Where real property meets real data, every day
🗞️ Weekend Edition:
In-depth dive on real estate commission changes from August 17
Key changes from settlement
Implications for buyers & sellers
Expert predictions
Tips for buyers & sellers
Colorado push-back on buyer agreements
Value of female leadership in real estate.
VA Loans in hot markets
Dream waterfront listing in New Jersey
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📝 Weekend Dive
Changes to Real Estate Commissions from August Could Mean Low Realtor Fees and Savings
The real estate landscape is poised for significant transformation following the National Association of Realtors' (NAR) $418 million settlement of antitrust lawsuits. This settlement mandates substantial shifts in how real estate commissions are negotiated and paid, promising potential savings and changes for both buyers and sellers. Let's delve into what this means for the real estate market and how you can navigate these changes effectively.
Key Changes from the Settlement
Direct Negotiation of Agent Fees: Buyers will now negotiate their agents’ fees directly, contracting with them before the home search begins. This removes the traditional expectation that the seller covers the buyer’s agent's commission, which was typically included in the home's sales price.
Prohibition of Commission Advertising on MLS: Brokers are now prohibited from advertising compensation on the Multiple Listing Service (MLS). Any commission agreements between buyers, sellers, and agents must be negotiated separately, ensuring greater transparency and potentially lower costs.
These changes are expected to take effect Aug 17 2024, with preliminary court approval, and will release over a million NAR members from liability.
Implications for Buyers
Increased Cost Responsibility: Buyers may need to budget for their agent’s fees, which were previously covered by sellers. This shift could make the home buying process more expensive, particularly for first-time buyers and those on fixed budgets.
Transparent Fee Structures: Buyers will need to sign written agreements with their agents, outlining the fees involved. This could foster more competition among agents and lead to innovative fee structures, such as flat fees or à la carte services.
Potential Savings on Home Prices: If commission costs are no longer baked into the sales price, overall home prices may decrease, potentially offsetting the direct payment of agent fees by buyers.
Implications for Sellers
Reduced Commission Burden: Sellers might save thousands of dollars by only paying their agent's commission or negotiating lower fees for the buyer’s agent. This could lead to significant cost savings on high-value properties.
Strategic Fee Payment: Sellers who choose to pay the buyer’s agent fees might attract more potential buyers and agents, increasing the likelihood of competitive offers and higher sales prices.
Expert Predictions
Real estate experts predict a period of adjustment as the industry adapts to these new rules. Marty Green, a principal at Polunsky Beitel Green, anticipates innovative buyer’s agent arrangements but expects uncertainty in the short term as MLS rules, agreements, and business practices evolve.
Madison Sutton, a New York-based agent, suggests that while buyers might bear a larger portion of transaction costs, the increased transparency could promote competition among agents, potentially leading to reduced fees.
Tips for Navigating the New Commission Landscape
For Buyers:
Shop Around: Take your time to find a reputable agent who is transparent about fees and services. Experienced agents will need time to adapt to the new rules, making it crucial to work with someone who communicates clearly.
Educate Yourself: Leverage resources from the Department of Housing and Urban Development (HUD) and other entities offering home buying training and events.
Budget for Fees: Plan for varying closing costs, as some sellers might cover the buyer’s agent fee while others might not. This could significantly affect your overall costs.
For Sellers:
Explore Your Options: Consult with professionals to understand different commission structures and how they impact your net proceeds.
Ensure Legal Compliance: Work with a knowledgeable agent to comply with legal disclosure requirements and avoid potential lawsuits.
Negotiate Fees: Remember that commission fees are negotiable. Discuss potential savings with your agent and consider negotiating the buyer’s agent commission as part of the purchase agreement.
Conclusion
The NAR settlement is set to reshape the real estate commission landscape, with potential benefits and challenges for buyers and sellers. By staying informed and strategically navigating these changes, you can make the most of the evolving market dynamics. Whether you're buying or selling, understanding these new rules will be crucial for making informed, cost-effective decisions in the real estate market.
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Colorado Push back on Mandatory Buyer Agreements
Mandatory Agreements Under Scrutiny: Starting in August, buyers nationwide will need to sign an agreement before touring homes. However, Colorado's regulatory agency is challenging this, arguing it conflicts with their consumer protection mission.
