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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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Selling An Inherited House: What You Need To Know | Bankrate

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If you’ve inherited a house, you might want to move right in, or take the opportunity to become a landlord and earn some steady rental income. But what if you don’t actually want the house, and would rather get rid of it?

Selling a home is always complicated, but selling an inherited home can add even more complexity to the equation. Everything from the specific wording of the will to the presence of a mortgage can impact how you unload an unwanted property. Here’s what to consider and what you should know about how to sell an inherited house.

Selling an inherited house

The details of how you came to own the property, and the nature of your ownership, play a big role in how to sell an inherited house. And don’t forget that, as the seller, you will be responsible for a certain amount of closing costs before you get your profits.

If you are the sole owner

The process of selling is easier if the home was bequeathed to you and you alone, or if you and the decedent (ie, your deceased loved one) were both listed as owners on the property. If the two of you were tenants in common or joint tenants with right of survivorship, you do not have to worry about probate or other legal processes — you’ll simply become the full owner of the home and can proceed to sell it as you like.

If you co-own it with others

In some cases, you may inherit the home along with other family members, such as siblings or cousins. If this happens, all joint owners of the property are jointly responsible for making decisions about it.

Mixing family and money can be stressful, especially during an emotional time when you have all lost a loved one. If it was your childhood home, the emotional attachment can make things even more challenging. It’s essential that you work together with your family to make sure everyone is on the same page, and to prevent hurt feelings.

“If there are other heirs involved in selling your inherited home, you may want to consult an attorney about the best way to handle these relationships and responsibilities during this process,” says real estate investor Shaun Martin, of Denver house-buying firm Watson Buys. “You may also want to discuss whether or not they will be contributing financially toward any repairs or renovations required before selling the property.”

Another option, especially if none of you are interested in living in the property, is to buy out the other heirs. You can offer to pay them for their share so that you become the sole owner of the property, which will make your future sale simpler.

The probate process

Probate is a legal process through which an estate’s assets are used to pay its creditors. The remainder is then handed down to heirs according to the decedent’s will or, in the event there is no will, according to state law. It can be a long and convoluted process.

Each state has a different process for probate, but it typically involves appointing an executor for the decedent’s estate. That person is responsible for following the terms of the will, managing the estate’s assets and seeing that they’re distributed properly to the beneficiaries.

It’s important that you follow the full probate process closely and don’t take possession of the home or try to sell it before you’re legally permitted to do so. Of course, if you’re also the executor of the estate, that simplifies matters.

Once ownership of the home has legally been transferred to you, you can begin the sale process. However, you shouldn’t expect any of this to happen right away.

“Probate can be a lengthy and complex process, often taking several months to years, depending on the size and complexity of the estate,” says Steven Parangi, an attorney and loan originator with Alpine Mortgage Services in Rochelle Park, NJ. “It can also be costly, with fees for the court, attorneys and appraisers. However, probate ensures that the decedent’s wishes are honored and that the estate is settled in an orderly manner.”

Does the home still have a mortgage?

Whether the inherited home has a mortgage or is fully paid off also impacts how selling it works.

If there is a mortgage

If there’s a mortgage on the home and the decedent was the sole person on it, it is the responsibility of the estate to continue making loan payments. That means the executor of the estate has to determine how to continue making mortgage payments from the estate’s assets.

When you inherit a home with a mortgage, whether through the probate process or otherwise, you will also have to assume the mortgage. This means making the monthly payments yourself, whatever they may be. Reach out to the lender to determine the logistics of getting the property and loan under your own name — an important part of being able to dispose of it. Once you’ve done that, you can sell the home.

If there is no mortgage

If there’s no mortgage on the home, the process is simpler: No need to worry about loan repayments. However, as the home’s new owner, you will still need to pay property taxes and utilities. (The decedent’s estate may provide funds to cover these expenses, so be sure to check.)

As part of inheriting the home you’ll need to work with the local property records offices to get the deed to the home put in your name and to set up utility accounts in your name. Once that’s done, you can sell the home.

What condition is the home in?

