Latest Posts:
Tag

settlement

Browsing
In News

‘This Is a Sea Change’: Bay Area Realtors React as NAR Settlement Goes Into Effect | KQED

No Comments


Steven Huang, president of the San Francisco Association of Realtors, said these new rules will also force realtors to educate their clients about the complicated home selling and buying process.

“A lot of times, consumers are not educated from A to Z up front,” he said. “We as real estate agents need to just thoroughly educate the consumer and let them know what our value is and then let the consumer decide what is a fair payment for that service.”

The lawsuit is just one harbinger of change for the real estate industry. A proposed state bill currently making its way through the Senate titled “Buyer-Broker Representation Agreements” would, if passed, require a buyer’s agent to enter into a contract detailing compensation rates and services the agent would provide before the agent starts touring homes with their client.

“This contract will actually have you sit down and go over why you’re being compensated, how you plan to be compensated and what kind of value you are bringing to the table for your client,” Michelle Perry, president of the Santa Clara County Association of Realtors, said. “Now we’re going to show our value even more.”

As the Federal Reserve is expected to lower interest rates next month and realtors are seeing a rise in homes being actively listed in the Bay Area, agents are preparing to see how these new rules play out.

“This is happening as the market is moving along and we’re anticipating a pretty busy fall,” said David Stark, a spokesperson for Bay East Realtors Association. “Call us in three months and then six months to see how it’s working out.”





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

Read More
By
In News

The NAR settlement comes into effect today: Here’s what changing and why | CNN Business

No Comments


CNN
 — 

On Saturday, a new set of rules governing how most real estate professionals do business in the US officially take effect — and the changes could potentially upend how Americans buy and sell homes.

The rules were agreed to by the National Association of Realtors, the powerful trade association that counts 1.5 million members, as part of a $418 million settlement into antitrust claims. The rules are designed to transform the way Realtors get paid and who pays them. It’s the largest change to the organization’s rules in at least a generation.

In a statement, Kevin Sears, NAR’s president, said that the changes “help to further empower consumers with clarity and choice when buying and selling a home.”

“I am confident in our members’ abilities to prepare for and embrace this evolution of our industry and help to guide consumers in the new landscape,” he said.

Here’s what you need to know:

Historically, buyers were not expected to pay their real estate broker directly. That’s because Realtor commission fees — to both the buyers’ agent and the sellers’ agent — were paid by a home seller.

Commissions usually total 5% or 6% of a home’s selling price, so for a $450K home, roughly the average price of a home in the US, a seller would be responsible for $27,000 in fees. Many experts have said these commissions have been baked into a home’s listing price, inflating home prices.

But beginning this week, seller’s agents will no longer be allowed to advertise commission fees to buyers’ agents on multiple listing services that Realtors use to list and find homes for sale and to facilitate transactions.

That means that a buyer’s agent can no longer use the database to search for houses based on how much they’ll get paid, a practice called “steering,” which led some agents to skip over showing homes that fit their client’s criteria solely because a seller was offering below-market commission rates, critics allege.

“By not having commission on the MLS anymore, it makes it harder to steer, because you can’t just do a search for 3% commissions,” said Tanya Monestier, a professor of law at the University at Buffalo School of Law. “You can still call everyone up and figure out what the lay of the land is, but this just makes it much harder.”

The second change affects the relationship between prospective home buyers and their real estate agents. Buyers must now sign a legally binding representation agreement with their agent before they can begin touring homes together.

These agreements are designed to inform home buyers how their agent gets paid,­ and if sellers do not agree to pay the agent’s commission, the buyer may be on the hook for that payment. They’re also designed to inform buyers that this commission is fully negotiable.

“The idea is if buyers are aware that they can negotiate commissions and that if they, in fact, do pay them, not the seller, it might create a more completive market and possibly a menu of services in the future that would be more comparable to other developed countries,” said Norm Miller, professor emeritus of real estate at the University of San Diego.

