The markets were up again last week, as Jerome Powell, the chairman of the Federal Reserve, indicated rate cuts are around the corner. Now is a great time to lock in long-term CD rates. If you own individual bonds, you should discuss lengthening the duration of bond ladders with your advisor. For example, you may own a five-year bond ladder. This would mean 1/5 of your bonds mature each year for five years. As the bonds mature, you buy new bonds that are five years from maturity. Stretching this to a ten-year ladder would mean 1/10 of your bonds mature each year, over a ten-year period.
If the potential for lower interest rates has you considering buying a home, there was a big change last week. Traditionally, the seller paid both their agent and the buyer’s agent a commission. As part of a settlement, the National Association of Realtors, the trade association for real estate agents, agreed to changes in how commissions are advertised and paid.
Starting last week, the commission paid to the buyer’s agent can no longer be advertised on multiple listing services, the database agents use to advertise homes for sale. The result is that the buyer’s agent can no longer search for houses with a higher commission, potentially pushing clients towards a house that would pay them a higher commission.
The second major change is that buyers must sign a representation agreement with their agent before they can tour homes. These agreements explain how the buyer’s agent is paid, and also state that, if the sellers do not pay the buyer’s agent’s commission, the home buyer is responsible for the difference. The key here is that these commissions are fully negotiable. Beyond that, a buyer’s agent cannot be paid more than the up-front agreed upon commission, even if the seller is willing to pay more.
Since this is a whole new ball game for homebuyers, some firms are offering trial contracts for a week, or even a day, to allow the buyer time to see how they like working with an agent before fully committing to them. Like any contract, it is important that you take the time to read through it prior to signing. If you’re really uncertain, it may be worth paying an attorney for an hour of their time to review the contract. Like anything else financial, it can be very expensive to be cheap.
Your action item is for folks who use buy now pay later programs like Klarna or AfterPay. Many credit cards have their own “Pay Over Time” option, and will stop recurring charges to these types of companies. If you are using them, be sure to check with your credit card company, and update your payment method to avoid any late charges.
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