If the home is in good condition, or in a desirable location, a traditional sale working with a local real estate agent will likely get you the best price. If you can find an agent with experience selling inherited homes, all the better — they can help you strategize the best selling approach and walk you through all your options.

For inherited properties, it can be smart to spend a few hundred dollars on a pre-listing home inspection. This will clue you in to any problems or necessary repairs that you might not know about, since it was not your home.

But if it’s in poor shape or extremely dated, the circumstances are different. in this case, you’ll need to either:

Invest in repairs and upgrades before lising it
Sell it as-is, effectively telling buyers that any work needed will be their responsibility
Sell to a cash-homebuying company that buys houses in any condition

Selling as-is or to a cash-homebuying firm won’t require as much effort, time or money as renovating would. But it does have a major downside: It will not earn you as high a price as you would likely get selling the traditional way.

Tax implications of selling an inherited house

Selling any property for a large profit has the potential to trigger real estate capital gains taxes. However, inherited properties are unique in that, while you now own the home, you are not the one who bought it. A lot depends on how much the decedent paid for the house in the first place, and how much the home’s value has appreciated since then.

To know if you will have to pay capital gains tax on your profits from selling an inherited home, you must calculate the profit: This is done by subtracting the cost basis (or original cost) of the home from the price you sold it at.

Typically, the cost basis for a property is the price paid to purchase it, plus any substantial sums spent to improve it. However, when you inherit property, the cost basis is typically “stepped up,” or adjusted, to be the fair market value of the property on the date of the decedent’s death. (In some cases it might also be the fair market value on an alternate valuation date, such as the date the executor filed an estate tax return.)

“When a person inherits property, they receive a ‘stepped-up’ basis, meaning the property’s tax basis is adjusted to its fair market value at the time of the previous owner’s death,” says Parangi. “This is significantly advantageous for the heir, as it can substantially reduce or eliminate capital gains taxes when the property is sold.” (There are some exceptions to the stepped-up basis, so it’s smart to consult a tax expert.)

Parangi offers this example: “If a parent purchased a home for $100,000 and it’s worth $500,000 at the time of their death, the heir’s basis becomes $500,000, not the original $100,000.” Thus, if you as your parent’s heir sell the home for $550,000, your taxable profit would be $50,000, not $450,000.

To determine a property’s value at the time of the decedent’s passing, you’ll need what’s known as a date of death appraisal (sometimes called a time of death appraisal). This “provides a clear and defensible valuation of the property, which can be beneficial in various scenarios, such as settling disputes among heirs or dealing with the IRS,” says Parangi.

FAQs

Should I sell or keep my inherited house?

It depends on your personal circumstances. If you want to live in the home or use it as a rental property, keeping it obviously makes sense. If you don’t want to do either — or if it needs significant work that you don’t want to commit to — selling it will make more sense. Take stock of your emotional attachment to the property, if any, and how you would feel if it were no longer in the family. If you think you want to sell, talk to a local real estate agent about how much the house is worth in today’s market.

Do I have to pay capital gains taxes on a property I inherited?

You may owe capital gains on inherited property — but only after you sell it. The gain is based on the difference between the final sale price and the cost basis of the property, typically the fair market value of the home on the day the decedent died. However, even if you sell for a profit, you may not owe capital gains tax. There are a lot of factors that depends on, including exactly how much money you earn on the sale and whether you file taxes individually or jointly with a spouse.

How fast can I sell a house I inherited?

Before you can sell you must have legal ownership, which can take quite a while if the inheritance must go through the probate process. Once you can legally sell, how long that takes depends on your local market conditions and how you choose to sell. Selling to a local cash-homebuying company can take just a couple weeks, or sometimes less. Using an agent will certainly take longer than that, but is likely to get you a higher price for the home.



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

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Mountain-town real estate experts give tips on selling properties in high-end Colorado

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What makes a house unique are important to include on online listings. This shot of a Breckenridge home demonstrates the view of Breckenridge Ski Resort that can be seen through the property’s large glass windows.
Tripp Fay/Courtesy photo

There’s a reason “location, location, location” has become one of the most-used real estate phrases of all time. When it comes down to it, in many situations, location sells. People in the market for luxury homes often seek one out in scenic areas. 