A key element to these agreements is that a buyer’s agent cannot receive more compensation than what the buyer initially signed onto, even if a seller is willing to offer more.

On its website, NAR said that these two changes have “eliminated any theoretical steering, because a broker will not make more compensation by steering a buyer to a particular listing because it has a ‘higher’ offer of compensation.”

The final approval hearing is scheduled for November 26, but a judge granted preliminary approval of NAR’s settlement in April.

Some brokerages have realized that buyers may get nervous about signing anything that commits them to a legally binding relationship with an agent before they begin touring homes. So, they created shorter-term contracts that cover a week­ or maybe even an hour for buyers to get comfortable with an agent before committing.

But, Monestier cautioned that buyers should be careful about signing any kind of legally binding contract without giving it a thorough read.

“You’re going to see all sorts of different versions of these agreements that are going to vary, state-by-state, brokerage-to-brokerage. There may end up being thousands of them out there,” she said. “It concerns me that buyers and sellers may sign something blindly and then be surprised when things are not as they think.”

Leo Pareja, the CEO of eXp Realty, one of America’s largest brokerages, told CNN that he drafted his company’s buyers’ agreements with simplicity in mind to head off potential confusion.

“It is designed to be something that a consumer could read in the driveway of a house without feeling put in an uncomfortable situation,” Pareja said. “You don’t need a law degree to read it.”

Pareja decided to make his contracts widely available so that they could be used by other firms, as well.

“We just want consumers and agents to have the least amount of friction going forward, because that’s the last thing we need right now,” he said.

Some real estate professionals have warned that the new rules could have a chilling effect on the home-buying market since more buyers may now be expected to come up with cash to pay their own agents.

But Monestier said that she believed in the long-term, the changes would help consumers.

“I would say the better thing for home buyers and sellers is if commission rates were to go down over time,” she said.

It remains unclear whether the cost of buying and selling homes in the US will immediately become cheaper for most people, though.

“I suspect somebody out there will eventually say, ‘let’s compete on price.’ If it’s a big firm, that could cause a revolution,” the University of San Diego’s Miller said. “But when would that happen? I don’t know.”

In the short-term, Miller believes mortgage rates will have a larger impact on home affordability than any particular rule change.

The rate for an average 30-year fixed mortgage recently hit 6.49%, still elevated compared to recent history but near the lowest levels in more than a year.

“That has a whole lot more effect on affordability than anything we’re talking about here,” said Miller. “If mortgage rates come down further, rule changes will just be noise in the equation, compared to that.”



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

Read More
By
In News

The NARS settlement agreement will not only affect real estate agents but also home buyers

No Comments


GAINESVILLE, Fla. (WCJB) – On August 17th policy changes are coming to people looking to buy and sell a home, as well as agents commissions.

The real estate industry is changing some of its practices and many people, including homebuyers and sellers, may not be aware of what’s in store.

“The news entails a buyer is now required to have some sort of agreement with their realtor before they start looking at homes. That’s one portion of the settlement and the other portion of it is that home sellers can no longer offer compensation to a buyer realtor in the MLS” President-Elect Gacar, Lisa Baltozer added.

This affects the buyers, to know how the market is changing. They will be responsible for paying for their agents. Sellers can negotiate the fees to both parties.

Still, agents can’t advertise for buyers’ agent’s commissions on the MLS

Some real estate agents favor the new changes, like Debra Martin-Back who is the broker of Exit Realty Producers.

“I think it’s a great thing for the industry and now it’s going to put us at a new level. Nobody works for free, nobody goes out there without telling you what they are charging. Now we are just doing it upfront and we are not relying on the seller and agents to pay us which has happened in the past. Whatever was in the MLS is what we got paid” Martin-Back added.

Others are hopeful agents will follow the rules and explain all the information to their clients upfront.

Florida realtor Zome De Las Estrellas said,

“I am a little annoyed by it because it’s a little more complicated but I’m not worried about it. I think my biggest concern would be just hoping that other agents are doing their part to explain the rules”.

