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Tag Archives: sellers
Hindenburg bet against India’s Adani puzzles rival U.S. short sellers
Feb 1 (Reuters) – When Hindenburg Research revealed a short position in Adani Group last week, some U.S. investors said they were intrigued about the actual mechanics of its trade, because Indian securities rules make it hard for foreigners to bet against companies there.
Hindenburg’s bet has been lucrative so far. Its allegations, which the Indian conglomerate has denied, have wiped out more than $80 billion of market value from its seven listed companies and knocked billionaire Gautam Adani from his perch as the world’s third-richest man. On Wednesday, a $2.5 billion sale of shares by one of its companies Adani Enterprises ADEL.NS was called off.
The short seller has said it held its position, which profits from the fall in the value of Adani Group shares and bonds, “through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.” But it has revealed little else about the size of its bets and the kind of derivatives and reference securities it used, leaving rivals wondering how the trade worked.
“I wanted to short it myself, but I was not able to find a way to do it with my prime broker,” said Citron Research founder Andrew Left, referring to Adani Enterprises and other companies .
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Hindenburg declined to comment to Reuters on the method it used to place its bets against Adani. Adani Group and the stock market regulator the Securities and Exchange Board of India (SEBI) did not respond to a request for comment.
DIFFICULT TO SHORT
Typically, investors who want to bet that the company’s stock will fall borrow shares in the market and sell them, hoping to buy them back at a lower price, in a practice called short selling.
Short sellers such as Hindenburg like to build positions quietly before unveiling their thesis about the company to maximize profits. Discretion is necessary for them, as word of their presence in the stock sometimes can be enough to cause the shares to fall.
In India, however, securities rules make it hard to quietly build positions. Institutional investors are required to disclose their short positions upfront and there are other restrictions and registration requirements on foreign investors.
With the Adani Group, there are added complications: the shareholding is concentrated in the hands of the Adani family and its shares do not trade on exchanges abroad.
Nathan Anderson, Hindenburg’s founder, has been coy even with peers about his bet against Adani. Left and Carson Block, the founder of Muddy Waters Research and another prominent short seller, told Reuters that they got a single word response – ‘thanks’ – to messages of congratulations they sent to Anderson, when usually they would talk shop.
Cracking the code of how Hindenburg did the trade could lead to more short sellers taking positions against Indian companies, which have been rare, analysts said.
“Once these things (short-seller attacks) begin there are others who could be looking,” said Amit Tandon, managing director of proxy and governance firm Institutional Investor Advisory Services (IiAS) in India.
DERIVATIVE TRADES
Reuters could not learn details of Hindenburg’s trades. But several bankers familiar with trading in Indian securities said the more profitable piece of the short seller’s bet would likely lie in the derivative trades it had placed.
Some of Adani’s U.S. dollar corporate bonds , , fell 15-20 cents in the days after the report was released, which would make that bet profitable.
But there are limits. Only a few billion dollars of bonds in total were outstanding and they were not easily available to borrow, one debt banker said.
A more profitable way, these bankers said, would be to place the bet via participatory notes, or P-notes, which are lightly regulated offshore derivatives based off shares of Indian companies.
The entities that create the P-notes are registered with the Indian stock market regulator, but anyone can invest in them without having to directly register with SEBI. An investor can further use intermediaries to obscure its position.
Moreover, the market for P-notes is large. Billions of dollars’ worth of P-notes are traded every year, regulatory data shows, making it possible to place large bets, the bankers said.
(This story has been refiled to add dropped word ‘to’ in the lead paragraph)
Reporting by Shankar Ramakrishnan, Svea Herbst-Bayliss and Carolina Mandl; additional reporting by Jayshree Pyasi in Mumbai and Anshuman Daga in Singapore; Editing by Paritosh Bansal and Anna Driver
Our Standards: The Thomson Reuters Trust Principles.
‘We’re seeing buyers backing out’: This dramatic chart reveals U-turn in the housing market as sellers slash home prices
Here’s a chart that speaks a thousand words about the state of the real-estate market right now.
The chart above, part of a new report by real-estate brokerage Redfin
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on the property market, reveals how home sellers are adjusting to the new normal of 7% mortgage rates.
The chart says that 7.9% of homes for sale on the market each week had their prices slashed — and that’s a record high.
That’s compared to just 4% of homes having their prices reduced each week over the same period a year ago.
Redfin’s data goes back to 2015. The company averaged out the share of listings which saw a price cut over four weeks, to smoothen out any outliers.
Taylor Marr, deputy chief economist at Redfin, added that looking over a bigger time period, i.e. a month, the company’s data shows that a quarter of homes right now are dropping prices.
