Commission agreements

CHICAGO (March 15, 2024) – The National Association of REALTORS® (NAR) today announced an agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.

The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule (MLS Model Rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. Under the terms of the agreement, NAR would pay $418 million over approximately four years.

“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” said Nykia Wright, Interim CEO of NAR.

Two critical achievements of this resolution are the release of most NAR members and many industry stakeholders from liability in these matters and the fact that cooperative compensation remains a choice for consumers when buying or selling a home. NAR also secured in the agreement a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion and MLSs not wholly owned by REALTOR® associations to obtain releases efficiently if they choose to use it.

NAR fought to include all members in the release and was able to ensure more than one million members are included. Despite NAR’s efforts, agents affiliated with HomeServices of America and its related companies—the last corporate defendant still litigating the Sitzer-Burnett case—are not released under the settlement, nor are employees of the remaining corporate defendants named in the cases covered by this settlement.

In addition to the financial payment, NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers. They are also consistent with the real estate laws in the many states that expressly authorize them.

Further, NAR has agreed to enact a new rule that would require MLS participants working with buyers to enter into written agreements with their buyers. NAR continues, as it has done for years, to encourage its members to use buyer brokerage agreements that help consumers understand exactly what services and value will be provided, and for how much. These changes will go into effect in mid-July 2024.

“Ultimately, continuing to litigate would have hurt members and their small businesses,” said Ms. Wright. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one fifth of the American economy, and NAR. For over a century, NAR has protected and advanced the right to real property ownership in this country, and we remain focused on delivering on that core mission.”

“NAR exists to serve our members and American consumers, and while the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” said Kevin Sears, NAR President. “NAR is focused firmly on the future and on leading this industry forward. We are committed to innovation and defining the next steps that will allow us to continue providing unmatched value to members and American consumers. This will be a time of adjustment, but the fundamentals will remain: buyers and sellers will continue to have many choices when deciding to buy or sell a home, and NAR members will continue to use their skill, care, and diligence to protect the interests of their clients.” 

The National Association of REALTORS® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.

Does your buyer have a prequalification letter?

Most Real Estate agents don’t know the difference

Getting Ready to Sell

Prepping Your Home For A Successful Sale

When you're ready to sell your home, doing a little preparation beforehand can potentially help your home sell quicker and for a higher price.

Maximize Curb Appeal

Getting buyers through the front door starts at the curb. Manicure the lawn, and trim the trees and shrubs. Pull weeds and plant some colorful flowers. Clear the walkways. Fix peeling paint and wind up that hose. Paint the address number on the curb.

Make Repairs to Visible Blemishes

Is there something that’s an eyesore, but an easy fix? If looking at it bothers you, it could bother a potential buyer and reduce the appeal of your home. Replace burnt-out light bulbs, fix that loose door handle, and make needed paint touch-ups.

Make a Buyer’s Entrance Inviting

Freshly paint the front door with a color that contrasts the house. Add a new welcome mat and hang a fresh wreath on the door.

Let the Light Shine In

Remove heavy window coverings to let in the natural light we all crave and add lamps to brighten up darker areas to add more cheer.

Remove the Clutter

This serves two purposes.

First, you want your home to have an open and inviting appearance. Removing clutter will make rooms appear larger and more appealing.

Second, it helps YOU prepare to move. Going through the clutter and getting rid of what you don’t need will make your move much easier.

Remove Personal Items

It will be much easier for potential buyers to imagine your home as theirs when they can envision their own items in it.

Highlight Special Features

Use accents and color to draw eyes to special features that you want potential buyers to notice—throw pillows, plants, or other eye-catching accessories.

Add Mirrors

Use mirrors to make rooms look larger and lighter. Position opposite windows for best effect.

Clean Out Cabinets and Closets

Buyers are nosy and they WILL open the cabinets. Make sure your contents are orderly and organized.

Eliminate Odors

Clean to remove any odors and do not cook any meals with heavy, lasting smells before a showing.