Realtors say this changes the game when buying or selling a home. It’s a learning curve that everyone is learning together.

Click here to subscribe to our newsletter.

Copyright 2024 WCJB. All rights reserved.



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

Read More
By
In News

Settlement of a Federal Lawsuit Will Change How Real Estate Agents Are Paid

No Comments


click to enlarge James Buck Vicky Phillips is selling her Westford home without a Realtor.

Before she put her Westford home on the market, Vicky Phillips did some math. With the four-bedroom home priced at $808,000, Phillips estimated it would cost her about $48,000 in commissions for a real estate agent to handle the sale.

Phillips decided to keep that money and sell the home herself. In May, she posted it on Picket Fence Preview, a website featuring homes that are for sale by the owner. She also paid a real estate agent $499 to offer the house on the multiple listing service, a system that shows all the properties for sale through brokers.

“It isn’t complicated,” said Phillips, who owns a business and noted that she has signed much more detailed contracts than the one she’ll use in selling her home.

She’s shown her home five times, a process that usually takes her about two hours, including tidying up. If she contracted with a real estate agent to handle the sale, that person would expect the standard 2 or 3 percent commission, as much as $24,000. If a buyer’s agent were involved, as is often the case, that person would take another 2 or 3 percent of the sale price.

“Real estate agents are great, but what are you paying for?” Phillips asked.

Questions like Phillips’ have roiled the real estate profession for years, and recently a rebellion of home sellers succeeded. In March, the National Association of Realtors agreed to pay $418 million in damages to settle a 2019 federal lawsuit that accused the organization of violating antitrust laws by adopting rules that created an industry-wide standard commission.

The settlement specifies that the NAR must drop rules that require the agent for the home seller to offer payment to the agent for the buyer. Those rules have resulted in the standard 5 to 6 percent commission being incorporated into the price of most homes for sale. Under the settlement, it will be easier for buyers and sellers to negotiate commissions with their real estate agents.

The settlement made national headlines, with some analysts predicting that the price of buying a home would drop significantly as a result of the decline in commissions.

Smaller commissions would be good news for Vermont home sellers, but local experts say the soaring cost of buying a house is mainly the result of the spike in home values. The median price of a house sold in Chittenden County climbed by more than $100,000 between 2020 and last year, to $460,500. With the typical commission of 5 or 6 percent, someone selling that home would pay the agents involved as much as $27,000.

Many real estate agents insist the national settlement won’t change anything in Vermont. Local agents have always been up front with homebuyers and sellers about how much commissions would cost — and have always been open to negotiation, said Kathy Sweeten, CEO of the Vermont Association of Realtors.

“It’s not going to have a huge effect, because we already do this,” Sweeten said in an interview. That’s the position many of Vermont’s real estate agencies are taking, too.

“We’ve been doing business this way for many years now with our agency disclosures,” Four Seasons Sotheby’s International Realty CEO Laurie Mecier-Brochu said.

But home industry analysts say the settlement will likely free up consumers to bargain with agents for their services. The Consumer Federation of America, an advocate for nonprofit consumer groups, said that while negotiating has always been an option in theory, contracts are usually written by lawyers for local real estate associations. Under the existing system, many homebuyers are unaware they’re paying a commission of 2 or 3 percent to their agent, because it’s incorporated into the home seller’s fees and therefore into the price of the home.

Starting next month, buyers who hire an agent to show them homes will be asked to sign a contract spelling out what they will pay the agent if there is a sale, so the cost will not be hidden in the sale price of the home. The advocacy group said the settlement will create more freedom and transparency for agents and consumers.

Change won’t happen overnight.

“The residential real estate marketplace will take some time, perhaps several years, to fully process the implications of this settlement,” the Consumer Federation said in a statement after the NAR settlement was announced.

Not all agents are paid by commission. Some charge a flat fee — $3,500 is common — instead of a commission, using that transparency as a selling point. And there have always been homeowners such as Phillips who avoid commissions altogether by tackling home sales on their own.

