This article was originally published by a www.houzz.com . Read the Original article here. .
Home price growth continues to decelerate, according to the recent release of the S&P CoreLogic Case-Shiller Home Price Index (HPI). The S&P CoreLogic Case-Shiller HPI increased at a seasonally adjusted annual rate of 1.89% for June 2024, slowing from a revised rate of 3.28% in May. Home prices have not seen an outright decrease since January of 2023. However, 1.89% is the smallest growth in prices since February of 2023. Additionally, the growth rate has shown a generally declining trend since a peak of 9.76% in August 2023.
Meanwhile, the Home Price Index released by the Federal Housing Finance Agency (FHFA; SA), recorded a decline in home prices for June. The index declined at an annual rate of -1.04% for June, decreasing from a revised 0.51% rate in May. The FHFA Index has experienced just one other decrease since August of 2022, with a decline of -1.03% in January 2024.
Year-Over-Year
Home prices experienced a fourth year-over-year deceleration in June, tabulated by both indexes. The S&P CoreLogic Case-Shiller HPI (not seasonally adjusted – NSA) posted a 5.42% annual gain in June, down from a 5.94% increase in May. Since June of 2023, the index has seen steady increases in the year-over-year growth rate. However, this growth rate began slowing in March of 2024 and has continued to decelerate through June. Meanwhile, the FHFA HPI (NSA) index rose 5.23%, down from 5.95% in May. This rate has decelerated from 7.19% in February.
By Metro Area
In addition to tracking national home price changes, the S&P CoreLogic Index (NSA) also reported home price indexes across 20 metro areas in May. At an annual rate, five out of 20 metro areas reported home price declines: Phoenix at -3.02%, Portland at -2.90%, Dallas at -0.69%, Charlotte at -0.56%, and Miami at -0.03%. Among the 20 metro areas, thirteen exceeded the national rate of 1.89%. Seattle had the highest rate at 10.80%, followed by San Diego at 9.18%, and then Los Angeles at 7.89%. The monthly trends are shown in the graph below.
By Census Division
Monthly, the FHFA HPI (SA) releases not only national data but census division data as well. Out of the nine census divisions, seven posted negative monthly depreciation (adjusted to an annual rate) for June, ranging from -7.59% in the Mountain division to -0.82% in the Middle Atlantic. The remaining two divisions with positive home price appreciation were East South Central at 8.66% and the South Atlantic at 3.09%. The FHFA HPI releases its metro and state data on a quarterly basis, which NAHB analyzes in a previous post.
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This article was originally published by a eyeonhousing.org . Read the Original article here. .
New changes in real estate transactions are altering how agents are paid, impacting both buyers and sellers.When your real estate agent lists your home, the commission is no longer included in the Multiple Listing Service (MLS), the database agents share. Commissions still exist and are negotiable. Sellers can still offer to pay buyer fees, just as they might cover the cost of a home warranty or other expenses.”It’s definitely made agent pay a bigger part of the conversation,” said Krishon Harris, a real estate agent for Reece & Nichols.Agents say high interest rates are keeping homes on the market longer, for 30 to 40 days in some cases.”It is in the offer acceptance process when buyers will find out how much they owe their agent,” Harris said.Sellers can still offer to pay buyer fees, just as they might cover the cost of a home warranty or other expenses.”As a buyer, your biggest change is that you have to have a written agreement with an agent before you go see a house,” Harris said.He says when and how fees are discussed is the biggest change.”When you are a buyer and you make an offer on a house, you’ll include in the offer what you’re asking the seller to pay your agent,” Harris said. “The seller can agree to that. They can counter, reject it, or whatever.”
New changes in real estate transactions are altering how agents are paid, impacting both buyers and sellers.
When your real estate agent lists your home, the commission is no longer included in the Multiple Listing Service (MLS), the database agents share. Commissions still exist and are negotiable. Sellers can still offer to pay buyer fees, just as they might cover the cost of a home warranty or other expenses.
“It’s definitely made agent pay a bigger part of the conversation,” said Krishon Harris, a real estate agent for Reece & Nichols.
Agents say high interest rates are keeping homes on the market longer, for 30 to 40 days in some cases.
“It is in the offer acceptance process when buyers will find out how much they owe their agent,” Harris said.