“We have never been this high,” Marr told MarketWatch in an interview.
Unlike buyers, who are much more sensitive to rising mortgage rates, “sellers are just slow to react to the changes in demand… they set prices based on where they think the market is [and] are often reluctant to set their prices too low,” Marr said.
So for sellers, prices are a little stickier, he added, and slower to come down.
But even if it took a while, it’s finally happening.
After all, mortgage rates are at multi-decade highs, with the 30-year trending steadily above 7% as of Friday afternoon, according to Mortgage News Daily. And that’s likely to go up even more, as the 10-year Treasury note
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4.023%,
is trending above 4%.
Meanwhile, Redfin said that the median home on the market was listed at over $367,000, up 7% over last year.
The monthly mortgage for that home at the current interest rate of 6.92%, according to Freddie Mac, is $2,559.
A year ago, when rates were at 3.05%, that monthly payment would’ve been just $1,698.
Two tips for home buyers struggling with high mortgage rates
Sellers are dropping their prices by 4 to 5% on average, Marr said.
“You would almost expect it to be a lot worse,” he added, given how quickly rates rose and eroded buying power.
But buyers and sellers are also using two different tactics to get some relief on mortgage rates, Marr said.
One, sellers are reaching out to buyers and offering concessions to buy mortgage rates down.
In other words, sellers are asking buyers to pay the full asking price, but proposing to use part of that as a concession to get buyers a lower interest rate on their mortgage.
“Which is essentially a price drop,” Marr said, “it’s the same thing … but it doesn’t necessarily show up in the data.” And it’s hard to get a sense of the magnitude of how this is playing out, he added.
How it works is as such, Marr explained: If a buyer is putting down $100,000 for a 20% downpayment on their home at a 6.5% interest rate, they can instead allocate 10% for the downpayment, and spend the rest of the $50,000 buying down the mortgage rate to 5%.
“5% isn’t very bad, and it might seem like a lot of money, but … chances are you’re going to be incentivized to refinance [in the future] and you’ll have to pay the closing cost on that loan to refinance, which could be upwards of 15 grand,” Marr added.
Buyers are also switching to adjustable-rate mortgages, which offer lower interest rates at the start of the term. ARMs are nearly 12% of overall mortgage applications, the Mortgage Bankers Association noted on Wednesday, which is high.
Where prices are falling
As to where prices are falling, a couple of places stood out to Redfin.
They said that home prices fell 3% year-over-year in Oakland, Calif., and 2% in San Francisco. New Orleans also saw a 2% drop.
“Even in Atlanta, or Orlando, we’re seeing buyers backing out,” Marr observed.
So with the backdrop of sellers finally dropping listing prices, if you’re a buyer right now, don’t be spooked by rising rates and stop looking, he advised.
“There have been opportunities when rates really came down and gave buyers the moment to jump back in and get some good deals on homes that did drop their prices,” he said.
Plus, “it doesn’t hurt to make a low ball offer,” Marr added. “Some sellers are desperate, and that can be a good strategy … we’ve heard from some of our own agents that some buyers are getting incredible deals right now.”
But if you need to rent for a year and wait for things to calm down, then do that, Marr said, and bulk up those savings for that dream home.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com
Credit Suisse is under pressure, but short sellers appear to be eyeing another global bank
Falling mortgage rates have homebuyers so emboldened they’re asking sellers for cash
After a string of steady increases, mortgage rates fell this week — a mixed blessing for the fragile U.S. economy.
The lower rate on a 30-year fixed mortgage is a relief for home shoppers who have been watching rates climb, but it’s also a sign that a recession could very well be around the corner as the market slows.
Rates tend to mirror 10-year Treasury yields, which have fallen as investors seek safer, more stable assets in the face of higher inflation and slower economic growth.
“Rising prices are eating into consumers’ paychecks, leaving many Americans with less money for discretionary spending,” says George Ratiu, senior economist with Realtor.com.
“In addition, with inflation outpacing pay raises, most workers are seeing their income fall behind, further straining the finances of buyers who are also facing higher borrowing costs.”
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30-year fixed-rate mortgages
The average 30-year mortgage rate fell to 5.70% this week, down from 5.81% a week ago, housing finance giant Freddie Mac reported on Thursday. A year ago at this time, the 30-year rate was averaging 2.98%.
“The rapid rise in mortgage rates has finally paused, largely due to the countervailing forces of high inflation and the increasing possibility of an economic recession,” says Sam Khater, Freddie Mac’s chief economist.
“This pause in rate activity should help the housing market rebalance from the breakneck growth of a seller’s market to a more normal pace of home price appreciation.”
