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Flat Conditions for Single-Family Home Size

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An expected impact of the virus crisis was a need for more residential space, as people use homes for more purposes including work. Home size correspondingly increased in 2021 as interest rates reached historic lows. However, as interest rates increased in 2022 and 2023, and housing affordability worsened, the demand for home size has trended lower.

According to second quarter 2024 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area edged up to 2,164 square feet, just off the lowest reading since the second half of 2009. Average (mean) square footage for new single-family homes registered at 2,363 square feet.

Since Great Recession lows (and on a one-year moving average basis), the average size of a new single-family home is now effectively flat at 2,387 square feet, while the median size is about 3% higher at 2,165 square feet.

Home size rose from 2009 to 2015 as entry-level new construction lost market share. Home size declined between 2016 and 2020 as more starter homes were developed. After a brief increase during the post-COVID building boom, home size trended lower due to declining affordability conditions. As interest rates decline, new home size could level off and increase in the quarters ahead.

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This article was originally published by a eyeonhousing.org . Read the Original article here. .

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New real estate commission rules to roll out Aug.17: Here’s how selling and buying a home

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New rules to how homes are bought and sold could mean an average savings of more than $50,000 to Peninsula home sellers. Photo courtesy Getty Images.

Big changes are coming to how homes are bought and sold beginning Aug. 17 when new rules roll out that will revamp how Realtors get paid commission. 

The changes, which are part of a $418 million court settlement that the trade group the National Association of Realtors announced in March, put an end to the decades-old practice requiring home sellers to pay 5% to 6% of a home’s purchase price to cover the commission for both the listing agent and the buyer’s agent.

For sellers on the Midpeninsula, where the median price for a single-family home is above $2 million – this means an average savings of more than $50,000 in commission fees.

The sudden death of the 6% commission

The Sitzer/Burnett buyer-broker commission lawsuit – a class-action lawsuit filed in Kansas City, Mo., last October on behalf of 260,000 home sellers in the Midwest over the National Association of Realtors’ commission rules – paved the way for the new regulations that will affect sellers, buyers and agents nationwide. 

A federal jury found the National Association of Realtors and some residential brokerages liable for nearly $1.8 billion in damages after determining they conspired to inflate commissions by forcing sellers to make non-negotiable offers of compensation to the buyer’s agent for listings on the Multiple Listing Service. 

What buyers should know

If you are a buyer and your agent is using an Multiple Listing Service, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided and for how much. Written agreements are required for both in-person and live virtual home tours and must include: 

The amount of compensation the real estate agent will receive and how this amount will be determined. Is it a flat fee, a percent of the home cost or an hourly rate?  Compensation cannot be open-ended or determined by “whatever commission amount” the seller is offering to give to the buyer’s agent. 

A statement indicating that the agent is prohibited from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer

A statement indicating that broker fees and commissions are fully negotiable and not set by law. 

Information from the National Association of Realtors.

To resolve the litigation claims against the trade association and more than one million Realtor members, the National Association of Realtors agreed to make changes to its commission process as part of the $418 million settlement agreement.

The association, however, has stressed that commissions have always been negotiable and continues to deny any wrongdoing by its members in regard to commissions. 

“NAR does not dictate commissions. This was true before the settlement agreement and remains true once the practice changes go into effect,” according to a statement by the association.  

What the changes mean to buyers and sellers

Under the new system, the most significant change is how buyers’ agents are paid. While the seller can choose to pay a buyer’s agent, the rules make it crystal clear that sellers are no longer required to offer any compensation to a buyer’s agent. 

Buyers now will be required to negotiate directly with their own agents and must enter into signed agreements that outline how they will compensate their agent (flat fee, hourly rate or other arrangements), the amount they will pay and what services they want their agent to provide. Written agreements will be required before a buyer and their agent can do any in-person or live virtual home tours. Buyers do not need a written agreement if they are just speaking to an agent at an open house or asking them about their services.

There are also changes to how and where real estate professionals may communicate with each other about offers of compensation. These offers are no longer allowed on Multiple Listing Service platforms, which are private databases created, maintained and paid for by real estate professionals and provide property listings to Zillow, Trulia, Realtor.com and others.  

Individual agents and real estate companies, however, will still be able to reference compensation on their own websites. 

“These changes will bring more transparency and more clarity for home sellers and buyers,” said Jennifer Branchini, regional vice president of the National Association of Realtors for California, Hawaii and Guam. Branchini, who served as last year’s president of the California Association of Realtors, manages the Compass real estate office in Pleasanton.

Talk of the industry

The lawsuit and the National Association of Realtors’ subsequent agreement are the talk of the industry — but little of it on the record. Numerous local Realtors, the Silicon Valley Association of Realtors, the Sunnyvale office of MLS, and the Real Estate Research Institute of Hartford, Conn., all either declined comment or did not return messages for this story.

Michael Repka, CEO and general counsel of DeLeon Realty of Palo Alto, had plenty to say, however. He said the 5% to 6% commission structure — including sellers paying 2.5% to agents representing buyers — has been the norm throughout the industry since he joined it in the 1990s.