Add Aromas

You can easily add appeal by quartering an orange and adding it to a pot of water with a cinnamon stick. Simmer on low for an inviting aroma. Or bake a fresh batch of cookies (and leave a plate of them on the counter for visitors).

Bad News looms for California homeowners

Anti "Flip" Law is Bad News for Homebuyers and Homeowners

The California Association of REALTORS (C.A.R.) is opposing a bill that will zap homebuyers if they have to sell within seven years.

According to C.A.R., AB 1771 (Ward) will impose a 25% tax on a home if it is sold within three years after it was purchased.  After three years, the tax rate decreases annually.  Seven years after purchase, the homeowner would not be subject to the tax. 

C.A.R. says this legislation is problematic in many ways including penalizing homebuyers who may have to sell soon after a purchase due to unforeseen circumstances. While it may be intended to limit so-called "flipping," C.A.R. says it will drive up home prices as a result of fewer choices being available for buyers.

Outlook for 2022

Experts Forecast What The Housing Market Will Look Like In 2022

National Association of Realtors chief economist Lawrence Yun anticipates that sales will exceed pre-pandemic levels this year. Yun’s projection is based on the assumption that additional inventory will be available in the coming months. The increasing supply will be partly fueled by new house construction and the end of forbearance for struggling mortgage payers, which may prompt some homeowners to sell. Yun added that mortgage rates are expected to rise to 3.7 percent in 2022 due to consistently strong inflation.

According to Danielle Hale, chief economist at Realtor.com, home buyers will have a greater chance of finding properties in 2022 but will encounter a competitive seller's market. She forecasts a 2.9 percent increase in the value of existing homes and predicts that sales in 2022 will be the second greatest in the last 15 years, only after 2021.

Redfin, the online real estate brokerage, believes the housing market in 2022 will be no more predictable than in the previous two years. Buyers would migrate away from the Sun Belt to more affordable Rust Belt areas such as Columbus, Ohio; Harrisburg, PA.; and Indianapolis due to rising housing costs in Austin, Atlanta, and Phoenix.

Meanwhile, Zillow predicts home values will increase by 11% in 2022, down from 19.5 percent in 2021. It anticipates 6.35 million existing-home sales in 2021, up from 6.12 million in 2021. They also forecast that many homes will have bidding wars, especially when the market heats up throughout the spring and summer shopping seasons.

So as you can see, there are different opinions of what 2022 will hold for buyers and sellers. We will keep an eye on the numbers and see who appears to be most accurate as time goes on.

Fear Of Even Higher Mortgage Rates May Be Heating Up Winter Homebuying

Mortgage rates have risen to their highest level in almost a year, making homebuyers concerned that their affordability window closes faster than anticipated. Although home prices are still growing, and winter is traditionally the weakest season for the property market, buyer demand for mortgages has increased.

According to the Mortgage Bankers Association's seasonally adjusted index, purchase loan application volume increased 2% last week compared to the prior week. Applications were still down 17% from the same week a year ago, but some of it is owing to the market's significantly reduced supply. For 30-year fixed-rate mortgages with conforming loan sums ($647,200 or less), the average contract interest rate jumped to 3.52 percent from 3.33 percent for loans with a 20% down payment. Last month, inventory did not grow as it usually does in December.

Next weeks potential market moving reports are:

• Monday, January 17th – No Report

• Tuesday, January 18th – Home Builders Index

• Wednesday, January 19th – Building Permits, Housing Starts

• Thursday, January 20th – Initial Jobless Claims, Continuing Jobless Claims, Existing Home Sales

• Friday, January 21st – Leading Economic Indicators

Useful Phone numbers for Utilities

Proposition 19 passes

When Does Proposition 19 Take Effect?

This week, the California Association of REALTORS® (C.A.R.) reported Proposition 19, the home protection for seniors, severely disabled, families, and victims of wildfire or natural disasters act, will likely pass and become state law. 

