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Excellent Point on paying more attention to rates
Posted by Tim (more from Tim) on Tue, 29 Mar 2011 07:20:46
In Reply to: Re: Let's make some things clear..., James, Tue, 29 Mar 2011 06:55:32
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Around the current sub-5% interest rate on 30yr fixed, a 2.5% co-broker fee is equivalent to about 1/8% (0.125%) in interest rate change; i.e. if one drags out the negotiations and finally win that 2.5% up front, his gain is entirely wiped out if the rate has gone up by as little as 0.125%: he gets the same monthly payment for the next 360 months as if he had never fought that battle and locked in interest with an earlier P&S at 0.125% lower rate. Wonder why so many recent college graduates went into financial industry, huh ;-) It's a lot easier to make most people part with that 0.125% in rates than the 2.5% on principal.
Of course, just to be fair and even-handed in this analysis, if one thinks the rates are going to head down, he'd have every incentive to drag the battle out (and conversely the seller and his agent don't). LOL. One has to decide what his rental cost for carrying on the battle is. The funs of economic "opportunity cost."
posted by 76.118.39...
Posts in this Thread:
- Buying a house; how to collect the co-broker comission?, dmz789qqq, Sun, 27 Mar 2011 21:20:55
- Any other agents here?, ChrisP, Wed, 30 Mar 2011 05:16:04
- Found a solution..., dmz789qqq, Tue, 29 Mar 2011 12:50:46
- Re: Buying a house; how to collect the co-broker comission?, andym, Tue, 29 Mar 2011 08:25:36
- Let's make some things clear..., dmz789qqq, Mon, 28 Mar 2011 20:18:33
- Re: Buying a house; broker comission?, BobS, Mon, 28 Mar 2011 19:11:26
- Re: Buying a house; how to collect the co-broker comission?, BlueWhite, Mon, 28 Mar 2011 15:50:55
- Seller typically pays both sides, AdamD, Mon, 28 Mar 2011 07:10:23
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