Location can help a property stand out. But in popular resort communities, many homes on the market can claim to have a great location. Many people wonder how they can give their property a leg-up on the competition, so Summit County real estate experts offered a handful of tactics people looking to sell their luxury property can deploy when the competition is also pointing to its backyard and the mountain views in the High Country. 

Aerial shots that give a bird’s eye view, such as this one of a home near Breckenridge Ski Resort, help buyers get an idea of what a property’s surroundings are like. Tripp Fay/Courtesy photo

Many local real estate agents emphasized the importance of maximizing curb appeal when vying for bids in a resort-town market. 

Dana Cottrell, a Realtor for the Summit Resort Group and president-elect of the Colorado Association of Realtors, said curb appeal becomes more paramount based on the price of the home. She said the more expensive the property is, the higher the expectation is that it will have strong curb appeal.

That means investing in smart landscaping decisions as you own the home, and, when you’re ready to sell, Cottrell said curb appeal also means getting rid of any weeds in the front lawn or driveway, ensuring the lawn looks well-kept and highlighting the property’s tasteful landscaping. 

Jim Schlegel, a branch broker with Slifer Smith & Frampton Real Estate’s Ten Mile Team, said outdoor amenities — such as pools or fireplaces — can also help enhance curb appeal. A property that’s set up in a way that facilitates large gatherings or parties is likely going to stand out compared to others on the market.

A still image shows off the living room of a home on Timber Trail Road in Breckenridge that is listed for nearly $20 million. Investing in unique amenities and creating artistic touches in a room are important parts of marketing a property in a resort-town market like Summit County.Tripp Fay/Courtesy photo

Cottrell and Schlegel said in an era where many people rely on the internet to scope the scene for what luxury homes are on the market, it’s also very important to evoke good curb appeal in a property’s listing online. They said the best way to do that is to get aerial drone footage of the property so people can get insight into it — and its surroundings — before visiting it in person.

Cottrell said that high-quality aerial drone footage is becoming a standard in the luxury home market — so much so that some buyers are starting to expect it.

High-quality visuals are important tools to both show off the uniqueness of a property and its interior. It can be the difference between someone opting to tour a home — or not. 

This aerial drone shot demonstrates a 6,200-square-foot, ski-in-ski-out residence on Snowy Ridge Road in Breckenridge sold for $12 million, making it the most expensive home sold in Summit County in 2023. Jonathan Huffman/Summit Multimedia

“A buyer could be from anywhere from London to Mexico City. … Being able to present that property fully and show it off and make it enticing is important because it can get somebody to hop on a plane from London to come see it,” Schlegel said. 

Schlegel generally instructs photographers photographing homes he is selling to show how different aspects of the home function through the still images. For instance, he asks the photographers to have the faucet on when photographing the bathroom, and he wants the fireplace to be all lit up when capturing the living room. 

He added it’s crucial to showcase all the amenities that make the home unique in a listing, especially if the unit can be categorized as a ski-on, ski-off property, which he said are generally the fastest selling in Summit County. 

Cottrell said it’s imperative to showcase the home while it’s at its prime in a listing, which is largely dependent on making sure the home looks spotless. She said even a small smudge on a bathroom mirror can impact how buyers view a home. 

Realtors that sell luxury homes say that outdoor amenities, such as fireplaces overlooking sweeping views, help make a property more enticing to buyers.Tripp Fay/Courtesy photo

Alongside ensuring that every window sill looks dustless and every counter appears immaculate, it also means taking out anything like family photos before staging a home and offering tours. 

“T​​he whole idea is you want a buyer to be able to envision themselves living there,” Cottrell said. “Having family photos on the wall can make that hard to do.”

While selling a luxury home can be tough in a market where “great locations” are everywhere, Cottrell said its useful for the seller to have patience. Luxury homes tend to stay on the market longer, so people interested in eventually selling should keep this in mind.

Editor’s note: This story originally published in the June/July Summit County Home magazine.





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

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What’s About to Change For People Buying and Selling Homes

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It was huge news at the time: the National Association of Realtors (NAR) agreed in March to pay $418 million and make changes to how the home-buying process works in order to settle a class-action lawsuit that alleged the industry conspired to make agent commissions higher than they needed to be.