Austin real estate agent Lilly Rockwell says the market has already started favoring buyers and that she just helped a client negotiate a purchase for under list price.
“It’s fabulous. Finally. Tons of choices, very little competition,” she tweeted Thursday.
She’s also been advising clients to ask for seller credits — a cash payment the seller gives the buyer at closing — to help them buy down their mortgage rates.
Buying down your mortgage rate means making an upfront payment to your lender to reduce your long-term interest costs, and seller credits can help cash-light buyers take advantage of the option.
“I plan to deploy this strategy myself on a listing I have coming up next week and provide some rate buydown information to just proactively address concerns about interest rates,” Rockwell said. “It’s crazy how quickly the tables have turned!”
15-year fixed-rate mortgages
The rate on a 15-year fixed mortgage is averaging 4.83%, also down from a week ago when it averaged 4.92%. Last year at this time, the rate on a 15-year loan was around 2.26%.
Aside from a few exceptions, rates have been rising for most of 2022 following two years of record-low levels. They took a particularly sharp ascent in recent weeks as the Federal Reserve began raising its benchmark interest rate to curb skyrocketing inflation.
Still, analysts say it’s important to keep the recent spikes in perspective.
“Although rates are significantly higher than last year, they are still historically low, remaining below 6%,” says Nadia Evangelou, senior economist for the National Association of Realtors.
5-year adjustable-rate mortgages
The average rate on a five-year adjustable-rate mortgage, or five-year ARM, was 4.5% this week, up slightly from 4.41% last week. A year ago, ARMs were averaging 2.54%.
Rates for adjustable mortgages are tied to the prime rate. While interest costs start off low, they can surge once the initial fixed-rate period ends.
Some recent borrowers are taking out ARMs in hopes that they’ll be able to refinance into a lower, fixed-rate mortgage by the time the five-year term expires.
How the recent rate swings are affecting the market
Housing activity has undeniably cooled. Close to 12,000 fewer homes sold in April and May compared to the pre-pandemic average, according to the National Association of Realtors.
“It’s a fact that many households are impacted by higher mortgage rates as they no longer earn the qualifying income for the median-priced home,” Evangelou says.
Homebuying, she says, became 15% more expensive in the second quarter — with buyers now needing to earn $104,000 to qualify for a loan on a typical property.
Another change is that more homeowners are listing their properties compared with a year ago at this time. Prices, however, have yet to see any meaningful dips.
In fact, the median price of a home hit a record $450,000 in June, 17% higher than the same month last year, according to Realtor.com.
“At that price, combined with today’s fixed rate for a 30-year loan, homebuyers are looking at monthly mortgage payments of about $2,100 — before adding in taxes, insurance or fees — more than $790 higher than June of 2021,” Ratiu says.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
What are closing costs for home sellers?
A “for sale” sign and “sale pending” sign are pictured in Salt Lake City on Monday, Oct. 18, 2021. Salt Lake City ranks second in the nation for the largest increase in home-sale prices according to a recent RE/MAX National Housing Report. (Kristin Murphy, Deseret News)
Estimated read time: 5-6 minutes
WASHINGTON — With the current seller’s market, along with high demand and low inventory, many homeowners are dabbling with the idea of putting their house up for sale.
But beware — if you’re ready to find an agent and list your home for sale, there are many hidden fees involved with selling a home that you will want to be prepared for ahead of time.
You want to avoid surprises in the home-selling process and understand the ins and outs of closing costs for sellers – from what’s included to how to negotiate a better deal.
For starters, closing costs are the various fees paid —some by the buyer, some by the seller, in order to finalize the home buying transaction. Many people are aware of closing costs for buyers but may not realize what is entailed in sellers’ closing costs.
Here are a few fees for homeowners to watch out for as they prepare to close on a deal.
Agent commission
The most significant cost that home sellers are responsible for is agent commission fees. Commission rates are usually around 5-6% of the final sale price, split between the buyer’s and seller’s agents. Therefore, on a $300,000 home, commission fees could total $18,000.
Transfer tax
Once you officially transfer ownership of a home, the state, county, and/or city where the property is located will charge taxes and fees. Although sometimes these fees are split, it’s pretty common for the seller to cover these costs. These taxes are usually represented as a percentage of the final sale price and vary by state and location.
Title insurance
A title insurance policy protects its owner from disputes about homeownership.
There are two types of title insurance — lender’s (which protects the lender) and owner’s (which protects the owner). Buyers are expected to pay the lender’s title policy, which is normally required for anyone who is receiving a mortgage. However, the question of who pays the owner’s title insurance depends on the state where the property is located.
