How to Prepare For a Chaotic Homebuying Season
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Here's your Money Briefing for Monday, April 8th. I'm Arianna Espuru for The Wall Street Journal, filling in for J.R. Whelan. Thinking about braving the rocky real estate market and buying a home this year? Well, there are a few factors that are making getting that dream home a little more challenging.
It's still a tough market. And so that's why it's so important for people who are serious about trying to buy a house this season is to make sure you have things like pre-approval on your mortgage already in place. So when you go to that open house or when you go to make an offer, you have a fighting chance against some people who are going to pay cash.
We'll talk to WSJ reporter Veronica Dagger after the break.
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash Washington Wise.
How is the National Association of Realtors settlement changing who pays buyer agent commissions?
Looking to buy a home this spring? Well, everything about the way you buy your home is now changing. And it can be hard to keep up. WSJ personal finance reporter Veronica Dagger joins me now to discuss it. Veronica, one of the biggest things that's happened in the housing market this year has been the legal settlement by the National Association of Realtors. Walk me through what happened there.
They agreed to get rid of a longstanding rule that required many home sellers to say how much they would pay for home buyers agent. Consumer groups had argued that the arrangement effectively prevented buyers from negotiating with agents to save money and keeping the commissions in the U.S. higher than many places in the world, typically 5% to 6% of the total sales price of the house. The new rules that are going in effect in mid-July, they are prompting some buyers and sellers to question whether or not they should rush to do deals now or wait to see what happens after the changes take shape. So what buyers and sellers need to know right now is there's a lot of uncertainty on how this is all going to shake out eventually.
So do we know how things are going to change in July?
What uncertainty should buyers expect when the new commission rules take effect in mid‑July?
Starting in mid-July, buyers might have to pay for their own agent out of pocket if they want one. And this could be tricky for first-time buyers who don't have that much cash sitting around up front. For context, the current system is that the buyer's agent is paid through the commission charge to a seller. And that is what we were talking about, which often runs from 5% to 6% of the purchase price. If all this goes through and the changes happen, buyers will need to be responsible, most likely, with not only finding their own agent, which many of them do now, but they'll have to pay their own agent and negotiate with this agent potentially about how much they're going to pay them. This is a big shift potentially for many buyers.
So some people are moving forward quicker with deals. Other people are just proceeding as is. Some people are waiting and seeing in July. It's as individual as the buyer who's looking for the house. As you know, there's a lot of other things people consider when they're buying a house.
How can homebuyers get a better mortgage rate during a 7% rate environment?
And so this is just another aspect for them to consider when they're trying to make their decision whether to buy now or wait.
How will it be this spring for someone in the market for a good mortgage rate?
So mortgage rates right now, still hovering around 7%. There's things you can do to get a lower rate. Your best bet in terms of trying to get a lower rate is to, in fact, shop around. Talk to three to five lenders. Include a credit union in that process. Include some online lenders. See what offers you get and find the rate that's going to help you pay that lowest mortgage rate. And when you're doing that, you don't want to focus solely on the interest rate.
What strategies can buyers use to shop lenders and compare APRs effectively?
You want to compare lenders by the APR or the annual percentage rate. And that incorporates the rate and the fees charged for the loan.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:01–1:45
2
How is the National Association of Realtors settlement changing who pays buyer agent commissions?
1:45–2:53
3
What uncertainty should buyers expect when the new commission rules take effect in mid‑July?
2:53–3:53
4
How can homebuyers get a better mortgage rate during a 7% rate environment?
3:53–4:34
5
What strategies can buyers use to shop lenders and compare APRs effectively?
4:34–6:10
6
How should buyers evaluate rising homeowners insurance availability and costs early in the process?
6:10–8:11
7
What inventory trends (new construction vs existing homes) should buyers expect this spring?
8:11–9:32
Speakers
3 identifiedMore from WSJ Your Money Briefing
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