The provisions of the settlement go into effect on Aug. 17. For now, what consumers can expect is more paperwork, and potentially more confusion. 

“This is a grand social experiment,” says Leo Pareja, the CEO of exp Realty, one of the biggest real-estate brokerages in the country. “None of us know what’s about to happen.” 

Buyers now have to sign a contract

Here’s how the process used to work: a seller’s agent would list a home on an MLS, or multiple listing service, which is a database of properties for sale. Those listings would state that the seller of a home would pay a certain amount to compensate the buyer’s agent. This compensation was often about 3% of the sales price, which was also about what the seller’s agent would get from the seller. (The average amount ranges between jurisdictions and even from sale to sale; some agents were also paid flat fees.) 

Technically, those fees were negotiable. But most homeowners either didn’t know that or feel they could negotiate. In addition, home sellers allege, real-estate agents would sometimes “steer” buyers to specific homes based on the amount of compensation they could receive. As of Aug. 17, real-estate agents cannot list any sort of agent compensation when they put a house on multiple listing services, a change designed to eliminate steering.

Read More: Stop Looking For Your Forever Home.

In addition, both buyers and sellers are now required to sign a written agreement with their agent before the agent shows them a property or assists with a transaction. The buyer’s side of this is more consequential—most sellers have signed these contracts in the past, but few buyers did. In the new buyers’ contract, sometimes called an “exclusive representation agreement,” the buyer agrees to work with the agent for a certain period of time. Most importantly, the buyer and agent also agree on how the agent will be compensated, whether through a flat fee, a specific share of the purchase price, or another method. Agents must also make clear in this contract that broker commissions are fully negotiable, a change that consumer advocates hope will drive commissions—and prices—down.

Many real-estate agents say the changes are positive, including Jennifer Stevenson, a real-estate agent in upstate New York and a regional vice president for the National Association of Realtors. “This makes the process better,” she says. “Clients are going to understand exactly what is expected of me and what I am offering them as a service.”

But others aren’t so sure that the changes will be positive for consumers. Realtor associations across the country have been releasing drafts of contracts that are extremely lengthy and written in legal terms that are difficult to understand, says Tanya Monestier, a law professor at the University of Buffalo. The draft buyer agreement from the North Carolina Association of Realtors, for instance, is seven pages long.

Read More: When Should I Buy A House?

Monestier analyzed the draft agreement by the California Association of Realtors (CAR) for the Consumer Federation of America, and issued a report criticizing the agreement for being opaque—so opaque, in fact, that Monestier says she had trouble getting through the document. “No seller will read this monster of a document—much less be able to understand it,” she concluded. 

Not all new buyer forms are so dense. Monestier says she reviewed a few forms that were clear; those from Exp Realty, for instance, are just two pages long and explicitly spell out buyer and seller responsibilities. Exp has made these forms available to any company that wants to use them, says Pareja, the CEO. 

Compensation may be changing

Before the NAR settlement, it was standard for the seller to pay for both the seller and the buyer’s agents. That may not be the case going forward.

In tight housing markets, sellers could refuse to pay for the buyer’s agent because they have so much interest in their home. Instead, agent’s fees may become a bigger part of the negotiation when people are buying homes. If a buyer really wants a house, for instance, they could offer to pay the seller’s agent fees, and include that provision in their offer letter. Conversely, if a seller in a slow market is desperate to unload their home, they could offer to pay the buyer’s agent fees—though the agent could not disclose that on the listing. 

Monestier says she also expects there will be more buyers who choose not to have an agent at all, because they don’t want to be on the hook for the agent’s fee. That could lead to less potential work for many of the real-estate agents out there.

Most of all, the settlement could lower compensation for both buyer’s and seller’s agents. Academic papers have predicted that fees could decline by 30-50% as a result, which would end up lowering home prices as well.

Of course, it’s possible that old habits are hard to break, and that not much will change at all. Sellers are accustomed to paying for buyers’ broker fees, and they may continue to do so. Even if everyone involved knows they can negotiate. 