Escrow costs
The escrow process begins when a buyer makes an offer on a home. The “good faith deposit” or “earnest money” amount shows they are serious about purchasing the property and are deposited into an escrow account controlled by an impartial third-party.
This impartial third party (aka the escrow company) charges a fee for their services in setting up escrow. Typically, these fees are split 50-50 between buyer and seller and vary depending on where the property is located.
Attorney fees
Real estate transactions are complicated, and a seller’s attorney will help them wade through the paperwork and ensure they do not fall victim to any loopholes.
Although buyers and sellers are not required to hire an attorney in some states, it is still a good idea to hire one to look over the final contract. Please make sure you are ready to pay for their time, however. Attorney fees can range between $150 to $500 per hour for a good lawyer.
Outstanding bills and liens
It is up to the seller to pay for prorated items such as property tax and utilities. The seller usually must pay these up to the sale date, at which point the buyer takes over the costs. Sellers will also be responsible for outstanding judgment or liens on the property before moving forward with the deal.
How to calculate closing costs
The average closing costs for sellers range between 8% to 10% of the final sale price once all is said and done, so it’s important to factor these funds into your overall moving budget. Moreover, these costs fluctuate depending on which state the seller lives in and are heavily influenced by local regulations and laws.
For instance, in Florida, it is custom for the seller to pay for the bulk of the closing costs to finalize the deal and bear most of the financial burden in this sense. Sellers usually receive a bigger payout in Florida, however, because property prices are higher. On the other hand, in Alabama, for example, the closing costs are traditionally split more evenly between the buyer and seller.
Sellers should also take additional costs, such as home repairs and mortgage payoffs, into account when calculating how much they will pay to sell their home. Sellers will often make cosmetic or even structural enhancements to a property before putting it up for sale to attract buyers quickly. And they will also have to pay off the remainder of their mortgage and accrued interest to move out officially.
All of these costs can add up quickly, so it’s important to track your spending and try to stick to a budget.
How to lower your closing costs
Home sellers can take several avenues to save money on their closing costs, especially in a seller’s market. When there are low inventory and high demand, homeowners have more leverage in the negotiation process and may even ask the buyer to cover certain costs. In fact, sellers can refuse to pay closing costs if they think they can get a better offer from another buyer.
However, covering a portion of your buyer’s closing costs doesn’t necessarily have to be a bad thing. Under the right circumstances, it could help save a seller money in the long run if a buyer’s overall offer is strong enough. Some things to consider when deciding whether to pay closing costs include:
As this seller’s market continues to build, some experts are predicting a housing market crash. All the more reason to be on top of things, and prepared to sell your home quickly if the opportunity arises.
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Amazon slaps U.S. sellers with 5% fuel and inflation surcharge
Peter Endig | AFP | Getty Images
Amazon said Wednesday it plans to add a fuel and inflation surcharge of roughly 5% to existing fees it collects from U.S. third-party sellers who use the company’s fulfillment services.
The fee will go into effect in about two weeks, and is “subject to change,” the company said in a notice to sellers that was viewed by CNBC.
“The surcharge will apply to all product types, such as non-apparel, apparel, dangerous goods, and Small and Light items,” the notice stated. “The surcharge will apply to all units shipped from fulfillment centers starting April 28.”
With inflation soaring and oil prices on the rise, Amazon is trying to offset some of its own costs by passing fees along to sellers
Amazon already collects fees from sellers who use Fulfillment by Amazon, or FBA. Merchants pay to have their inventory stored in Amazon’s warehouses and to make use of the company’s supply chain and shipping operations.
Some 89% of Amazon’s 2 million-plus sellers used FBA in 2021, according to a report from Jungle Scout, which creates product research software for Amazon sellers.
“In 2022, we expected a return to normalcy as COVID-19 restrictions around the world eased, but fuel and inflation have presented further challenges,” an Amazon spokesperson said in an email to CNBC. “It is still unclear if these inflationary costs will go up or down, or for how long they will persist, so rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time—a mechanism broadly used across supply chain providers.”
Amazon said its fuel and inflation surcharge is 24 cents per unit, below the UPS fuel surcharge of 42 cents and FedEx’s fee of 49 cents, as of March 21, 2022.
WATCH: How Amazon plans to fix its multi-billion dollar returns problem
Rising mortgage rates cause more home sellers to lower asking prices
Several new reports from real estate companies suggest buyers may be starting to get a break in this red-hot housing market. More listings are coming up for sale, and some sellers are lowering their asking prices.