He said a recent analysis of home sales in Palo Alto valued at between $2 million and $10 million, revealed that nearly 95% of them included the 2.5% fee paid by sellers to agents representing buyers.

Repka said he believes the rule changes will be good for the real estate market. With sellers now looking at paying a commission of only 2.5% to 3.5% on any given transaction, Repka said this could persuade more long-time Midpeninsula homeowners to sell their homes. That, in turn, could put more badly needed housing inventory onto what has been an historically tight market in recent years.

“This new situation results in something that is more fair to the seller,” he said.

The new rules still allow sellers to offer some compensation to the agents of buyers, but the amount paid, if any, is now up to the seller, Repka added. 

“Typically, sellers had no option to pay less than the total commission. Even if the buyer’s agent’s involvement was minimal, or if the buyer discovered the property on their own (without the assistance of an agent), the listing agent retained both sides of the commission,” Repka said. 

This practice, he explained, has been used to encourage agents to point buyers toward properties that offer them higher commission rates. Sellers who didn’t offer 2.5% commission to a buyer’s agent, allegedly risked having their listing “blacklisted” by some real estate agents, according to Repka. 

“In essence, buyers will now have access to information about all homes available for sale, irrespective of whether the seller offers minimal or even no compensation to the buyer’s agent,” Repka said. 

According to the settlement facts outlined on the National Association of Realtors’ website, the association already had MLS policies in place regarding the non-filtering (or removal) of listings based on compensation. The new rules amend that policy “for clarification purposes and to ensure consistency with the proposed settlement agreement.”

Whether the 6% commission has been a longstanding and common practice, depends on whom one speaks to in the industry. 

One veteran Midpeninsula agent, who preferred not to be named, said 6% commissions have never been demanded across the board by agents locally, adding commissions are typically negotiated between home sellers and Realtors — and discounted commission rates are fairly common “to keep transactions alive.”

She said it’s not unusual for agents to “absorb costs” at times for sellers and buyers.

While the new rules provide more transparency and give sellers more options, some say the homebuying process may become more challenging for first-time buyers. 

“At a time when home prices and mortgage interest rates are higher, these new rules place an additional financial burden on homebuyers, particularly first-time homebuyers who are already struggling to come up with a down payment to purchase a home.” Eileen Giorgi, president of the Silicon Valley Association of Realtors, said in a news release from the association. 

New California requirements in the works

On the buyers’ side, Branchini, regional vice president of the National Association of Realtors, said the issue also has attracted the attention of lawmakers in Sacramento. The California Legislature currently is considering a bill that would require written agreements between agents and homebuyers. It would enshrine the requirement in state law, complementing the new industry directives.

Mantill Williams, Washington, D.C.-based vice president of communications for the National Association of Realtors, said 18 states currently have such laws, with several more, including California, now proposing similar legal requirements.

Assembly Bill 2992, authored by Assembly member Stephanie Nguyen, D-Elk Grove, would mandate buyer/broker written agreements — already required for sellers and brokers. The bill is still working its way through legislative committees.

Despite the National Association of Realtors’  widespread coverage, the association’s agreement does not yet cover all brokers in the industry. Officials of HomeServices of America Inc. of Edina, Minn., are still litigating the lawsuit, known as the Sitzer-Burnett vs. National Association of Realtors case. HomeServices of America is the parent company of Intero Real Estate Services, which has local offices in Palo Alto, Menlo Park, Los Altos and Redwood City.

David Goll is a freelance writer who regularly contributes to the Real Estate section.

– Linda Taaffe contributed to this article.



This article was originally published by a www.paloaltoonline.com . Read the Original article here. .

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Buying or selling a home set to change on August 17

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KSHB 41 reporter Grant Stephens covers issues connected to access to housing and rent costs. Share your story idea with Grant.

—

There are big changes coming to the way you buy or sell a home.

These changes stem from a series of lawsuits intended to make the home buying process more transparent.

The changes take effect August 17th.

An agent working with a buyer will have to work out an agreement before the prospective buyer and real estate agent look at a property together.

KSHB 41 News staff

Home in Kansas City area

“When a real estate agent says, ‘Hey, starting August 17th, you have to sign this agreement,’ they’re telling you the truth,” said Holden Lewis with NerdWallet.

You may be familiar with the standard five to six percent commission rate you’d have to pay in the past.

It’s split between buyer’s and seller’s agents and is often baked into the total cost of the home.

The changes mean there’s now an extra layer of negotiation that could change that standardized fee.

“It’s gonna specify how much you’re gonna pay that agent,” Lewis said.

Realtors like Kathleen Spiking with the Rob Ellerman Team say it might change how contracts are written and how they’re paid.

KSHB 41 News staff

Kathleen Spiking

“They’re training us on what’s going on, what’s does this look like, how does it appear in a contract,” Spiking said.

But since she’s always been upfront with costs, it won’t change the day-to-day.

“Personally, for me, it doesn’t affect the way that I run my business,” she said. “I still have communication up front with all of my clients, whether they’re buyers or sellers, and I think maybe for people it would be further and more thorough communication at the beginning and during the process of buying a home,” she said.