Regulatory Agency's Stance: Marcia Waters of the Colorado Department of Regulatory Agencies highlighted that agreements are not required in Colorado for property tours or commissions. She stresses the need for transparency and the right for consumers to evaluate agents before committing.
Consumer Complaints: There have been reports of misleading practices where buyers were misinformed about the necessity and nature of these agreements, causing confusion and unintended contractual obligations.
Broader Implications: While NAR supports these agreements for transparency, consumer watchdogs and industry insiders predict potential friction and legal disputes, echoing Colorado's concerns
The Value of Female Leadership in Real Estate
Kate Reisinger, Chief Operating Officer, Leading Real Estate Companies of the World
Challenges for Female Brokers: Female brokers face unique challenges and must trust their instincts. Events like the CEO & Leadership Exchange offer a platform for sharing and receiving new ideas, which can aid in making informed decisions.
Evolving Role of Women: Women have always been vital in real estate, with many building successful companies and inspiring future leaders. The industry is seeing more women in leadership, using their unique talents to drive success.
Importance of Industry Leaders Convening: The real estate industry is ever-evolving. Leaders must adapt to economic impacts, changing living preferences, and business practices. Engaging with peers provides fresh perspectives to strengthen firms and elevate the industry.
Technological Trends and Mentorship in Real Estate
Kimberly Harris Campbell, Regional President, Compass
Trends and Technological Advancements: Technological advances have significantly impacted real estate. AI tools like Likely to Sell and Compass AI enhance agents' business growth and marketing efforts. Staying updated and collaborating on new tech is crucial for meeting industry needs.
Advice for Aspiring Leaders: Confidence and mentorship are key. Building a strong network and seeking guidance from industry leaders can propel career growth. Having a mentor, like Holly Worthington at Compass, can provide essential knowledge and support. Being resilient and maintaining self-worth are vital in overcoming daily challenges.
🛠️ Toolkit
VA Loans in Hot Markets, Challenges and Tips for Veterans
Veterans Face Hurdles in Competitive Markets
Veterans aiming to use VA loans to purchase homes in today's competitive housing market are encountering significant challenges. Although VA loans offer advantages like no down payment and no mortgage insurance, strict inspection and appraisal requirements can make sellers wary. In markets with high demand and low inventory, sellers often receive multiple offers, sometimes far above the asking price. These sellers may prefer offers with easier standards or even cash offers, making it tougher for veterans to compete.
Massachusetts Real Estate Expert Weighs In
Sandi LaCasse, a "Military on the Move" real estate specialist with Jack Conway & Co., has witnessed firsthand how VA loan requirements can deter sellers. "Sellers are getting offers with no contingencies, waiving home inspections and appraisals," LaCasse said. Even minor issues like chipped paint can become deal-breakers for veterans using VA loans, as sellers often choose offers that don't require them to make repairs.
East Tennessee Market Highlights the Struggle
Ed Guynes, a real estate agent with Coldwell Banker Wallace, describes a similar scenario in East Tennessee. In one case, a newly built home received multiple offers, including one from a veteran using a VA loan. However, a cash offer that was $40,000 above the appraised value overshadowed the veteran’s offer. "Cash becomes king, and there are fewer inspections and appraisals required," Guynes explained.
Tips for Veterans Navigating the Market
Be Prepared and Patient
Veterans should prepare to act quickly while being patient. Having current proof of income and pre-approval for a mortgage is essential. Offering proof of additional accounts like savings or retirement can also strengthen your offer.
Proactively Handle Repairs
Collaborate with sellers to address necessary repairs for VA loan approval. Develop a good relationship with your loan officer and ensure you can contact them after hours if needed. Quick resolutions of issues like mildew or peeling paint can help close deals.
Find Advocates
Seek out real estate agents, mortgage loan officers, and VA staff who will advocate for you. These professionals can help navigate the complexities of VA loans and support you in meeting required standards. A strong support team can make a significant difference.
Leverage Personal Connections
Include your military service in a "love letter" to sellers. These personal notes can make your offer stand out by highlighting your service and dedication, potentially tugging at the seller’s heartstrings and giving you an edge in the bidding process.
📸 Dwelling’s
Dream waterfront home in Silverton section of Toms River.
And…that's a wrap on this edition!
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