Sellers can still offer to pay buyer fees, just as they might cover the cost of a home warranty or other expenses.
“As a buyer, your biggest change is that you have to have a written agreement with an agent before you go see a house,” Harris said.
He says when and how fees are discussed is the biggest change.
“When you are a buyer and you make an offer on a house, you’ll include in the offer what you’re asking the seller to pay your agent,” Harris said. “The seller can agree to that. They can counter, reject it, or whatever.”
This article was originally published by a www.kmbc.com . Read the Original article here. .
Home Buying
The bad news: They broke records in July. The good news: The increases were modest and are less than what buyers paid in June.
“With the prime selling season behind us, we’re seeing fewer bidding wars, more offers under asking price, and homes that are taking longer to sell,” said Jared Wilk, president of the Greater Boston Association of Realtors. Adobe Stock
The median sales prices for single-family homes and condominiums in Greater Boston broke records for July but were less than what buyers paid in June, according to a report the Greater Boston Association of Realtors released Wednesday.
The median sales price for a single-family in July was $910,000 — $15,000 more compared to July 2023 but $50,000 less than the June 2024 median.
In the condo market, buyers paid a median of $740,000 in July. That’s $2,000 more than they shelled out in July 2023 and $12,000 less than compared with June 2024.
Buyers are enjoying more purchasing power, and “there is some evidence that prices may have reached their ceiling, at least in the near term,” according to the report.
“What we are experiencing at the moment is not a price correction, but rather a softening in prices,” Jared Wilk, the association’s president and a broker with Compass in Wellesley, said in the news release. “With the prime selling season behind us, we’re seeing fewer bidding wars, more offers under asking price, and homes that are taking longer to sell. As a result, sellers have become more flexible, with some agreeing to price reductions in order to sell.”
“Prices also have eased a bit from their peak over the past month, which suggests buyers are finding more room for negotiation,” Wilk added, “and that’s giving many a renewed sense of optimism as we approach the fall market.”
Evidence may indicate that prices are capping out, but the median sales price year-to-date is still 7.1 percent higher than at this point in 2023, according to the report.
Data provided by MLSPIN © Domus Analytics under license for the GBARData provided by MLSPIN © Domus Analytics under license for the GBAR
Condo buyers are paying $189 more per square foot than single-home purchasers, according to the report — $630 compared with $441.
Mortgage rates giveth and taketh away
Mortgage rates that have eased from a high of 7.22 percent on May 2 may have played a role in the nearly 15 percent jump in sales and the 10 percent increase in local listings year-over-year in July in the single-family home market.
The available inventory in July was 1.2 months — a disappointing number that suggests that some sellers who don’t want to trade their low mortgage rates for ones in the mid-sixes — are still hesitant to list. Many experts agree that at least a five-month supply of inventory is a healthy market. High mortgage rates also relegate some buyers to the sidelines as the costs ratchet up, siphoning their buying power.
“There’s no denying the fact that sales activity continues to lag behind historic norms, but it’s also worth noting that last month was the busiest one we’ve had for home and condo closings in more than a year,” Wilk said. “Buyers have a larger selection of homes to choose from than they did last summer, and with mortgage rates lower than they were this spring, the market has become increasingly more inviting to those looking to buy.”
Condo sales were down 1.2 percent, but the “months supply” of inventory rose from 1.7 in July 2023 to 2.1 last month.
“Although buyer demand has been slowed by higher interest rates, it continues to outpace the supply of homes for sale,” Wilk said, “and that imbalance has kept upward pressure on selling prices and allowed for continued price appreciation.”
Economic forecasts call for mortgage rates to continue to fall, but not below 6 percent. The average rate ticked up last week to 6.49 percent.
Massachusetts home prices soar
The median sales price for a single-family home in the state jumped 6.6 percent to $650,000 in July, according to a report The Warren Group, a data analytics firm, released Tuesday.
That’s a record for the month, but home prices are losing momentum, according to Cassidy Norton, associate publisher and media relations director for the group: “Interest rates are more than double where they were two years ago, and I’m certain prices would be even higher without those changes. That does lead to a lack of inventory that may have abated price gains somewhat. Unfortunately, the lack of inventory will continue to be the biggest factor driving prices for the foreseeable future.”
Sales were up a modest 0.8 percent.