—





This article was originally published by a www.kshb.com . Read the Original article here. .

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The home buying and selling process is changing. Here’s what you need to know in Illinois.

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Save up money. Find a real estate agent. Attend open houses. Put in an offer … or two or three or four. 

Once the deal is closed, real estate agents for both the buyer and seller get paid commissions, typically by the seller.

This is a condensed version of how the home buying and selling process has functioned for years. And this process is about to change. The way real estate agents get paid will shift on Aug. 17, following massive settlement agreements that resulted from numerous class-action, antitrust lawsuits brought by home sellers over the commissions they paid to real estate brokers. The suits were filed against the Chicago-based National Association of Realtors and real estate brokerages nationwide.

In March, NAR agreed to pay $418 million as part of a settlement to resolve litigation against the organization and its members. It also agreed to amend its model rules. The settlement will be paid out over approximately four years, and around 50 million people will be eligible to receive money from NAR’s settlement. Some real estate brokerages opted to settle their own suits before and after NAR’s agreement, and some are still ongoing.

The full NAR settlement is not expected to receive final court approval until November, with the U.S. Department of Justice indicating that the terms of the settlement may not go far enough.

NAR’s settlement came after a Missouri federal jury issued a landmark $1.8 billion verdict in October of last year, finding NAR and several large real estate brokerages conspired to artificially inflate commissions on home sales. A similar case was expected to go to trial this year in Illinois federal court. The settlement resolved NAR’s role in both of those suits plus two other class actions. NAR continues to deny any wrongdoing, according to the association.

The litigation came to a head amid internal turmoil at NAR, which has undergone a series of leadership changes. Over the past year, NAR has seen two presidents and a CEO resign following allegations of sexual harassment against its former President Kenny Parcell.

Here’s what you need to know about the landmark settlements and how the changes being implemented will affect buyers, sellers and real estate agents in Illinois. 

What were home sellers arguing in their lawsuits against NAR and real estate companies?

The lawsuits claimed the compensation practice for brokers was anti-competitive because it incentivized buyers’ agents to steer their clients toward sellers who were offering higher commission rates in their listings on the Multiple Listing Service. The MLS is the main tool used by real estate agents across the country to market home listings.

Historically, the seller set the commission rate when listing the home for sale and then paid the fee to their agent, who split it 50-50 with the buyer’s agent.

How is the National Association of Realtors changing its rules?

NAR is changing its rules in two main ways. It is requiring potential homebuyers to enter into written agreements — often referred to as buyer agency agreements — with their agent that state how the buyer’s agent will be paid. NAR is also removing offers of compensation to agents in the MLS.

If a broker is not a member of NAR or does not use an MLS platform that adheres to NAR’s rules, they will not be subject to these rules changes.

Can cooperating commissions be listed outside the MLS?

Some real estate brokerages are still permitting their agents to list cooperating commissions on their real estate listings outside the MLS, while others are not. A cooperating commission is the amount paid to a buyer’s agent once a transaction is closed.

Redfin will allow sellers who want to advertise an offer of compensation to do so, but will not require it, according to a statement from a company spokesperson.

Compass agents will follow a similar practice, with a company spokesperson saying it will be an “agent-by-agent decision with their clients.”

A RE/MAX spokesperson said in a statement that while the firm will not display offers of compensation on the company website, each RE/MAX office is independently owned and operated, and “it is up to offices to determine what works best for their office.”

Laura Ellis, chief strategy officer and president of residential sales at Baird & Warner, said her company will not allow its agents to list buyer or seller agent compensation on any platform.

“We will not do that because it’s going to put us right back to how we got into the situation we are in now,” Ellis said.

Mike Golden, co-CEO of @properties Christie’s International Real Estate, said that as of now, similar to Baird & Warner, the company does not have plans to list cooperating commissions outside the MLS.

“We feel like that is in direct conflict with what the Department of Justice’s goals are with the settlement,” Golden said.

On a call with reporters on Aug. 7, NAR said it would not tolerate “people making attempts to circumvent those policy changes,” but declined to comment on particular brokerages’ practices when asked after the call.

Realtors group to pay $418 million to settle litigation over broker commission fees

What does this mean for potential homebuyers?

Homebuyers will now be required to enter into written contracts with their agents before the first tour of a home if working with an agent who is a member of NAR or an agent who is using an MLS that follows NAR’s model rules. The contracts will dictate how much the buyer will pay — in either a dollar amount or percentage — their real estate agent in the event that the seller does not cover any or all of the buyer’s agent commission.

These contracts do not have to be signed if a buyer chooses not to work with an agent, if a buyer visits a for-sale home on their own or if a buyer is working with an agent who does not use a NAR-affiliated MLS. Some states already required these written buyer agreements. Illinois was not one of them, but many brokerages began encouraging their agents to use the agreements after the Missouri verdict came down.

In Illinois, there are five primary MLS platforms, and they are all implementing the changes, according to a spokesperson from Illinois Realtors, a local NAR chapter. MLS platforms also have the option to disaffiliate from NAR if they do not agree with certain model rules, according to NAR.

