Housing Watch: Realtors encouraged as Fed lowers interest rates

FRESNO, Calif. (KFSN) -- This week's lowering of a key interest rate by the Federal Reserve is an encouraging sign for realtors.

Housing experts believe the Federal Reserve's decision to cut its benchmark interest rate by half a percentage point will be felt locally.

They say it could result in savings between $100-$300 a month for buyers or those who refinance.

"That will have a positive impact on pushing interest rates down. We will see a flurry to the market," said Mike Allen, the president and owner of Century 21 Jordan-Link & Company.

He believes the market is poised for a strong 4th quarter when it comes to home buying and refinancing.

"The misconception is values are going to go down, the market's going to crash. I don't think it's going to happen. Values have only gone up over the last two years, along with interest rates. There's not always an inverse reaction between rate hikes and property values," Allen said.

Allen also reminds us of a fundamental real estate change - one which now requires a buyer representation agreement.

"Definitely before we show them their first home," Allen explained.

The written agreement clearly spells out the agent's commission and who will pay it.

"Each of those will be negotiated for each transaction now rather than just a blanket number that's being applied to any transaction so I think it creates a higher level of disclosure to buyers. Sellers are going to understand clearly how the process works," Allen said.

Allen adds agent commissions can no longer be posted on any Multiple Listing Service controlled by realtors.

"And it doesn't mean a buyer's going to have to pay an agent's commission," Allen explained.

"My opinion is, as most agents and brokers, is that the seller will continue offering concessions that will in turn cover the agent's compensation on the buyer's side."

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