In Arlington, the median sales price of $1,142,500 for a single-family home in July reflects more than an 11 percent decrease. In Needham, the median sales price was $1,408,000, a jump of 3.9 percent, according to the report.
In the condo market, sales were up 3.2 percent, and the median price rose only 1.8 percent year over year to $565,000.
“The median condo price also reached a new high for July, but prices were down moderately from the previous month,” Norton said. “This could be an early indicator that condo prices are starting to plateau.”
In Quincy, the median sales price for a unit was $485,000, a drop of nearly 5 percent. In Malden, the median sales price for July was $425,000, an increase of 6.3 percent.
Check out the breakdowns by town and county and the recent sales list from The Warren Group.
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This article was originally published by a www.boston.com . Read the Original article here. .
NEW RULES FOR HOW MOST REAL ESTATE PROFESSIONALS SELL PROPERTY JUST TOOK EFFECT. THAT MEANS THERE ARE SOME CHANGES YOU NEED TO KNOW ABOUT ABOUT THE PROCESS. STEVE KING JOINS US LIVE WITH THE CONCERNS THAT A PALM BEACH COUNTY REAL ESTATE AGENT IS EXPRESSING FOR HOME BUYERS. AS WE MOVE FORWARD. STEVE. TODD. THESE NEW RULES WENT INTO EFFECT AS A RESULT OF A $418 MILLION ANTITRUST LAWSUIT SETTLEMENT. NOW, PEOPLE WHO ARE GOING TO TOUR A HOME NEED TO SIGN A LEGAL DOCUMENT BEFORE THEY COULD GO ON THAT HOME TOUR WITH THEIR REAL ESTATE AGENT. GARY PORTER WITH DOUGLAS ELLIMAN, REAL ESTATE IN PALM BEACH, SAYS THIS COULD CREATE PROBLEMS FOR BUYERS. I WOULD SAY THEY’RE JUST GOING TO BE CONFUSED. I THINK THAT BUYERS WILL BE WALKING INTO AN OPEN HOUSE, AND FOR ME TO EVEN SHOW YOU THE HOME, I BELIEVE YOU HAVE TO SIGN ONE OF THESE DOCUMENTS. SO I THINK BUYERS ARE JUST GOING TO KIND OF BE A LITTLE BIT HESITANT TO LOOK AT THESE THREE NEW DOCUMENTS. MOST PEOPLE DON’T WANT TO SIGN THINGS, ESPECIALLY LEGAL LOOKING DOCUMENTS, WHEN THEY DON’T EVEN KNOW THAT PERSON. PORTER SAY ONE OF THE DOCUMENTS REQUIRES THE HOME BUYER TO AGREE TO WORK WITH THE REAL ESTATE AGENT FOR A SET PERIOD OF TIME, WHILE ANOTHER ONLY COMMITS TO SHOWINGS FOR CERTAIN PROPERTIES WITH THAT REAL ESTATE AGENT. IT GOES FROM MORE COMMITTED TO MODERATELY COMMITTED TO NOT REALLY COMMITTED AT ALL. ALL THE DOCUMENTS ALSO CAN BE MODIFIED SO IF YOU SAID YOU WANTED TO GO LOOK AT HOUSES WITH ME AND DECIDED TOMORROW YOU DIDN’T WANT TO SEE THEM OR DIDN’T WANT TO BUY ANYTHING, THEN YOU JUST BASICALLY SAY, GARY, YOU KNOW WHAT? PLEASE CANCEL THAT AGREEMENT AND WE’LL HAVE TO RESIGN AND JUST CANCEL IT. AS FOR THE MULTIPLE LISTING SERVICE, IT’S PLATFORMS NO LONGER HAVE FIELDS FOR REAL ESTATE BROKER COMPENSATION LISTED LIKE BEFORE. I HONESTLY DON’T SEE IT REALLY HELPING ANYBODY. ASIDE FROM THE LAWYERS THAT SETTLED THE LAWSUIT. I MEAN, IF YOU ARE A HOME BUYER LOOKING FOR A HOME, BUT YOU’RE UNWILLING TO PAY A BROKER AND THE SELLER IS UNWILLING TO PAY THE FEE TO THE BROKER, THE A REALTOR MOST LIKELY WON’T SHOW YOU AROUND. AND FOR MORE ON THE NEW NATIONAL ASSOCIATION OF REALTORS RULES, YOU CAN VISIT OUR WPBF 25 NEWS APP. REPORTING LIVE
Palm Beach County real estate agent says new home buying/selling rules could present problems
New regulations are now in place for real estate professionals, and a Palm Beach County real estate agent says it could cause issues for home buyers moving forward.The changes follow a $418 million antitrust settlement.Now, homebuyers must sign a legally binding agreement with their real estate agent before touring a home with that agent.Gary Pohrer, a veteran real estate agent with Douglas Elliman Palm Beach, says he has concerns about the new regulations. “I would say (homebuyers are) just going to be confused,” Pohrer said. “I think that buyers will be walking into an open house, and for me to even show you the home, you’ll have to sign one of these documents, so I think buyers are going to be a little bit hesitant to look at these three new documents. Most people don’t want to sign things, especially legal-looking documents, when they don’t even know that person.”One of the documents requires the home buyer to agree to work with