Even when the litigation was still winding its way through court, local real estate firms said it was no longer assumed sellers would foot the bill for both the listing agent and the buyer’s agent.

Ellis of Baird & Warner said it is still “highly likely” that buyers will ask sellers during contract negotiations to offer a concession or closing cost credit so they can pay their agent. Commission costs have typically been baked into the price of the home, something the DOJ wanted to clarify for buyers with these rules changes, Ellis said.

A landmark jury verdict threatens to upend home buying and selling. In Illinois, changes are already underway.

Do these rules apply to VA-backed mortgages?

Veterans with VA-backed mortgages are allowed to pay buyer broker fees as of Aug. 10. Prior to the settlement agreements, per the policy for VA-backed mortgages, veterans buying homes were not allowed to pay a buyer’s agent commission. The VA amended its policy in light of NAR’s rules changes because veterans could have been at a disadvantage in the homebuying market if they could not offer to pay an agent’s commission, according to the VA.

What does this mean for potential home sellers?

Sellers will maintain their ability to offer a buyer’s agent compensation or to choose not to. A seller’s agent will, however, no longer be able to list cooperating commission percentages on the MLS. If a seller does choose to cover a buyer’s agent commission, the compensation must not exceed the amount the buyer agreed to pay their broker in their buyer agency agreement.

Conversations surrounding agent commissions can still occur during the contract negotiation process for buyers and sellers.

Golden of @properties said his company has seen that sellers are still largely paying buyer’s broker compensation.

Erika Villegas, president of the Chicago Association of Realtors, said she has not seen large numbers of sellers stop paying commissions to buyers’ brokers.

“What I am seeing is that we are having a more transparent conversation with our sellers about all the choices that they have,” Villegas said. “Sellers have always had choices, but I think that we are making it even clearer now.”

Will the costs of hiring a real estate agent go down?

Data already show that commission percentages have been decreasing for years. And attorneys say they expect the rules changes will lead to lower commission fees because agents will be forced to compete on service.

Since the NAR settlement, average buyer’s agent commission percentages have declined locally and nationally, according to recent data from Redfin. In Chicago, the average commission was 2.35% for the four weeks ending July 14, 2024, compared to 2.44% for the four weeks ending Jan. 28, 2024. Nationally, buyer’s agent commissions have declined from 2.62% to 2.55%. Redfin said these trends follow yearslong gradual declines, but buyer’s agent commissions in dollar amounts are up this year due to rising home prices. 

In the past, real estate agents were typically compensated 5% to 6% of the purchase price of a house by the seller, an amount that usually got split in half between the buyer’s agent and the seller’s agent. Local real estate agents maintain the commission percentage has always been negotiable. NAR vehemently denies that there were ever “standard” commissions and also says its members’ clients have always been able to negotiate commissions.

Golden of @properties said he has not seen commission percentages go down.

As workers return to the office, residents are moving back to Chicago and other cities, driving up home prices

What do these changes mean for the real estate industry as a whole?

It is still too early to know exactly how the policy changes will affect potential homebuyers and sellers.

“I just think it’s going to be a bumpy ride for a while,” Ellis of Baird & Warner said.

But some signs of a changing market are underway. Ellis’ firm is seeing agents leaving their roles and expects to see more do the same, she said.

At the end of June 2023, Baird & Warner had 2,226 agents; for the same time this year, the firm had 2,161 agents, an approximately 3% loss of the company’s agent headcount, with no notable decrease after the settlement announcement in March, Ellis said.

Ellis said it’s hard to tell if agents are leaving because of the Aug. 17 changes. She thinks it is more likely due to the challenging market conditions. Either way, she believes it is a “good thing,” Ellis said.

“The Realtors who are going to survive this and thrive are your really high-integrity, highly professional, really smart agents, and I think that is better for everybody,” Ellis said. “The bar of entry was just too low in our industry.”

In its second quarter earnings, RE/MAX reported a 3,581 decline in its year-over-year U.S. agent headcount, a 6.3% decrease, as of June 30.  

Villegas of the Chicago Association of Realtors said the trade group has not seen a dropoff in membership since the settlement announcement but a “re-engagement of members” to make sure they are prepared for the changes.

Redfin has seen its agent headcount tick up by 61 nationally, a roughly 3.7% increase, between the first and second quarters of this year. Compass saw an even bigger increase in its headcount due to recent acquisitions, according to its second quarter earnings report.

Golden of @properties said his company has not seen any unusual attrition following the settlement agreements, and the company has already been navigating some of the market changes in Indiana, as buyer agency agreements became mandatory in that state July 1. So far, it has been a “pretty seamless process,” Golden said.

“Every brokerage company is faced with the same questions and faced with the same changes, and every company will adapt in their own way,” Golden said. 

ekane@chicagotribune.com

Originally Published: August 13, 2024 at 5:00 a.m.



This article was originally published by a www.chicagotribune.com . Read the Original article here. .

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Best Quarter for Custom Home Building in Almost Two Years

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NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates gains for custom home building after some recent slowing. Custom home building typically involves home buyers less sensitive to changes for interest rates.