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

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Buyers, Find Hidden Bargains In NYC: Real Estate Listings Selling For Less

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The summer slowdown is slowly uncovering some interesting pricing opportunities across Manhattan. … [+] The data suggests now might be an opportune time to buy homes others paid significantly more for not too long ago.

getty

As the summer heat intensifies, the Manhattan real estate market is cooling down, and the languid season could present unexpected opportunities for savvy buyers. An emerging trend shows an increasing number of properties being listed at prices lower than their previous sale prices. This phenomenon offers a chance to secure homes with potentially less downside risk and more upside potential should the market’s nascent pricing recovery continue.

Pricing Opportunities

Recent Manhattan data indicates a significant upward trend in the percentage of new listings priced below their previous sale prices. This trend has accelerated in 2024, reaching 9.5% by the third quarter. Historically, this is a marked increase from just 1.7% back in Q1 2014. This data underscores a growing opportunity for buyers as the market adjusts and consolidates from its previous highs.

Percentage of Quarterly New Listings in Manhattan Priced Below Previous Sale Price (2014-2024)

UrbanDigs

Condos and Co-ops by Neighborhood
#1: Condos

The trend of condo listings below previous sale prices varies across Manhattan neighborhoods. Downtown, Midtown, the Upper East Side, the Upper West Side, and Upper Manhattan all show significant increases, with the Upper East Side peaking at 31.6% in July 2023.

Percentage of Condo Listings Below Previous Sale Price by Neighborhood (2014-2024)

UrbanDigs

#2: Co-ops

The more stable co-op market mirrors this trend, albeit at lower levels, with notable increases across all neighborhoods. Midtown and Downtown have seen substantial jumps, reaching 18.7% and 21.0% respectively by Q2 2024.

Percentage of Co-op Listings Below Previous Sale Price by Neighborhood (2014-2024)

UrbanDigs
Year of Previous Sale

Analyzing the data further, we see a pattern where the majority of listings now priced below their previous sale were originally purchased during market peaks. The period of 2014 to 2018, which saw a frenzied rally peaking in the years 2016 and 2017, represents the bulk of units, with nearly 600 homes listed for sale this year seeking to sell at a loss.

Number of Listings in 2024 Priced Below Their Previous Sale Price by Year of Previous Sale

UrbanDigs

Brooklyn Value Creation

While Manhattan has seen a notable increase in the percentage of new listings priced below their previous sale prices, Brooklyn tells a different story. The percentage in Brooklyn remains significantly lower, speaking to the incredible value creation in the borough over the last decade as prices have steadily risen in response to incessant demand. Despite market peaks and troughs, over the last decade, buyers in Brooklyn have done exceedingly well and may continue to do so even if prices remain stable, hence the level of units selling at a loss in Brooklyn remains far lower than that of Manhattan.

Percentage of New Listings in Brooklyn Priced Below Previous Sale Price (2014-2024)

UrbanDigs
Risk Padding

When markets are hot, buy-side competition is at its most intense, supply is scarce, and asking prices tend to rise quickly, reflecting a seller’s market premium over and above the fair market price that buyers have to pay if they want a deal. However, as markets slow, that premium is the first to evaporate. Slower markets, like the one we are experiencing today, offer buyers a chance to buy without having to embed a premium in their price due to intense buy-side competition, offering a kind of risk padding as there is likely to be less price volatility in the near future due to a downshift in market sentiment. This risk padding means that buyers who enter the market now could see more stable property values over time, reducing the chances of sharp price drops that were more common following the market peaks of the past.

Current Manhattan Market

A look at what’s currently on offer shows a handful of opportunities for buyers. Out of nearly 6,800 active listings, 537 are priced lower than their previous sale prices, reflecting an average loss of 12% compared to the previous sale price. In particular, homes sold in 2017 and 2018 make up the largest segments of such listings, with 81 and 45 units on the market, respectively. For those hunting for bargains, the data implies that focusing on properties bought between 2015 and 2018, particularly in areas with higher inventory, might yield the best opportunities for finding a new home at a reduced price relative to what it once traded at and could potentially trade at again.