the real estate agent for a set period of time, while another only commits to showings for certain properties with that real estate agent. “It goes from more committed to moderately committed to not really committed at all,” Pohrer said. “All of the documents also can be modified, so if you want to go look at houses with me and decide tomorrow, you didn’t want to see them or didn’t want to buy anything, then you just basically say, ‘Gary, you know what? Please cancel that agreement,’ and we’ll have to resign and just cancel it.”Additionally, the Multiple Listing Service platforms have undergone changes, removing fields that previously listed compensation totals for real estate brokers, both sellers and buyers.”I honestly don’t see it really helping anybody,” Pohrer said. “Aside from the lawyers that settled the lawsuit. I mean, if you are a home buyer looking for a home, but you’re unwilling to pay a broker, and the seller is unwilling to pay the fee to the broker, then a realtor most likely won’t show you around.”For more information about the new rules, click here.Stay up-to-date: The latest headlines and weather from WPBF 25 Get the latest news updates with the WPBF 25 News app. You can download it here.
PALM BEACH COUNTY, Fla. —
New regulations are now in place for real estate professionals, and a Palm Beach County real estate agent says it could cause issues for home buyers moving forward.
The changes follow a $418 million antitrust settlement.
Now, homebuyers must sign a legally binding agreement with their real estate agent before touring a home with that agent.
Gary Pohrer, a veteran real estate agent with Douglas Elliman Palm Beach, says he has concerns about the new regulations.
“I would say (homebuyers are) just going to be confused,” Pohrer said. “I think that buyers will be walking into an open house, and for me to even show you the home, you’ll have to sign one of these documents, so I think buyers are going to be a little bit hesitant to look at these three new documents. Most people don’t want to sign things, especially legal-looking documents, when they don’t even know that person.”
One of the documents requires the home buyer to agree to work with the real estate agent for a set period of time, while another only commits to showings for certain properties with that real estate agent.
“It goes from more committed to moderately committed to not really committed at all,” Pohrer said. “All of the documents also can be modified, so if you want to go look at houses with me and decide tomorrow, you didn’t want to see them or didn’t want to buy anything, then you just basically say, ‘Gary, you know what? Please cancel that agreement,’ and we’ll have to resign and just cancel it.”
Additionally, the Multiple Listing Service platforms have undergone changes, removing fields that previously listed compensation totals for real estate brokers, both sellers and buyers.
“I honestly don’t see it really helping anybody,” Pohrer said. “Aside from the lawyers that settled the lawsuit. I mean, if you are a home buyer looking for a home, but you’re unwilling to pay a broker, and the seller is unwilling to pay the fee to the broker, then a realtor most likely won’t show you around.”
For more information about the new rules, click here.
Stay up-to-date: The latest headlines and weather from WPBF 25
Get the latest news updates with the WPBF 25 News app. You can download it here.
This article was originally published by a www.wpbf.com . Read the Original article here. .
For millions of Americans, a pet makes a house a home. Now, a new study by Houzz shows that when remodeling their homes, pet owners keep their furry — and hairy, feathery and scaly — friends in mind.
Houzz surveyed more than 1,000 pet owners and found that nearly half (48%) prioritize pets in their decision-making process when upgrading their home. Considerations include pet-friendly products and materials (34%) and choosing design or functionality specific to their pet, such as incorporating space for an animal’s bed or feeding station (22%). More than three-quarters (77%) of those surveyed are in the midst of, are planning or recently completed a home renovation.
