 30, 2010 to close escrow and receive the $8,000 tax credit. But before you go out and celebrate, understand that the only buyers this extension will help are people who already were in contract to buy a home by the April 30th deadline. The proposed extension would allow only those buyers to have until September 30th to close escrow rather than the looming deadline of June 30th. Senators Johnny Isakson, R-GA, and Christopher Dodd, D-CT, are joining Senator Reid in support of the amendment. And why not? It’s a good political move and even Senators who said they would never vote for another extension will feel pressured in an election year to get behind this move.

Will it help? Sure, in a few cases where there are delays in the closing of escrow where banks may be overwhelmed or dragging their feet on short sales or where buyers are simply not able to close soon enough.

But don’t look to the government to shore up the housing industry anymore for awhile. The housing market is like a bird flying the nest…at some point you have to find your own wings.

Real Estate re-cap–2008

Before we wrote this year’s forecast, we went back and re-read our assessment of where the market might be headed in 2008. Graphs

 

Of course very few people could have predicted that the dire real estate woes would drag the entire economy to the brink of collapse and we were no better than most.

 

However, for your enjoyment we’ve clipped a segment out of our 2008 market forecast made on January 4th 2008—and highlighted some of our more interesting comments:

 

“This is precisely why the Peninsula should fare better than other areas [in 2008]”.

 â€œHowever, it’s entirely possible we are on a precipice which could collapse at any time. What is [currently] impacting the Peninsula is the rising cost of energy—especially gasoline.”

“What could have an incalculable impact would be a prolonged recession and loss of local jobs; either of these would undoubtedly bring a decrease in home values to the Peninsula”.

In 2008, Investors eventually began to snap up undervalued properties in the central valley and a few of the nine bay area counties which were hard hit by foreclosures. This had the desired effect of liquidating the tidal wave of inventory but the undesirable effect of sinking the reported median price by skewing the sales mix to smaller homes (since smaller homes and distressed properties sell for less). The media meanwhile continued its relentless reporting of the falling median home price without appreciable application of responsible journalism. Bombarded by the media’s lack of analysis, invariably many buyers were frightened by the reports of falling home values and quite reasonably and expectedly took a “wait and see” attitude. That’s not to say the media’s information was wrong, but they do choose what to report and what to leave out and in many cases they reported numbers without the necessary perspective leading many to believe the housing situation to be far worse than it was in some areas, and far better than it was in others.

Although clearly there were several other factors which inhibited the ability of people to purchase homes—not the least of which was tighter lending standards and higher interest rates—our intrinsic evidence suggests that most credit worthy buyers on the Peninsula withheld from purchasing a home based on the fear of values spiraling down, not because they wanted to wait and “time the absolute market bottom” or couldn't get a loan.

 

Belmont-Month in Review December 2008

We’ve got a lot to cover at the beginning of a new year as we go back and examine all of 2008 as well as the month of December.

This is our month-end report of home sales in Belmont for the month of December 2008. Note that while the median price dropped significantly from November, so did the size home which sold in December. The difference in size of homes in the two months was 190 square feet. At the price per square foot of $514 that could account for $97,660 of the difference in the median home price—meaning that home prices were actually higher in December if you factor in for the size of home which sold.

Sales were up too. There were eight sales in November and eleven in December. That’s an anomaly as typically sales in November are greater than December. We’ll chalk that one up to the dire economic news in October (October sales are November’s closings).

Click on the chart for a readable picture.

December 2008 Belmont Sales

Market Update-11.24.2008

Drew & Christine Morgan



 


Housing Update–November 2008

(650) 508-1441


dmorgan@morganhomes.com


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San Mateo County continues to out performed many of the nine bay area counties but a protracted deep recession could change all that.


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We’re very excited to bring you a new animated version of our graphs depicting the various housing market trends in San Mateo County and the cities which lie within.


Each month we download data from our Multiple Listing Service and analyze the market indicators. We provide this in-depth analysis for several of the many cities we serve on the Peninsula.


We’ve also added short audio tags to describe what we are depicting and help put the information in perspective.


Another feature will be our “Weekly Graph”. We’re not saying it will change each week but when an interesting trend develops you’ll find it under that tab.


We hope you’ll take a moment to check out our new graphical interface on our “How’s the Market?” link and give us some feedback.













Unveiling our NEW Fusion charts!

Graphs We’re very excited to bring you a new animated version of our graphs depicting the various housing market trends in San Mateo County and the cities which lie within.


Each month we download data from our Multiple Listing Service and analyze the market indicators. We provide this in-depth analysis for several of the many cities we serve on the Peninsula.


We’ve also added short audio tags to describe what we are depicting and help put the information in perspective (Click on the play button to hear a brief introduction).




Another feature will be our “Weekly Graph”. We’re not saying it will change each week but when an interesting trend develops you’ll find it under that tab.


We hope you’ll take a moment to check out our new graphical interface on our “How’s the Market?” link and give us some feedback.

When A Little Common Sense Goes A Long Way

I found the picture that accompanied the article in the San Francisco Chronicle, Saturday November 15th 2008 title “Increase in Deaths, injuries on dangerous San Francisco Streets”  a bit symptomatic of the problem.

The article is reciting the statistics on just how dangerous the streets are for pedestrian and bicyclists and the picture shows a pedestrian walking right out in front of a car without even looking at the driver of the vehicle which is poised to potentially run him over.

(click on the picture for a full-sized view)

SF Chron 11

Don’t get me wrong, in most accidents drivers are in fact at fault and hitting pedestrian accounts for more than half of the fatalities each year in San Francisco. That doesn’t mean we should subjugate personal responsibility or common sense for laws. Traffic lights are there to tell drivers they need to stop, and laws are there to help enforce that they do so, but if they fail to stop who really wants to be dead right?

I applaud Belmont for installing the flashing crosswalk signals to alert drivers that a pedestrian is about to cross. This extra “heads-up” could save many lives if it were employed in San Francisco. And while their proposal to install cameras to award citations for failure to stop will generate much needed traffic fine revenues, it will do little prevent accidents; remember the citations are given after the fact—once there has already been a violation. That said, if the fines generate enough revenue to be self-sustaining or better yet offer extra revenue to fund lighted crosswalks I’m all in favor.

Not being privy to the statistics, intuitively, I’ll bet that the person who purposely runs a red light does so by just missing a yellow one. If the lights were timed with a little more delay, a pedestrian would not receive a green light until well after the opposing light had turned red. The real danger is in drivers who plow on through a red light oblivious to its warning, well after the driver should have stopped—giving pedestrians ample time to wander out in front of an oncoming car.

When I was a child my mother taught me to stop, look and listen before crossing a street. Somehow those simply life saving lessons have been lost as people become more reliant on traffic lights and less reliant on common sense—traffic signals do not substitute for common sense and personal preservation. Sure people are supposed to stop, but pedestrians fail to remember that sometimes they don’t, or can’t always do so.

I’ve driven around Belmont for many years and I’m always amazed as I approach an intersection to see for example, a mother with a stroller fixated on the WALK signal in front of her and not on whether I am poised to heed my signals. They’ll blindly push their stroller right out in front of my vehicle on the assumption that in a perfect world I will see the red light, heed the laws, that I will physically be able to stop and my car will mechanically be able to do so—should you really have that much faith in the average driver or the maintenance of their vehicles?

Look, listen, be aware of your surroundings and a lot of these accidents could be avoided.