Changes in technology are making that easier. Nowadays, websites such as Zillow and Redfin display the homes that are listed on the MLS, making them available online to anyone who knows how to look for them. When she was shopping for a house two decades ago, Phillips noted, the real estate agent would print off MLS listings and mail them to her, a cumbersome process that gave the agent control over which properties Phillips could consider.

Online listing services also help would-be home sellers see what similar properties are going for — and provide valuable information to buyers, such as how much the home sold for in the past.

“Before, you couldn’t really go on Zillow and find comparables and past histories and what the taxes were” for houses on the MLS, Phillips added.

Demand for homes is high in Vermont, making it a good time for sellers to try their hand at going it alone.

Before she put her Montpelier modular home on the market in May, Tammy Parish asked for advice on Front Porch Forum about selling without an agent. She got a flurry of responses from sellers who had done that — as well as several pleas from people who wanted to tour her home.

“My phone blew up. It was people giving me advice saying, ‘Yes, you can do it’ or ‘No, it’s more detailed than you think,'” said Parish, who added that she sold her home for $240,000 the following weekend to one of the people who had responded to her query.

Parish hired a lawyer to help with a contract, paying around $2,000, she said. A 5 percent commission would have set her back around $12,000.

“That’s a lot of money to give to someone else for putting pictures out there and marketing it,” she said.

Phillips said more than 25 agents have gotten in touch since she posted an ad for her Westford home on Front Porch Forum in May.

“They all want to represent me,” said Phillips, who thinks a lack of inventory and high interest rates may have created a very slow market for agents. She added that there are times when using an agent is essential. She’s looking for property in Asheville, N.C., where she’ll build her next home, and she said the agent alerted her that land prices were lower in a neighboring town because of a local paper mill.

“She said, ‘On the right day you don’t smell it, but on a bad day, not only do you smell it everywhere, the fumes are toxic,'” Phillips said. “Good advice.”

If more negotiations lead to lower commissions, as expected, some agents might leave the profession. The number of real estate agents licensed in Vermont jumped during the pandemic, reaching 3,072 last year — the most since the Secretary of State’s Office started keeping records in 2008. Right now, 2,843 people are licensed to sell real estate, according to the office.

click to enlarge James Buck Mikail Stein of RE/MAX North Professionals showing a house

It’s a tough way to make a living, according to Mikail Stein of RE/MAX North Professionals, who sells about 40 homes a year. Stein said his overhead is high and his hours are long. Income is unpredictable.

“Only in the last two years of my career have I had a winter where I wasn’t freaking out about where things were financially,” Stein said. “And hourly-wise, most people do way better than me.”

Stein thinks career professionals such as him will stay in the business, and if commissions drop, part-time, new or unskilled agents will be most likely to leave.

“I hope what it ends up doing is providing the public with better service,” he said of the NAR settlement. “For those of us who do bring high service, the compensation will be just. And for those who don’t, the market will say, ‘You’re not providing enough.'”

A Game-Changing Federal Case

The lawsuit
A group of Missourians who had used real estate agents to sell their homes filed a 2019 class-action lawsuit against the 1.5 million member National Association of Realtors and several multistate real estate brokerages. The suit alleged that the defendants had conspired to inflate real estate commissions paid by the homeowners.

The details
The lawsuit took aim at the NAR’s “cooperative compensation” rule, which requires the home seller’s agent to offer compensation to the agent for the buyer in order to add the home to a multiple listing service. The suit charged that the NAR, by controlling almost all the multiple listing services in the U.S., was wielding monopoly power to keep commissions artificially high.

The verdict
A federal jury in Missouri ruled for the homeowners in October 2023, awarding them $1.8 billion in damages. The NAR said it would appeal.

The settlement
Instead, in March, the NAR settled the case for $418 million in damages and an agreement to change some of its practices.

What will change?
Sellers’ agents won’t set the commission earned by the buyer’s agent. Instead, homebuyers will negotiate directly with those agents for their services. The changes are due to take effect in August.