Read on for paws-itively enlightening insights revealed in the 2024 U.S. Houzz Pets & the Home Study.
This article was originally published by a www.houzz.com . Read the Original article here. .
When it comes to buying and selling homes, new rules are about to be put in play, five months after the National Association of Realtors agreed to a blockbuster settlement over how its 1.5 million agents across the U.S. are paid commissions.
The settlement — which resolved litigation stemming from a grand jury finding that the real estate group artificially inflated brokerage commissions — brings sweeping changes to the industry, starting tomorrow.
The adjustments come as prospects brighten for the beleaguered housing market. Mortgage rates earlier this month tumbled to their lowest level since April 2023, offering hope to house hunters priced out of the market given high borrowing costs and home prices that reached a record in June.
Still, the current rate on the 30-year fixed loan stands at about 6.5%, or more than double the sub-3% rates available in 2020 and 2021. The Federal Reserve in September is widely expected to reduce its benchmark interest rate, a step that should reduce mortgage rates currently high enough to bring turnover in the housing market near 40-year lows.
In the meantime, real estate agents across the nation will have to adopt to new changes that could potentially reduce the commission that home sellers are asked to pay.
Many experts are now looking for home prices to fall as the sticker price will no longer include the steep commissions that have for decades been in play.
Here’s a rundown of what this means for those looking to buy and sell homes going forward.
Buyers beware
Real estate agents are now required to have buyers sign a form before showing them a home. The agreements are intended to detail exactly how much a buyer will be expected to pay an agent.
However, “at that stage, the buyer hasn’t had an adequate opportunity to evaluate that agent,” Steve Brobeck, a senior fellow at the Consumer Federation of America, told CBS MoneyWatch. “When you’re touring houses with an agent, the agent is auditioning to be your agent, that’s when you get to know the agent.”
Most buyers would not be comfortable signing a contract with a financial obligation that early in the process, added Brobeck, who noted that the new requirement came at the industry’s behest and was not part of the NAR’s settlement.
Buyers should not sign a contract with a financial obligation until they are ready to make an offer, advises Brobeck. “There are other options for seeing a house,” he noted, including calling the listing agent or attending an open house.
Another option that is increasingly in use are touring agreements that cover limited amounts of time and come without financial ties, he said, noting that Zillow had developed one. Many model contracts developed by the industry are difficult to read, understand and are otherwise problematic for consumers, Brobeck warns.
That said, one buyer-broker agreement developed by real estate brokerage eXp Realty is “simple, consumer-centric and meets most of our criteria,” he said. “They’ve made it available for the industry to use.”
Homebuyers should also think about offering a flat fee or paying their agent an hourly rate, the advocacy group advised.
“The dollar value of today’s percentage commissions is often underestimated by buyers. Moreover, buyer agents should not have a financial incentive to be paid more the higher the sale price,” Brobeck said in a report.
Sellers rejoice?
For folks selling their homes, the changing landscape should bring some quick respite, as their agents no longer have to make an offer of commission to buyers’ agents.
Nearly 9 in 10 home sales are handled by real estate agents affiliated with the NAR, the nation’s biggest trade association. It required that home sellers figure in a commission rate, usually 6%, before listing homes on its property database, known as the Multiple Listing Service, or MLS.
The commission borne by home sellers was then divided between agents for the seller and buyer. While on paper subject to negotiation, the fee was the focal point of the lawsuit lost by the NAR and brought by a group of home sellers, who claimed the trade group and others colluded in driving up the commissions.
In June, the median sale price of a home was $442,451, according to Redfin. Under the previous practices sellers would be paying $26,547 in commissions. That customary rate is no longer the default.
Sellers can now expect to be asked for just one side of the commission pot, or what would now average 2.5% to 3%.
“For the first time now, buyers will have the opportunity to negotiate the buyer commission,” said the CFA’s Brobeck. “We suggest setting a target of 2% or less,” the advocate said. Matched with the buyer agent’s commission that would mean paying overall commission closer to 4% rather than the current standard of 5% to 6%, he added.
In a separate but related development, almost any American who sold a home in the last fives years is covered by the class-action settlement with NAR and other brokerages. How much anyone is entitled to depends in part on how many sellers submit claims, and other factors including where one lives and when your home was listed.