There were 52,000 total custom building starts during the second quarter of 2024. This marks an almost 6% increase compared to the second quarter of 2023 and the best reading since the third quarter of 2022. Over the last four quarters, custom housing starts totaled 180,000 homes, a 5% decline compared to the prior four quarter total (189,000) due to weakness in prior quarters.

After share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes increased until 2023 and then entered a period of retrenchment. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, has fallen back to just under 18%. This is down from a prior cycle peak of 31.5% set during the second quarter of 2009 and a 21% local peak rate at the beginning of 2023.

Note that this definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction.

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Wood-Framed Home Share Decreased in 2023

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Wood framing remains the most dominant construction method for completed single-family homes in the U.S., according to NAHB analysis of 2023 Census Bureau data. For 2023 completions, 93% of new homes were wood-framed, another 7% were concrete-framed homes, and less than half a percent were steel-framed.

On a count basis, there were 930,000 wood-framed homes completed in 2023. This was a 3% decrease compared to the 2022 total. The wood-framed market share decreased to 93% in 2023, after it increased for three consecutive years, from 2019 (90%) to 2022 (94%). As noted above, steel-framed homes are relatively uncommon, with 3,000 housing completions in 2023, the same amount as the 2021 and 2022 completions.

Meanwhile, the concrete-framed market share increased from 6% in 2022 to 7% in 2023. On a count basis, there were 65,000 concrete-framed homes completed in 2023, up 3% from the previous year. This is the first increase after three straight years of declines (down 13% in 2020, 5% in 2021 and 11% in 2022).

Non-wood based framing methods are primarily concentrated in the South due to residential resiliency requirements. In 2023, concrete-framed homes made up 11% of all homes completed in the South. Additionally, approximately two-thirds of steel-framed homes completed in 2023 were in the South.

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Should I Wait Till August to Sell My Home to Save on Commission? – NerdWallet

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If you sell your home after the middle of August, cheers: You could end up pocketing the money that previously would have gone to the buyer’s agent.

But before you celebrate, consider the downside of waiting until late summer to list your home for sale: House prices tend to fall after August. The price drop might surpass the money you save on commission.

New policies governing real estate commissions are set to go into effect Aug. 17 as a result of the settlement of an antitrust lawsuit. The amended policies give home sellers more room to negotiate what to do about the buyer’s commission — whether they want to use it to induce competitive bids or keep it to themselves entirely.

The choices complicate this season more than usual, for both buyers and sellers. Here’s what to know to help you and your agent come up with the best strategy for you.

What, exactly, is changing?

Starting Aug. 17, sellers will no longer set the commissions for real estate agents who represent buyers. Buyers will decide how much their agents will be paid. Even when sellers are willing to pay some or all of the commission for the buyer’s agent, the amount will no longer appear on the multiple listing service.

For decades, and up to Aug. 17, MLS listings have been required to advertise how much commission the seller is offering to buyer’s agents. The information wasn’t visible to home buyers but could be viewed in agent-only fields of the MLS.

When sellers set commissions for buyer’s agents, they’re sometimes advised that offering a low commission will attract fewer buyer’s agents — and therefore fewer competing offers. The plaintiffs in the antitrust suit argued that the policy of requiring commission info on the MLS was designed to discourage them from negotiating lower commissions for buyer’s agents.

Can sellers start offering 0% to buyer’s agents today?

Technically, sellers have always had the option of offering zero or minimal commission to the buyer’s agent. But most sellers have offered such commissions to motivate buyer’s agents.

The money may come directly out of the seller’s pocket, as has been the norm.

The money may come directly out of the buyer’s pocket.

The buyer and seller may split the payment.

The buyer may pay indirectly, by adding their agent’s commission to the price of the house when they make an offer.

Here’s an example of how an indirect payment might work for a buyer who is paying a 3% commission. The buyer finds a house costing $400,000. The 3% commission is $12,000. The buyer offers $412,000 and asks the seller to transfer $12,000 to the buyer’s agent at closing.

Keep in mind that sellers, having equity, tend to have more access to cash than first-time home buyers, who accounted for 33% of buyers in April. A seller who’s willing to pay all or some of the buyer’s commission may end up with more offers, and a higher final price, than one who flatly takes that commission off the table.

How much money could sellers keep, though?

As a home seller, you stand to save thousands of dollars on commissions if the buyer pays their agent directly or indirectly.

Let’s say the agents in your town typically collect 2.5% on each side of the transaction, and you sell your house for $400,000. Each agent earns $10,000. If you pay both agents, you’ll shell out $20,000 and end up with $380,000.

But if the buyer pays their agent, you would pay your agent $10,000 and walk away with $390,000. That’s $10,000 more.

On the other hand, buyers might request bigger closing cost credits, subtracting from the seller’s bottom line, Chuck Vander Stelt, a real estate agent in Valparaiso, Indiana, said in an email. Or buyers might offer less because they will bear the expense of paying their own agents.

Even after Aug. 17, sellers might keep offering commissions to buyer’s agents as motivation, Vander Stelt added. These offers could remain standard in many markets, multiple agents said. Offering commissions to buyer’s agents will still be permissible under the new policies, but those offers will no longer appear on the MLS. Listing agents can communicate the information on brokerage websites, or in phone calls, emails and texts.