What’s next?
In Vermont, analysts say it is too soon to predict what, if any, impact the settlement will have in the state. Prices are high, driven by a critical shortage of inventory and high demand.

“If I had to guess, I would say Realtors will become less powerful, and maybe there will be more fee-for-service” real estate transactions, said Jeff Lubell, a Norwich resident who works as a principal associate in housing policy for Abt Global, a consulting firm in Rockville, Md. “We’ll see different patterns in different places.”

An unintended consequence?
Some real estate companies and analysts say the settlement will hurt low-income homebuyers. Those buyers may not be able to afford to pay an out-of-pocket commission to their agent. Previously that commission was incorporated into the price of the home, and thus into the mortgage paid over time.



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

Read More
By
In News

How Do Real Estate Agents Get Paid? What to Know About Commissions After the NAR Settlement

No Comments


NAR settlement 2024: New real-estate commission rules

While both buyers and sellers typically use real-estate agents, traditionally, only sellers have paid directly. The commission is then split between the listing agent and the agent representing the buyer.

Critics have said for years that this structure limits competition, lacks transparency and artificially inflates both commissions and home prices. In October 2023, a jury ordered NAR and a number of well-known real estate brokerages to pay $1.8 billion in damages in a Missouri–based lawsuit arguing as much.

While NAR initially indicated it would appeal the verdict, in March the trade group opted to settle the case instead. The plaintiffs agreed to release NAR from the jury verdict in exchange for $418 million in damages and a host of new commission-related rules that are expected to go into effect in August (pending judge approval).

Those rule changes include:

Mentions of buyer-agent compensation will now be prohibited in listings on Multiple Listing Services, the regional databases agents use to list and market properties.  All commission splits will need to be negotiated separately, giving sellers more power over what—if any—compensation they’ll offer to buyer agents.Buyers and agents will need to sign a contract, detailing the fees and compensation they’ll owe, before even touring a property. This may open the door to more negotiation for buyers and new pricing models—like sliding-scale commissions or an a la carte approach, where buyers pay per service.

It’s not yet clear how these rules will play out on the ground, but they could lead to a major shift in how real-estate agents get paid and who uses an agent. Experts also predict that average commissions could eventually fall by as much as 30%.

How much are current real-estate commissions?

Real-estate agents are paid a commission based on the sale price, and for now, buyers and sellers pay an average of 5.45% the transaction amount, according to research by real-estate brokerage Clever. However, the typical commission varies by location, ranging from 4.90% in Washington, D.C. to 6.07% in Missouri.

Here’s a look at average real estate commission by state:

“Commissions can and do vary widely,” says Adie Kriegstein, an agent with Compass Real Estate in New York. “Location is a huge factor, as markets often vary city to city and state to state. On top of location are just the market conditions: Is it a buyer’s market, seller’s market or simply one that is transitional? The type of property also changes commission rates.”

In the luxury market, for example, commission percentages can often be lower. This is because higher-end properties come with higher price tags, leaving agents more room to negotiate and still get a decent payday.

The exact commission percentage is typically negotiated upfront and will be detailed in the listing contract with a seller. So, for example, if the agreed-upon commission was 5% and they sold a home for $500,000, the agent’s real-estate brokerage would get a $25,000 commission check once the transaction was complete.

It sounds like a lot of money, but that check is rarely a single agent’s to keep. They often have to split that payment with one, two or even three other parties(more on this later). The settlement is meant to end parts of this practice, but it is not yet clear how much agents will be able to charge for their services, though the change is likely to be more dramatic on the buyer end of the equation.

How is the commission divided between agents?

Making things even more complex, unless the same agent is representing both the buyer and the seller, the selling agent gives a portion of the commission to the buyer’s agent—generally in a 50-50 split. With a $25,000 commission, that would mean the listing agent would get $12,500 and the buyer’s agent $12,500.

Beyond that, there are further splits. Often, the agents will also have to share their commission with their broker—the leader of the brokerage firm they work for. These splits vary based on the company, but it often starts at 60-40 (with 60% for the agent and 40% for the broker) and goes up to 80-20 for more experienced agents.