To see if you’re eligible, check here.
More from CBS News
This article was originally published by a www.cbsnews.com . Read the Original article here. .
Changes to realtor commissions taking effect this weekend could give home sellers a lot more negotiating power — and for buyers, potentially some more paperwork.
Starting Saturday, realtors will be barred from offering compensation on multiple listing services (MLS), making it harder for buyers’ agents and sellers’ agents to negotiate fees on their own, as they’ve done for decades.
Until now, home sellers traditionally had to pay commissions, commonly in the range of 5% to 6%, to their agents, who then split that fee with the buyer’s agent upon making a sale. The new rules, which follow a historic $418 million settlement with the National Association of Realtors in March, leave more room for sellers to negotiate those fees down and make it more appealing for buyers to forgo agents entirely.
“It’s the biggest change probably in the history of real estate,” said Mike McCann, a realtor in Philadelphia. “It has created a lot of fear, a lot of anxiety” within the industry, he said.
The changes to broker commissions come in the midst of a cooling U.S. housing market.Loren Elliott / Getty Images
With the MLS no longer serving as a forum for negotiation, it remains to be seen how agents, buyers and sellers will choose to cover commission costs. While sellers could pass on any savings on the commission to the buyer in the form of a lower home price, it’s also possible that sellers could increasingly choose to ask the buyer to cover some or even all of the costs.
To ensure buyers know the compensation that they may be on the hook for, the NAR is implementing a change, also effective Saturday, requiring agents to enter into written agreements with buyers before showing a home.
Jan Jaeger is a client of McCann’s and says the new rules add more work to the experience of homebuying, which she’s going through now in Philadelphia after selling her house there earlier this month.
“It’s just another step in already a very difficult process, and I only say that because I have bought and sold many homes in the past, and what’s happening today is very different. It used to be fairly simple,” Jaeger said.
The settlement that triggered the shake-up stemmed from a class-action antitrust lawsuit that alleged brokers were steering clients to listings on the MLS offering better commissions. The NAR denied wrongdoing and reaffirmed its “commitment to requiring that MLS Participants must not limit the listings their client sees because of broker compensation.”
The NAR has also clarified that even though offers of compensation are prohibited on the MLS, offers “could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.”
The changes come in the midst of a cooling housing market, where high home prices and high mortgage rates have caused sales of existing homes to slide since the pandemic-era homebuying frenzy.
For first-time homebuyers already concerned about affordability, the possibility of being on the hook for commissions adds more potential costs.
“People are saving, they’re paying rent, they don’t have the money,” McCann said of younger buyers looking for their first homes. “How are they going to pay the commission? That’s my biggest concern.”
Still, experts say the big takeaway is that fees could decline further. Real estate listing site Redfin noted in a report earlier this month that commissions for buyers’ agents have already been on a yearslong decline.
“It’s also possible that news of the settlement made consumers more aware they can offer any commission to a buyer’s agent or none at all, contributing to the decline since March,” the report said.
In the end, the new changes should at least give homebuyers and sellers more transparency into how they compensate brokers.
This article was originally published by a www.nbcnews.com . Read the Original article here. .
Chicago members of the National Association of Realtors say they’re prepared for the changes that some housing experts describe as the industry’s largest shift in how homes are bought and sold.
NAR, a professional organization of real estate agents whose members are known as Realtors, will be implementing two major changes starting Saturday as part of a $418 million antitrust settlement.
The changes upend more than a decade of industry procedures and could affect how buyer agents have traditionally been paid. It could also open up more opportunities for homebuyers and sellers.
“What we’re really going through is a seismic shift,” said Matt Silver, a partner and senior broker in Corcoran Urban Real Estate.
The NAR doesn’t expect home prices or sales to fall but says the changes could make it harder for first-time homebuyers in a frenzied real estate market.
What’s the biggest change?
Offers of broker compensation no longer will be displayed on the Multiple Listing Service, a database used by licensed brokers and agents to share information about properties for sale as well as commissions.
Historically, broker commissions have been paid by sellers. Seller’s agents usually agree to split their commission with the buyer’s agent. That means homebuyers often don’t incur an extra cost when working with a real estate agent — a big relief for first-time buyers — as their agent’s commission is covered by the seller.