What would be the cost of waiting?

You might be tempted to keep your home off the market until the new policy goes into effect. But waiting might not be a wise move, because it would mean sitting out homebuying season.

Home prices peak from May through August, then drop off. In 2023, the median existing home cost $410,100 in June, $405,600 in July, $404,200 in August — and $392,700 in September, according to the National Association of Realtors. If you list your house after mid-August, you probably won’t close until October or later, when prices are even lower.

With house prices peaking in summer, you might come out ahead by selling during the busiest time of the year, even if you end up paying the buyer’s agent’s commission.

“I don’t really have anybody holding off until after August to list their house because they want to save a couple bucks,” says Michelle Doherty, an agent in northern Virginia with RLAH Real Estate. She says her clients will be ready to sell in June or July, “depending on how things progress with prepping the house.”

Can I negotiate the listing agent’s commission too?

You might save money if you don’t pay the buyer’s agent’s commission. But what about the commission that you pay the listing agent for selling your home? You might not see an immediate reduction. If a cut in commissions from 3% to 2% is your hope, you’ll probably mope.

“First of all, nothing’s going to change quickly, OK?” says Stephen Brobeck, senior fellow for the Consumer Federation of America. “The industry will resist, and consumers don’t really focus on this much.”

Vander Stelt said that he sees headlines that proclaim “the end of the 6% commission.” That’s a mistaken belief, he said. “Overall, the average commission costs per transaction on a percentage is likely to come down over the coming years,” he said. But not instantly.

What if I list before Aug. 17 but sell after?

Months can pass between the day you put your home on the market and the day you hand over the house keys at closing. What if the Aug. 17 policy change happens in the middle of this period? The National Association of Realtors provides guidance for two scenarios:

Your home’s MLS listing offers to pay the buyer’s agent’s commission, and you sign the contract accepting the purchase offer before Aug. 17: You’ll pay the commission, even if the closing occurs on Aug. 17 or after.

Your home’s MLS listing offers to pay the buyer’s agent’s commission. But in accordance with the new policy, that offer is removed from the MLS on Aug. 17. Sometime after that date, you accept the purchase offer: That defunct commission offer on the MLS is no longer valid. You and the buyer will negotiate how to take care of the buyer’s agent’s commission.

When you put up your home for sale, you’ll sign a listing agreement with your agent. NAR says that listing agreement might have to be amended if it says that an offer to pay the buyer’s agent must be made “on the MLS.” As of Aug. 17, that clause in the listing agreement will conflict with the new policy. Your agent might ask you to sign an amended listing agreement before that date.



This article was originally published by a www.nerdwallet.com . Read the Original article here. .

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8 Things Realtors Want You To Know Before Buying Or Selling A Home

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Realtors are a wealth of knowledge about buying and selling homes. Listen to them.

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Whether you’re buying a home or trying to sell one, knowledge is power. The more knowledge you have, the more you’re empowered to make the right decisions. Good realtors and brokers are a wealth of information for buyers and sellers looking for ways to maximize their transactions. Here’s what they want you to know about buying and/or selling your home.

Understand The Process

According to Brett Ringelheim, licensed real estate salesperson at Compass in New York, before listing a seller’s property, he has an in-depth conversation about the entire process. “During this discussion, I share my experiences with other sellers, highlighting both the good and the bad,” Ringelheim says. He notes it’s crucial that sellers, especially first-timers, thoroughly understand the process before their property hits the market.

For example, one thing first-time sellers might not understand is that they should probably expect to be inconvenienced during the process. “Being flexible with showings and open houses is important, as it allows more prospective buyers to view the property, increasing the chances of finding the right buyer in a timely manner,” advises Mike Downer, broker associate at Coldwell Banker Realty in Naples, Florida.

Be Emotionally Detached

When selling your home, check your feelings at the door. According to India Headley, broker and team lead of Housed by Headley Team at EXP Realty in Connecticut, sellers need to be emotionally prepared to sell. “Once your house goes live on the market, you can anticipate ample traffic with showings, incoming offers that may falsely inflate or deflate your confidence in value, and once you actually sign a contract, there may be some understandable anxiety that kicks in,” Headley says.

However, she adds this is not the time to second-guess your decision when you start thinking of the memories and good times you’ve had in the house. People don’t buy your memories – they want to create their own. “Be proud that you maintained an asset that can serve someone else for years to come, and remember that the grass will always be greener where you water it, so let’s move,” Headley says.

Get A Pre-Inspection

If you get a pre-inspection before you put your home on the market, Headley says it can save everyone a lot of time. “If both parties can be made aware of things that are major and/or minor, we can deal with it more effectively upfront,” she notes.

Depending on the findings, Headley says your realtor can properly advise you how to remedy the issue by extending their knowledge, resources, and referrals. “It’ll also take some stress off the seller during the buyer’s due diligence period knowing that deal breakers shouldn’t be an issue,” she explains.