If the agents in that same $25,000 commission scenario had 60-40 splits with their brokers, that’d mean the listing agent and selling agent would take home just $7,500 each.

“Buyers and sellers can be wary of the 5% commission rate, but their individual agent typically ends up only seeing 1.5% on each deal,” says Christa Kenin, an agent and attorney with real-estate firm Douglas Elliman in Connecticut.

To be clear: Not all real-estate brokerages operate this way (just most). National discount brokerage Redfin, for example, pays its agents a salary. Realty ONE Group, which has over 400 franchise offices, lets its agents keep their full commissions, though agents do pay fees to the company.

Can sellers negotiate real estate commissions?

With inflation and mortgage rates high, a 4% to 6% commission might seem pretty pricey—regardless of whose pocket it goes into. Fortunately, “all commissions are negotiable,” says Joe Rath, head of industry relations for real-estate brokerage Redfin.

If you’re a seller looking to negotiate a lower commission with an agent you’re considering, it is important to do so up front. Ask your agent to detail what their proposed commission entails—what services and value they’ll provide in exchange for their fee. You can then agree to remove or reduce certain services in exchange for a lower cut.

“Commissions can vary depending upon the level of service that an agent provides, such as marketing, social media, etc.,” says Bryson Taggart, an agent with Opendoor in Arizona. “If a client wants drone photography, videos and a 3-D printing of their home, that commission may come at a higher price than if they simply want it listed on the MLS.”

You may be able to ask for a lower commission depending on market conditions, too. If it’s a seller’s market and homes are selling at inflated prices and record speeds, you may have more room to negotiate than when buyers are harder to come by and selling a home takes more work.

“Consider the conditions of your current market,” Kriegstein says. “If it’s a hot market with little supply and a lot of demand, you can likely leverage your commission. However, if the market is a buyer’s market you may not want to do that, as other properties could be offering more enticing commissions.”

Can buyers negotiate?

Buyers may be able to negotiate fees with their agents, too, though for now, opportunities for this are rare since sellers typically pay the full commission. Once the new rules from NAR’s settlement go into effect, buyers should have much more negotiating power.

Until then, you might be more able to negotiate if your agent is also the listing agent on the home you’re buying or if you’re buying a For Sale By Owner, or FSBO, property. Some brokerages offer buyer’s commission rebates, typically in the form of closing credits, though the practice is banned in eight states.

Other options

Negotiating isn’t your only option. You can also look to alternative agents and brokerages for reduced fees, too. Discount brokerages such as Redfin and Clever charge just a 1.5% listing fee (versus the usual 2% to 3%), plus the buyer’s agent fee. Other brokerages, such as Homie and ListingSpark, operate on a flat-fee basis.

You also have the option to go agent-free altogether. According to the National Association of Realtors, about 10% of all home sales are FSBOs.

Just keep in mind: If you go this route, you’ll need to handle all aspects of the sale yourself. As Kuba Jewgieniew, CEO of Realty ONE Group, explains, “Realtors work incredibly hard, with the bulk of that work done behind the scenes—negotiating, researching, marketing, writing up contracts and more.”



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

Read More
By
In News

The Realtors settlement is already changing the way some Americans buy and sell homes | CNN

No Comments


CNN
 — 

The seismic settlement announced by the National Association of Realtors earlier this month has not yet been approved, but it is already sending shockwaves through the real estate industry.

The mere prospect of a future settlement has already caused some Americans to change their behavior when buying and selling their homes. Some prospective homebuyers said they plan to restart their housing search after the new rules are in place in hopes of finding lower home prices, while some homesellers aren’t waiting for the new rules to take effect in July to lower — or even eliminate — the commission they offer to buyers’ agents.

Housing experts say the $418 million settlement will effectively demolish the current real estate business model, in which home sellers pay both their agent and their buyers’ agent, which critics say inflated housing prices.

If approved by a judge, the settlement comes with new rules for Realtors.