Conclusion

In conclusion, the summer slowdown is slowly uncovering some interesting pricing opportunities across Manhattan. Whether you’re eyeing a condo or a co-op, the data suggests now might be an opportune time to buy homes others paid significantly more for not too long ago.

Moreover, today’s market slowdown may offer an additional layer of security for Manhattan buyers. With less frothiness and reduced competition, there is likely to be less price volatility in the future, providing a cushion against market fluctuations. Meanwhile, Brooklyn’s relatively low percentage of new listings priced below their previous sale prices showcases the borough’s unrelenting demand and highlights its strength.

Ultimately, current market conditions may provide a unique opportunity for some buyers to secure properties at attractive prices, with reduced risk and potential for future value appreciation.



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

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Want to get rich quick selling Florida real estate? Think again.

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Tiago Ribeiro paced the lobby of the Four Points by Sheraton hotel in Tampa on Saturday night searching for a miracle. He had 24 hours to find someone who could lend him $30,000 to buy a foreclosed property in Fort Myers.

“Ask me about a 35% APY (investment) opportunity,” read the laminated sign hanging from his neck.

Tiago Ribeiro wears a sign enticing attendees to an investment opportunity at the Real Estate Raw seminar hosted by Ben Mallah on Feb. 24 in Tampa. [ LUIS SANTANA | Times ]

Ribeiro and 160 others paid $250 a pop to attend an event put on by Tampa Bay real estate mogul and YouTube personality Ben Mallah.

A high school dropout, Mallah got his start buying dilapidated apartments, fixing them up and renting them through Section 8 and other federal government programs. Now he lives in a $16.5 million gulf-front mansion, drives a Rolls-Royce (or a Bentley, depending on the day) and wears a thick gold chain with a blingy medallion in the shape of a dollar sign.

“You can do it,” Mallah preached to the crowd from behind his signature aviator sunglasses. “I know it, I’ve seen it, I’ve done it.”

Since the start of the COVID-19 pandemic, droves of wannabe real estate investors have flocked to Florida chasing the promise of streets paved with gold. But rising interest rates, home prices and insurance costs have created hurdles for newcomers looking to get rich quick.

“It’s a very tough market right now,” Mallah told the Tampa Bay Times. “It’s impossible to find a decent deal.”

Ben Mallah, left, speaks on stage with his sons during his Real Estate Raw seminar on Feb. 24 in Tampa. [ LUIS SANTANA | Times ]

Last year, Mallah sold off some of his assets, including an $8.7 million home in Belleair, a $28 million hotel in Fort Lauderdale and several shopping plazas.

He started holding events like this one to connect with fans and maybe help some people along the way.

There was no rehearsal beforehand. Mallah and his sons got up on stage and spoke to the crowd off the cuff. They pledged to stay as late as they needed to take make sure everyone would get their chance to chat with them and snap a photo.

A group of dancers in colorful showgirl outfits came out to shake and shimmy for the crowd during a break.

The point is to have a good time, Mallah said. He’s not interested in selling his followers instructional courses or raising money for his real estate ventures, he said. That’s already a crowded space.

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“It’s not a gimmick,” he said. “It’s not a seminar. It’s about meeting people, networking.”

This message has helped him gain a loyal following. On Saturday, there were fans that flew in from New York, Pennsylvania, Ohio and Michigan to see him.

Elizabeth Robles, 35, said she’s been watching Mallah’s videos and attending his events for a decade. He was the one who inspired her to move from Las Vegas to Clearwater and purchase her first condo.

“He’s very motivational,” she said. “He makes you want more from life.”

Even if, in this economy, that means working harder to get it.

Elizabeth Robles listens to Ben Mallah speak during his Real Estate Raw seminar on Feb. 24 in Tampa. [ LUIS SANTANA | Times ]

For Ribeiro, success came easy at first.

The Orlando native took advantage of historically low interest rates in 2021 and snagged his first home in Orange County for $200,000. He then bought his parents a home in Osceola County and moved in with them so he could rent out the first house.

He figured buying a third property would be a breeze. But it hasn’t panned out that way.

“Sellers have us in a chokehold right now,” he said. “There’s really nothing good available for a fair price.”