Understand That Buyers Have Different Opinions

One reason you should be emotionally detached is that you may hear some unflattering comments about your home. “Every buyer who views your property will have a different opinion, so it’s essential not to get discouraged by their feedback,” Ringelheim says. Your favorite features may be the very qualities that some buyers may hate. For example, you may love your all-white kitchen, but some buyers might consider it boring. And that garden you worked so hard to cultivate: Perhaps buyers can’t wait to remove it.

Just make sure that buyers don’t have legitimate concerns. Ringelheim agrees that before listing, it’s advisable to conduct an inspection to identify and address any potential issues. “Resolving these red flags before listing ensures a smoother transaction once a buyer is found,” he explains.

Downer adds that home maintenance is another crucial factor that sellers should be aware of. “Ensuring that the property is well-maintained and addressing any necessary repairs can significantly impact its appeal to potential buyers,” he says.

But keep in mind that your home isn’t for everyone, and some potential buyers will let their feelings be known, loud and clear.

First Impressions Matter

Even though it’s still a buyer’s market, you won’t get the best price if you just plop a For Sale sign in your front yard. According to Nicole Beauchamp, associate real estate broker at Sotheby’s International Realty in Manhattan, that first impression is everything – and this goes beyond just making sure that the home is sound.

“It is so important to prepare the home for sale, and investing in refreshing your home and staging, along with pricing realistically, can make a difference in how quickly you sell and for how much,” Beauchamp says. “Declutter, remove personal effects, and never underestimate the impact of a fresh coat of paint and a deep clean.”

While decluttering, here’s something that can be sensitive for some people. Ivan Chorney with the Ivan and Mike Team at Compass in Florida recommends removing personal items that could distract potential buyers. “This includes family photos, knick-knacks, collections, and out-of-season holiday decorations,” Chorney says. He explains that your personal items could prevent buyers from envisioning themselves living in the space.

“While neutral as a theme is overdone, the space must be a canvas for someone else, not an ode to your history, so make your home look less lived in by minimizing personal touches,” Chorney advises.

Your Home Might Not Sell Immediately

In the housing market, both sellers and buyers are trying to get the best price – and that number varies depending on which side of the transaction you’re on. “Depending on the property’s market and condition, sellers should be prepared for the possibility of receiving low offers and the chance that the property might not sell immediately,” Ringelheim says. “I explain the importance of reviewing recent comparable sales to set realistic expectations regarding pricing, and how long properties have stayed on the market.” If sellers want to aggressively price their properties, he says they need to understand the need for patience.

In fact, Downer warns that sellers need to understand that overpricing their home can often result in it sitting on the market for a prolonged period. “This can deter potential buyers and lead to the property becoming stigmatized, making it more challenging to sell at a later stage,” he explains.

Crunch The Numbers

Real estate advice often talks about understanding the financial component when purchasing a home. However, Beauchamp says it’s also important for both buyers and sellers to clearly understand the financial aspect.

Selling a house isn’t just about the purchase price you receive. “Sellers may have a home equity line of credit, and that balance will reduce how much money they receive,” Beauchamp explains. For buyers, she says they need to understand closing costs, and the other costs of home ownership. Both need to speak with their tax advisors to gain a realistic picture of the bottom line numbers.

Trust Your Realtor

It’s tempting to look at someone else’s home and compare your situation to what happened to that person. However, Headley recommends leaving the market analysis to the experts. “Just because you know someone whose house didn’t sell as easily as they anticipated or for a specific amount, doesn’t mean that you’ll face the same fate as a seller,” she says, adding there are many contributing factors that determine how properties perform, and a local realtor is your best resource for recommended time to sell, what buyers are looking for in your area, and purchase price.

Dawn David, licensed associate real estate broker with Corcoran in New York, says she wishes consumers better understood the extensive effort required to sell homes. “Sadly, when consumers try to act on their own, they may miss a critical window when a property is first introduced to the market by presenting it in a light that isn’t well received or is mispriced, resulting in a taint of sorts that others can’t pinpoint, but results in the property being ignored,” David says.

While experienced sales professionals can get you maximum value by determining an accurate fit for the actual state of the market, David says consumers selling without an agent are often misaligned with the reality of the market.

“Agents prepare you to capture all qualified interests with exhaustive tips for improvements, staging, decluttering, and we help you avoid the make-it-or-break-it qualities that immediately turn people off and prevent you from getting offers when most factors would indicate a potential offer is imminent,” she says. In addition, David says realtors and brokers present guidance on negotiating for the best price.

However, not all real estate professionals are created equally. “Make sure your licensed professional is up to date on the commission laws, latest marketing trends, and even ask them how they’re incorporating tech, like AI, to get your home sold,” Headley says. “Now is the time to ask questions more than ever and choose the agent that likes to answer them.”



This article was originally published by a www.forbes.com . Read the Original article here. .

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Should you sell your home now or wait for the Realtor settlement this summer? | CNN Business

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Listing your home in the spring used to be a no-brainer. But a major real estate shakeup is complicating the equation.

That shakeup is coming from a $418 million settlement the National Association of Realtors announced last week with groups of homesellers that could go into effect as early as July. The settlement will eliminate the long-standing standard 6% commission paid by the seller, which could ultimately make it cheaper to sell your home post-settlement.

