Rate-Speculation: A Brief Chicago Outlook with Some Words of Wisdom Throw In For Agents and Consumers

The next time you go to open your mouth to answer a client's question regarding where interest rates are headed- STOP. Now, before you open it again consider this- if you advised them about it you represented yourself as an expert and are opening yourself up to lawsuits galore.

Consider the complications of the current market and all the factors that can effect interest rates. Are you really qualified to answer that question taking everythign into consideration? Do you really even understand it?

Of course this post is a call for all RE professionals to strive for no less than an advanced understanding of finance principlas both general and those specific to our field, but it is more.

In Chicago, we've gotten no where near the kick in the face that the coasts are experiencing. We're looking for a bottom somewhere near mid-2009 and all signs are pointing upward right now. Money is cheap, inventory is plentiful for even the pickiest buyer, great time to be buying a house right? Absolutely!!

But I'm hearing a lot of agents tell people to continue to wait as prices will continue to come down and when I hear this I cringe. Yes, I agree that getting the best price possible on a home is paramount but do not let that one single task pull you off course. What most agents forget to mention, or more likely don't understand, is that with economic rebound comes a myriad of other changes- many of which are not advantagious to buyers. For example, an economic leveling off and turn around will eventually cause inflation which will drive up the cost of money and thus interest rates. While the average home price might drop an additional 2-3% by that time, the extra cost of your mortgage every month more than wipes out that perceived gain.

Now here is my plee with all you buyers out there to find a GREAT lender. Not good, not talented, but GREAT!!! Your lender should be more than just the person who gets you a loan. it is important to forge a strong relationship with that person and go over multiple scenarios and rates that cover all possibilities. They should have a strong understanding of economics and be up to the second on what is currently happening out there and how it effects you directly.

When you see a news article and a question pops up write it down and email it to them. Go on-line and read up on the questions you should be asking, do something to cover your bases!

Too many people refused to take an active interest in their education regarding real estate and the finance industry that supports it. Now, more than ever, it is imperative that everyone out there take the time to ask the questions we didn't ask before. And if you're still not sure of the answer to your question, then ask it again and again until you actually feel comfortable with every step of the process and can form your own opinions on the situation.

Education is key here. Your agent and lender should be working together in unison to provide you not only with data but also interpretation and analysis of the market and how you can maximize your position by using that knowledge to your advantage.

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Scott Newman
Newman Realty
(773) 474-7011
newmanrealtychicago@gmail.com