Adriana Crisanti, a bartender in St. Petersburg, attended Saturday’s event seeking guidance. During the height of the pandemic, her bar was flooded with real estate agents bragging about how much money they were making.

“I thought I could do the same,” said the 28-year-old.

Adriana Crisanti listens to Ben Mallah speak during his Real Estate Raw seminar on Feb. 24 in Tampa. [ LUIS SANTANA | Times ]

Crisanti got her real estate license seven months ago but still hasn’t sold her first home. It’s been discouraging, both for her and for her clients who have lived in the area for a long time.

“They’re not accustomed to the change that’s going on,” she said.

In January 2019, the median sale price across Tampa, St. Petersburg and Clearwater was $225,280. Now it’s $400,000, according to the most recent data from Greater Tampa Realtors.

While higher home values can lead to more profits, it also makes it harder to get started, said Casey Lawhorn, 31. After building a sizable portfolio of rental properties in his home state of Kentucky, he was inspired in part by Mallah to start doing business in the Tampa Bay area in 2020. He moved down last year.

Finding deals has been a challenge in an increasingly crowded market. Sometimes he feels like David battling Goliath, competing for the same homes as large investment firms.

“Back home you could offer under listing,” he said. “Here you could offer $80k over listing and still be outbid.”

Attendees to a Real Estate Raw seminar by Ben Mallah make their way to the ballroom on Feb. 24 in Tampa. [ LUIS SANTANA | Times ]

Mallah told the crowd it’s something he’s dealt with too — corporations coming in with cash offers that the average person could not afford. Sometimes you can beat the big guys by being more nimble — offering better terms and shorter time frames to close the deal. Other times, there’s nothing you can do.

That’s because making money in real estate often comes down to timing, Mallah said.

“Sometimes you’ve got to be patient and you’ve got to wait.”

Ribeiro, 25, wasn’t able to find an investor Saturday but he’s not giving up. Even if this property doesn’t pan out, he has faith the next one will.

He didn’t grow up rich. He has a day job as a consultant but 75% of his net worth comes from his real estate holdings, he said.

Though he’s faced more obstacles than he initially bargained for, real estate still feels like an industry where it’s possible to make something out of nothing.

“Anyone can get into it,” he said. “All you have to do is work hard and learn the market.”

Tiago Ribeiro listens during a Real Estate Raw seminar hosted by Ben Mallah on Feb. 24 in Tampa. [ LUIS SANTANA | Times ]



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

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What Is Dual Agency, And Is It Risky? | Bankrate

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Key takeaways

In a dual agency situation, the same real estate agent represents both the buyer and the seller of a home.

This arrangement can be risky for buyers, since agents are paid based on how much the home sells for.

However, dual agency can also be beneficial in helping to simplify a complex transaction and ensuring a smooth and efficient close.

In most real estate transactions, the buyer and seller are each represented by their own separate agents: one buyer’s agent and one listing agent. Each agent protects their individual client’s interests. It’s also possible, however, for both the buyer and seller to work with the same real estate agent in an arrangement called dual agency.

Having only one agent involved in a transaction can simplify the process. But it also presents the risk that the agent may favor one party over the other — specifically the seller, as their commission fee hinges on the final sale price of the house. In fact, in several states, acting as a dual agent is actually illegal. Still, if it’s permitted in your state, it can be worth considering. Here’s what you should know about dual agency, whether you’re a buyer or seller.

What is dual agency, and how does it work?

Typically, when a buyer searches for and purchases a home, they do so with the help of a buyer’s agent — an agent who works specifically for them, helping them find and buy the right property. The seller of a home, meanwhile, works with their own dedicated agent, whose job is specifically to market and sell their home (usually referred to as the listing agent, as they manage the listing). Each agent in the transaction works on behalf of their respective party under a principle known as fiduciary duty, which means each must act in their own client’s best interests. But in a dual agency situation, the same real estate agent represents both the buyer and the seller of the home.

Dual agency often occurs when the buyer and seller of a home use the same brokerage. It can also happen when a buyer approaches the listing agent directly, such as through a for-sale sign or online listing, without being represented by their own buyer’s agent.