But is it worth waiting to list your home and potentially risking a sale?

Would you rather be unloading boxes from a moving truck in a potential snowstorm or heatwave as opposed to when it’s a pleasant 60-degree day?

That’s one of the main reasons spring has been the most popular season to buy a home.

For families with children, it’s also an ideal time to close on home because it would allow them to stay in the same school.

By springtime, people are also more likely to have paid off any debt they took on over the holidays, said Phil Crescenzo Jr., the southeast division vice president at Nation One Mortgage Corporation.

The settlement could present a major downside to homebuyers.

Under the current system, the buyer’s agent’s commission is baked into the total they pay for a home. That meant buyers could pay that added cost over the entire length of their mortgage.

But after the settlement is finalized, many may have to pay flat fees upfront to agents. That would add to the financial burden for homebuyers – especially first-timers. And that’s on top of coming up with all the money they need for a home downpayment, closing costs, a lawyer and all the other fees associated with buying a home.

Buyers, therefore, may have more of an incentive to close on a home sooner rather than later.

There’s also no guarantee a federal court will sign off on the settlement as is. The unknowns associated with that are enough of a reason not to wait to list your home, said Crescenzo. From conversations he’s had with real estate agents, he said he’s not seeing any signs that the NAR settlement is delaying listing activity.

“There is no reason to wait,” Mike Downer, a broker associate with Coldwell Banker Realty in Naples, Florida. “The seller does not currently need to provide any compensation to the buyer’s agent.”

The biggest advantage of waiting to list your home until the settlement is finalized is being able to negotiate an agent’s commission down more than they otherwise would’ve been able to. On top of that, they may be able to avoid having to pay the buyer’s agent’s commission.

That could allow them to pocket thousands of dollars more on the sale of their home.

If selling your home boiled down to a business decision, Mike Downer, a broker associate with Coldwell Banker Realty in Naples, Florida, said he’d try to list it as soon as possible.

“If I am trying to test the market, there would be no need to list it 1723291007,” he added.

But in his view, the NAR settlement shouldn’t be a major consideration when it comes to timing.

“An agent who provides value will always be worth more than an agent who does not provide value,” because they can help you net more money for the sale of your home, he said.



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Real estate: What’s the success rate of selling your own home without an agent

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Q: I am the personal representative of my dad’s estate that is going through probate. I have a question about the seller’s disclosure statement. I lived in the house when I was a kid/teenager. I moved out when I turned 18, 40-plus years ago. I have never been on the title to the property. Do I still need to fill out a seller’s disclosure statement because I lived in the house?

A: Normally when a property is to be transferred (sold) because of an order by a probate court in the administration of an estate; the seller/executor/personal representative is exempt from filling out a seller’s disclosure statement except when they have lived in the property, as an adult, even if they had no ownership in it. As per the Michigan Association of Realtors legal counsel, an adult who has no ownership in the property and only lived in the home as a child/teenager or college student is exempt from filling out a seller’s disclosure statement. As always, consult an attorney when dealing with legal matters, especially an estate.

Q: We are going to be selling our home this year. My son-in-law says we should try selling it ourselves. I’m not comfortable doing that. Are there any statistics that show what the success rate is with for sale by owners?

A: That’s a good question. FSBOs (for sale by owner) sales accounted for 7% of home sales in 2023. The typical FSBO home sold for $310,000 compared to $405,000 for agent-assisted home sales, according to the National Association of Realtors. This sales price differential between for sale by owner and agent-assisted home sales has been going on for years. Sure, you can go in thinking that you will be saving a 5% to 6% negotiable commission, but on the other end, you are losing over 23% in sales price.

Market update

March’s market update for Macomb County and Oakland County’s housing market (house and condo sales) is as follows: In Macomb County, the average sales price was up by more than 6% and Oakland County’s average sales price was up by more than 5%. Macomb County’s on-market inventory was down by more than 30% and Oakland County’s on-market inventory was down by more than 28%. Macomb County’s average days on market was 33 days and Oakland County’s average days on market was 34 days. Closed sales in Macomb County were down by almost 26% and closed sales in Oakland County were down by almost 15%. The closed sales continue to be down as a direct result of the continued low inventory. Demand still remains high. (All comparisons are month to month, year to year.)

By the long-standing historical definition from the National Association of Realtors, which has been in existence since 1908, a buyer’s market is when there is a seven-month supply or more of inventory on the market. A balanced market between buyers and sellers is when there is a six-month supply of inventory. A seller’s market is when there is a five-month or less supply of inventory. Inventory has continued to stay low. In March, the state of Michigan inventory was at 1.6 months of supply. Both Macomb and Oakland county’s inventories were at 1.2 months. As you can see, by definition, it is not a buyer’s market.

Steve Meyers is a real estate agent/Realtor at RE/MAX First in Shelby Twp. and is a member of the RE/MAX Hall of Fame. He can be contacted with questions at 586-997-5480 or Steve@MeyersRealtor.com You also can visit his website: AnswersToRealEstateQuestions.com.



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