“This is unchartered territory,” said Debra Dobbs, a Realtor in Chicago, of the potential new rules.

The new rules could help lower home prices, experts say.

That’s what Jeremy Cannon, a 34-year-old teacher in Corona, California, hopes.

Last year, Cannon and his wife tried to buy their first home, putting in offers for multiple properties.

“All of our offers got denied because other people were bidding higher than us,” Cannon said. “We were already trying to bid above asking price for pretty much every place.”

At the time, Cannon decided to hit pause on his dream of owning a home. But, to Cannon, the new rules established by the NAR settlement could potentially clear what felt like an intractable hurdle for him: the high cost of housing.

Sales commissions, traditionally shared between a buyers’ agent and the agent who lists a home on the market, are usually between 5% and 6% of a home’s selling price. The median price of a home in the US is $417,000, according to census data, meaning the average seller could be paying more than $25,000 in brokerage fees.

Groups of sellers brought lawsuits against the NAR for this practice, alleging it was a violation of antitrust laws.

Under the proposed settlement terms, sellers’ agents will no longer be required to offer to share their commission with buyers’ agents, uncoupling commissions from home prices and opening the door to a more competitive housing market.

Many experts believe commission costs have been baked into home listings prices. Lower commissions could mean lower home prices.

“I think it could be helpful,” Cannon said. “I hope it might be cheaper and bring the prices of houses down more.”

He now plans to restart his home search this summer.

A price drop would be a much-needed reprieve for Cannon and others looking to buy a home: the median sales price of a new house has surged 21% since January 2020, according to census data.

The new rules also require agents to enter into written agreements with their buyers. Many agents plan to stipulate that if a home seller does not agree to pay their commission, their buyer is on the hook for that money.

But Cannon said if buying a home becomes more affordable, he would be willing to pay out-of-pocket for an agent, as long as it is “someone who has my interests in mind.”

Matt Hanley, a 49-year-old who works in insurance in Minnesota, has lived in his home since 2007. He was reacquainted with how real estate transactions work when he recently purchased a new home.

“We were confused,” he said. “I’m like ‘wow, I’m surprised the seller has to pay my agent’s commission.’ It seemed like a conflict of interest.”

Hanley now plans to list his home in April. After the NAR settlement was announced, though, he changed course: Instead of offering to pay a commission that would be split between his agent and his future buyers’ agent, he asked his agent to write “0%—negotiable” as the buyers’ agent commission on his home’s listing page.

“Why wait for the settlement? This is common knowledge now,” Hanley said. “I’m going to try to be at the start of this bell curve.”

Hanley’s experiment may be premature, though. The new rules will prohibit agents’ compensation from being included on centralized listing portals, which some critics say led agents to push more expensive properties on customers. But, for the time being, buyers’ agents will still be able to see that Hanley isn’t offering them compensation, potentially disincentivizing them from showing his home to clients.

But Hanley pointed to favorable conditions in his market as a reason that he believes buyers may still consider purchasing his home, even if they have to pay their realtor out-of-pocket.

“We’ve got everything going for us. We have no inventory in our area and we’re selling at peak time, so we said, ‘Let’s try it,’” he said. “If someone really wants it, they’re going to come up with their buyers’ fee.”

“They should be reporting to their agents, we should be reporting to ours,” he added.

Mariya Letdin, an associate professor of business at Florida State University, said this settlement has helped raise awareness that people have a right to negotiate. Even so, Letdin said it’s possible that the status quo is maintained.

“It’s up to the consumers on both the seller side and the buyer side to bring this to wide use,” she said. “I think it will take more than just a ruling. I think it will take consumers advocating for themselves and not being passive.”

“They now have a legally protected voice, and they should use it if we want to see change happen,” Letdin said.



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

Read More
By
In News

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

No Comments


New York
CNN
 — 

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

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

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

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

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

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

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

The settlement could present a major downside to homebuyers.

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

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

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

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

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

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

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

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

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

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

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



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

Read More
By
Pin It