Here’s an example: Say you’re a buyer who’s just starting to look at homes, and you are not yet working with an agent. You attend an open house, love it, and chat with the agent hosting it, who is representing the seller. You hit it off with that agent and decide to work directly with them to submit an offer and purchase the home. If that agent agrees, they are now a dual agent, representing both parties in the transaction.

Whether you’re the buyer or the home’s seller, it’s important to understand how you’re being represented. Both parties must formally agree to a dual agency arrangement, notes Than Merrill, a real estate investor and founder of FortuneBuilders. “For an agent to represent both sides in a real estate transaction, they must receive informed consent from the buyer and the seller,” he says. “If either the buyer or seller isn’t comfortable with the idea, they reserve the right to opt out of the deal.”

Risks of dual agency

By its nature, dual agency can present very real conflicts of interest.

A real estate agent’s commission is based on a percentage of how much the home sells for — in other words, the higher the sale price, the more money they earn. So they “are incentivized to bid up the sale price,” Merrill says. “That’s not to say that all dual agents don’t have their customers’ best interests in mind, but rather that the incentives inherently work in favor of sellers.”

It also raises potential ethical questions. “Dual agency in and of itself is not unethical, but there are actions and tactics that could be sneaky,” says Farid Yaghoubtil, an attorney with Downtown LA Law Group in Los Angeles. He notes that “both the buyer and seller may be under the impression that the agent is biased toward or favoring the other party, which can result in suspicion, mistrust and anger.”

Overall though, buyers and sellers can usually count on getting fair, if not full, representation in a dual agency transaction, says Deb Tomaro of Bloomington, Indiana’s Deb Tomaro Real Estate. “For example, if I am the agent in a dual agency arrangement, I cannot make suggestions to a buyer about how much to offer, because that’s not fairly representing the seller,” she says. “If a buyer tells me he wants to see a list of all homes with 2,000 square feet that sold in the past year in the same neighborhood, I can run that report. But I can’t help him interpret it or point out differences. I can only provide the facts.”

Is dual agency illegal?

For these and other reasons, some U.S. states actually prohibit the practice of dual agency. “The fact that it is illegal in several states should be enough to give some parties pause and elicit further consideration,” says Yaghoubtil. Real estate dual agency is illegal in these eight states:

Alaska
Colorado
Florida
Kansas
Maryland
Texas
Vermont
Wyoming

Advantages of dual agency

While dual agency can be inherently problematic, it can also offer advantages — namely, a smoother transaction.

“Since both the seller and buyer are working with the same agent, documents can be prepared and signed more quickly,” says Raj Dosanjh, founder of Rentround, a rental agent-matching platform. “There will be one person who knows everything about the property. This can eliminate excessive back-and-forth questions.”

Another plus? The seller has more leverage to request a reduced commission fee, since there’s only one agent. “You can use the single point of payment to your advantage,” Merrill says. “You may be able to negotiate lower commission fees when the dual agent doesn’t have to split profits with anyone else.” (Read more on this below.)

Who pays commission in dual agency?

In a traditional two-agent transaction, each agent earns a portion of the overall commission. In contrast, a dual agent will receive the entire commission on the transaction, since there’s no second agent to split it with. Thus, the amount can often be open to negotiation. For example, a dual agent may agree to a 5 percent commission instead of 5.5 or 6 percent, or maybe even less, since they do not have to split the fee with anyone else.

As for who pays that commission, buyer or seller, it used to be that the seller paid the commission for both agents out of their sale proceeds. But that is changing thanks to new commission rules going into effect after a federal lawsuit, which are due to kick in this August. Be sure to hammer out the details of who is paying what percentage of a dual agent’s commission beforehand, and have it clearly spelled out in the purchase and sale agreement.

Bottom line

Dual agency is legal in most states and can make for a more convenient transaction, provided you understand the risks. But it isn’t often recommended. “I believe buyers should have their own representation and enlist their own agent before they start looking for homes,” Tomaro says. “Having representation with a Realtor you trust and develop a relationship with will always end better than just calling a random name on a sign and having them represent you.”



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

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Do Selling Sunset Stars Actually Sell Homes? Us Breaks It Down

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

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