The number of new listings last week jumped 8% from a year ago, according to Realtor.com. This follows four straight weeks of annual declines in new listings. The total amount of active inventory for sale is still down 13% from a year ago, but it may be on track, given the rise in new listings, to surpass year-ago levels by this summer. New listings tend to peak in May.
Prices, however, are still well above year-ago levels. Higher mortgage rates are also making houses less affordable. The average borrower is now paying about 38% more than they would have for the same home a year ago on a monthly payment, according to Realtor.com.
For some buyers, general inflation and related mortgage rate hikes mean less budget flexibility to pursue freshly listed homes. For those who can afford to persist, a silver lining could be relatively less competition for more for sale home options, which could lead to some relief from relentless home price momentum.
As more supply comes on the market and mortgage rates rise sharply, sellers appear to be coming back to Earth, at least a little. About 12% of homes for sale had a price drop during the four weeks ending April 3. That’s up from 9% a year ago, according to Redfin. The rate of sellers dropping their asking prices is now growing faster each month than it has since August.
“Price drops are still rare, but the fact that they are becoming more frequent is one clear sign that the housing market is cooling,” said Daryl Fairweather, Redfin’s chief economist. “It goes to show that there’s a limit to sellers’ power. There is still way more demand than supply, and buyers are still sweating, but sellers can no longer overprice their home and still expect buyers to clamor at their door.”
Buyers are sweating because the average rate on the 30-year fixed mortgage, which has been rising since January, really took off in the past few weeks. It surpassed 5% earlier this week, according to Mortgage News Daily. Consumers are more pessimistic about the housing market, according to a monthly survey from Fannie Mae, and especially about mortgage rates.
The share of consumers who expect mortgage rates to rise further increased to 69% from 67% in March. More consumers also said they believe home prices will continue to rise.
“If consumer pessimism toward homebuying conditions continues, and the recent mortgage rate increases are sustained, then we expect to see an even greater cooling of the housing market than previously forecast,” wrote Mark Palim, vice president and deputy chief economist at Fannie Mae.
Etsy hits sellers with 30 percent transaction fee increase
Following a record-breaking 2021 fourth quarter, Etsy is raising seller transaction fees from 5 percent to 6.5 percent, the company announced today. In a report to investors today, the company says the 30 percent increase will take effect beginning on April 11th. The transaction fee is the percentage of the total order amount Etsy charges when a seller makes a sale.
The added expense to sellers comes as Etsy announced a fourth-quarter revenue of $717.1 million, which the company attributes to a strong holiday shopping season. Etsy added 10 million new buyers in the fourth quarter of 2021, bringing the number of active buyers to a record 90 million. Stock prices jumped more than 15 percent after market close on Thursday following the report to investors.
“We have demonstrated our ability to make improvements that directly translate into more sales for our sellers, as evidenced by record sales per seller in 2021,” Etsy CEO Josh Silverman says in the report. “Our new transaction fee will enable us to invest in key areas like marketing and support to further extend our strong momentum.”
Etsy says the increase in fees will mostly pay for “marketing, seller tools, and creating world-class customer experiences.” But past changes to features for sellers — like the controversial advertising program — have not gone over well with sellers, some of whom are unable to opt-out.
Higher seller fees are likely to upset merchants on the platform, who for years have complained about changes at Etsy as the company grows. The last time Etsy raised transaction fees was in 2018, when it went from 3.5 percent to the current 5 percent, and sellers also pay $0.20 for listing an item, plus payment processing fees.
Pokémon Legends: Arceus Tops Amazon’s “Best Sellers” Chart, Unsurprisingly
Ahead of the arrival of Pokémon Legends: Arceus on the Switch tomorrow, the game has already sold out in certain parts of the world on Amazon.
On both the US and UK Amazon webpages, physical copies of the game are temporarily out of stock. Even digital code sales are performing quite well. The game is currently the best-selling Nintendo Switch title on the website and also tops the charts in both regions as the best-selling video game (across all platforms) right now.
To be fair, anything related to Pokémon sells like hotcakes – and it’s also been a relatively quiet start to the year in terms of blockbuster releases. A lot of other major game releases are scheduled for February or later. Amazon sales of the new Pokémon game stretch to other parts of the world, too – as highlighted by Twitter user @So_Ethereal:
Admittedly, it might be a bit of an uphill battle for Pokémon Legends: Arceus to match the sales of certain other Pokémon releases on Switch, as this is a single game, rather than two separate versions.
Over the past few weeks, Legends has also been on the receiving end of leaks and datamines. Fortunately, this does not seem to have harmed the launch of the title, and the reviews have been quite positive.
Have you pre-ordered a copy of Pokémon Legends: Arceus? Leave a comment down below.