Commissions typically range from 5% to 6%.
Compensation offers will still be an option consumers can pursue off MLS through negotiation and consultation with real estate professionals, according to NAR, which says broker commissions have always been negotiable.
How agents are compensated is “the biggest change our industry has had to deal with in easily 100 years,” according to Laura Ellis, Baird & Warner’s chief strategy officer, executive vice president and president of residential sales, who has been with the firm since 1998.
Ellis said the change will create more conversations between real estate agents and clients, requiring agents to use different skills than they might be used to.
Laura Ellis of Baird & Warner at the company’s Gold Coast office.
Barry Brecheisen/For the Sun-Times
“We did a big push on educating our agents about the fact that most buyers thought that the process or the service to them was free because … the seller technically paid the commission,” Ellis said. “Transparency in that alone is a big difference.”
Many real estate agents have been letting clients know in advance about the changes. And trade groups have been sharing updates for months with their members ahead of Saturday’s deadline.
Why is this happening now?
The changes stem from a series of class-action lawsuits filed by homeowners, who accused the NAR of fixing broker commissions at high rates and discouraging sellers from seeking better terms. The association has 1.5 million members and broad control over access to the MLS system.
The NAR agreed to settle the lawsuit in March., ending litigation that could have resulted in a $1.8 billion verdict against the association and tripled under antitrust law.
In April, a federal judge in Missouri granted preliminary approval to the settlement. A final approval hearing is scheduled in November.
The NAR has denied any wrongdoing.
Are other changes coming?
The settlement also requires all real estate agents working with a buyer to enter a written agreement outlining compensation before touring homes.
Some Chicago real estate agents say the written agreement requires less of an adjustment for them because they already use buyer-broker agreements.
Erika Villegas, a real estate agent for more than 20 years, said she’s always used buyer-broker agreements even though her firm, Oak Park’s RE/MAX In the Village, never required them. Villegas said requiring the document industrywide will be beneficial.
“I think it’s a great opportunity for us to make sure that we are providing the best tools, best services and we [are] making it very clear and transparent of the work that we do for buyers,” Villegas said.
Illinois real estate laws will change in 2025, including the requirement for written brokerage agreements.
What this means for you and the industry
While broker compensation no longer will be displayed on the MLS, Ellis doesn’t expect a change in how brokers are compensated. She predicts buyers will ask sellers for a “closing cost credit,” which buyers then use to pay their agent. Homebuyers also can ask the seller to pay their broker — reverting to the traditional model.
Both those scenarios emphasize that the buyer commission comes from the home transaction, Ellis said.
“It doesn’t mean that [buyers] are going to have to come out of pocket with money that they never did before,” she said.
Buyers and sellers also could elect to separately pay their own broker, raising concern among some real estate agents about how the rules could affect first-time buyers.
How will first-time buyers be affected?
First-time buyers, including those from underrepresented groups, can have trouble with financing their first home and having to pay a broker’s commission could act as an extra hurdle, according to Brian Kwilosz of EXIT Realty. Kwilosz said EXIT is watching the impact the changes will have on first-time buyers.
Lutalo McGee, owner of the real estate firm Ani World, plans to stress that cooperative compensation remains an option for new buyers even if it’s negotiated differently. Ani Real Estate, under the umbrella of McGee’s Ani World, has the bulk of its sales on the South Side.
“A lot of clients, at least that I service and my brokers [service], are those that have struggled with down payments and closing costs in the past,” McGee said. “We’re going to be actively monitoring to see what the impact of these changes are going to be.”
Several real estate agents said they don’t think the changes will affect home prices. The housing market is driven by supply and demand, Silver said, and with a dearth of housing across the region, he doesn’t think home prices will go down “anytime soon.”
It’s possible buyer commission rates could drop as agents and their clients have more conversations about compensation. But Ellis predicts agents will complete more transactions after Saturday’s changes take effect.
“I think that good real estate agents will actually increase their income,” Ellis said. “We’ve got to do what’s right for the consumer and what they want and bring real, tangible value to them.”
This article was originally published by a chicago.suntimes.com . Read the Original article here. .
Homebuyers face a changing housing market this weekend as major shifts to how real estate agents are paid take effect.
