Saturday, October 26, 2024 / by Mary Page
It's a New Market with New Rules
There are some new rules in Real Estate! Let's take a look at how Giving Tree's Broker Partners are preparing for this "new normal".
- Buyers are required to be under a Buyer Agency Agreement prior to viewing a home. There are many ways that a good agent can guide you through this. Gone are the days of just opening a door as a favor to peak inside. Many buyers in the past don't want to be locked into a contract with an agent that early in the process. Buyers will not be able to view homes without some type of contract. In many opinions, this type of rule prohibits listing agents from showing the home to potential buyers, except for during open houses. There must be a contract between a potential buyer and an agent prior to requesting a showing.
- Sellers may negotiate realtor fees to pay a listing agent and offer a cooperating compensation if an agent bring a buyer. This rule is NOT new in NC. That has always been the law. It is new in many other states. Sellers have never been required to pay buyer agency compensation. Where we got into trouble was when some bad apples in the business would word this explanation a tiny bit inappropriately. By saying things like "the norm is" or "the average is", these agents were misguiding their clients. There is not and has never been a "norm" when it comes to real estate fees.
- The Buyer Agency Agreement in NC has always said…I will attempt to negotiate my fee (that we already agreed on) from the seller, but in the event that I can’t, the buyer is responsible to pay it at closing. That fee, like every other element of real estate, is negotiable. Real estate agents set their fees for service the same way a lawyer sets an hourly rate or a beautician sets their fees for services (sometimes we wish we could charge an hourly rate). There are many ways to negotiate this into an offer. We can ask for seller paid concessions (sometimes known as closing costs). The buyer has to consider that in their offer since the seller is concerned about the net amount they will be paid. It may require even increasing your offer to cover the concessions so the net amount is at list price. In that instance, you have to be very careful about appraisal value.
- It is in the best interest of Sellers to continue offering Buyer Agency Cooperating Compensation especially for homes in the First Time Home Buyer price range. In many cases, those first time home buyers are stretched pretty thin with downpayment, closing costs, and inspection fees. Paying an agent is going to be tough. Many analysts are concerned that this is going to force people to try to do real estate transactions without the services of a licensed and trained agent. Compare it to going to court without an attorney. You certainly can represent yourself, but you really shouldn't! If FTHB begin buying real estate without an agent to help them, there are going to be a whole new set of lawsuits and problems and sellers could suffer.
- Agents are no longer allowed to post to MLS the cooperating compensation offered. It now becomes an extra step of the Buyer Agent to find out that information. Some agents are planning to do this prior to showing, so the buyer can be aware early on if this particular home is one that fits into their budget. The problem is that listing agents are really hard to get on the phone sometimes, before this was ever the process. Now that every showing is going to call asking about Buyer agent compensation, they'll never return calls! It is a step that will have to be done early so the buyer can make an informed decision about making an offer on the property and what that offer might look like with all factors on the table.
There is talk that this will bring down the price of real estate. It will not! Real Estate prices are based on market sales, not realtor fees. It may even raise the price of the home because some buyers are going to roll it into their offer. I have even heard of some buyers suggesting that they can roll it into their loan amount. Who in the heck needs to pay 30 years of interest on real estate fees! They are already paying 30 years of interest on the $10,000+ in loan fees the lender is charging and burying in your closing. That is not a financial strategy we would recommend, but we understand where it is coming from. We have simply shifted the burden from the seller reducing their profit to pay real estate fees, to the buyer increasing their payment to pay real estate fees (which is where the sellers money came from in the first place). This change to the market is no small hill to climb. It has already driven about 30,000 real estate agents out of the business. At Giving Tree, we have been coaching on this strategy of concierge level service that is deserving of the fee we request. We also believe firmly in educating our clients so they understand alllll of the many ways we can mold and shape a real estate deal. We are more than prepared for this "New" Market.