The National Association of Realtors (NAR) groundbreaking new commission-sharing agreement will end the common practice of home sellers automatically covering the fees for real estate agents on both sides of the transaction. The new rules start on Saturday.
The agreement is the result of the settlement of a series of lawsuits brought over the past few years challenging the long-held practice of splitting the sales commission between the seller and buyer agent. Plaintiffs in the legal battles, primarily home sellers who paid both agents, claimed commission sharing, also known as cooperative compensation, artificially inflated the cost of a home sale.
Although the NAR was the main defendant in several cases, other major brokerages, including Keller Williams and RE/MAX, were also named co-defendants. With the NAR settlement, however, most of these lawsuits will have been settled, clearing the way for a change in how realtor fees are negotiated.
Now, real estate agents are prohibited from advertising shared commissions on local databases, called multiple listings services (MLS), and buyers will instead have to negotiate their agent’s fees before they start viewing homes.
How will the NAR agreement change agent commissions?
Even though these fees have always been negotiable, most homeowners entering into a listing agreement with a realtor have typically paid between 5% and 6% commission on the sales price, which was split between the agents representing the seller and buyer. The ultimate goal of the lawsuits was to reduce this percentage, thereby saving sellers money.
Since the settlement announcement in March, there has been a slight decrease in the typical percentage paid to buyers’ agents. According to a report from Redfin, the typical seller is paying the buyer’s agent a 2.55% commission through the period ending in mid-July. By comparison, the typical commission paid in January was 2.62%. The question is whether the new commission model will accelerate the decline in fees paid.
Marty Green, principal at the Texas-based law firm Polunsky, Beitel, Green, believes that once the agreement goes into effect, commission changes will remain modest — at least for now.
“It’s not likely they are going to turn a switch on August 17th, and suddenly everything’s going to be different,” Green says. The immediate effect will be more transparency between agents and their clients, emphasizing the buyer’s side of the commission discussions and whether sellers want to keep splitting commissions. Some sellers may decide to continue the practice to make their homes more attractive to buyers.
Who benefits most from the change in how real estate agents are paid?
Although the settlement is meant to benefit all sellers and buyers, that may not be the case, according to Daniel Smith, founder of Keepingly, a home management platform. If the traditional model of commission sharing is fundamentally altered, it could simply lead to more upfront costs for buyers.
“For many consumers, particularly those with limited financial flexibility, this could make homeownership more challenging,” Smith says.
Aside from home sellers, who can decide if they want to continue footing the bill for the buyer’s agent and how much they are willing to pay, the other winners in this scenario are likely to be high-income buyers. These clients have the means to cover the costs of their own agent’s commission and may be more likely to shop around and negotiate agent fees.
On the other hand, the agreement could increase the challenges low-income and first-time buyers face in an already difficult housing market. Part of the settlement agreement includes a provision that buyers must sign a contract with their agents before touring any potential homes. That contract will likely include language that outlines how the buyer will be responsible for paying the agent’s commission if the seller decides not to.
If buyers have to pay for their agent’s representation, that cash needs to be paid upfront with the down payment and closing costs or somehow rolled into the mortgage, increasing the borrowed amount and the monthly payments along with it.
The increased cost of representation could also lead some buyers to hire an inexperienced agent or forego representation altogether, which could put them at a disadvantage when negotiating a home price or concession.
It will take time to measure exactly how much change the agreements will bring about to agent commissions. For now, it’s more important than ever that sellers and buyers understand the potential impacts of the settlement. For sellers, Green says, this means deciding whether to pay the buyer’s agent and for buyers, how to structure their offer in a way that makes financial sense.
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This article was originally published by a money.com . Read the Original article here. .
Encourage a positive lifestyle by keeping healthy food within reach. The most obvious way is to put a bowl of fruit on the table, but there are other things you can do.
Avoid last-minute dinner decisions by displaying a meal planner in the kitchen, with nourishing options for the whole week. If you have children, get them involved by asking them to contribute their ideas.
Think of ways you can make it easy to choose a wholesome snack. Keep nuts and granola bars in tempting glass jars. If you’ve invested in a juicer or yogurt maker, don’t let it languish in the cupboard. Make room for it on the counter so that you’ll be more inclined to use it.
Tell us: Do you have any tips on how your home can make you happier? Share your thoughts and ideas in the Comments.
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