The Legislative Analyst's Office report about Proposition 19 released earlier this year stated tax portability would be available to homeowners on July 1, 2021.  This date is incorrect.  The California Association of REALTORS® (C.A.R.) has clarified when the various provisions will take effect:

• February 16, 2021: New process for assessing inter-generational transfers begins.

• April 1, 2021: Property tax transferability for eligible homeowners begins.

C.A.R. will be releasing more information about how Proposition 19 will be implemented during the next few weeks.



Confused over Smoke detectors?

When selling your home in Livermore or Pleasanton California, the law states that all properties must comply with the state fire marshalls mandate of having the correct and operating devices in the home.

To Clarify:

Here are the current requirements as of August 2020.

Each bedroom must have a Carbon dioxide detector (CO2). They can be hardwired or battery operated. They should be placed on the wall above the door no closer to the ceiling than 6 inches and no further away than 10 inches. In addition a CO2 detector is required outside “each sleeping area” usually translated as the hallway or area outside the bedrroms, these can be placed on the ceiling.

In addition each home also now needs a carbon monoxide (CO) detector. This is is different from a CO2 detector and senses odorless and invisible carbon monoxide a dangerous byproduct of combustion.

If you own a 2 story property you need 2 of these detectors one on each level and they can be placed anywhere. Certain detectors are combo units and can detect both. These are ideal but usually cost a little more.

CO2 detectors can be purchased for @ $20 and CO detectors for @$30 at any hardware store, Lowes, Home Depot or Amazon.

New Technology drives Sales

Wondering how to get buyers through your house for sale when there is COVID -19 restrictions?

Check out the latest in digital 3D marketing. This technique is a wonderful tool not expose your property without risk but also eliminates looky loo types who frequent open houses looking for decorating ideas.

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Would you like this technology applied to your home?

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Economic Roundup

RECESSION REASONS

Recessions tend to occur from sharp falls in auto sales, home construction, commercial construction, and corporate investment in plant and equipment. It’s because purchases of these items can generally be timed, unlike services such as healthcare. Importantly, unlike housing, which skyrocketed early in the last decade to crash in 2007, precipitating a recession, these four sectors have been weak for some time now. This suggests a mild recession when it comes.

TARIFF TRAVAILS

Prior to slapping tariffs on China, US tariff revenues were $3 billion/month. They’re now $7 billion/month; an increase of around $50 billion/year or 0.25% of GDP. Thus, GDP has been reduced by at least this much, and realistically much more because some purchases are simply not made and we’re importing from other nations at prices higher than before the imposition of tariffs. Rearranging supply chains is very expensive.

MORE MONEY

When raising the minimum wage two things are relevant. First, what percentage of impacted firms are exporters? They are much less able to raise prices to offset the increase as they compete in world markets. Second, what percentage of the median wage is the new minimum? The higher it is, the more the unemployment rate rises. At $15/hour, the minimum wage would be almost 70% of the median; troublingly high.

AUTOMOTIVE ACTIVITY

In 2018, automakers sold 81.8 million vehicles and 4.2 million light commercial vehicles, down 400,000 from 2017, the best year ever. 2019 looks to be slightly weaker than 2018. The biggest market is China, with sales of 28.1 million vehicles. The US is a distant second at 17.3, followed by Japan at 5.2, India at 3.9, and Germany at 3.7. Collectively these five nations account for 67.7% of all sales.

EUROPEAN ECONOMIES

One reason Europe grows slower than the US is because it’s a goods producing powerhouse. That’s because EU rules allow goods to cross borders more easily than services. Unfortunately for Europe, service companies (like Google and Microsoft) are not only hugely valuable but are also more productive and pay better. Worse, the splintered eurozone has three times as many service firms as the US, thus few enjoy economies of scale.

SOPHISTICATED SCAMMERS

On social media, 91% of survey respondents said they initially failed to recognize fraudulent advertisements as scams and proceeded to engage and 53% eventually lost money. On websites, things were slightly better; the percentages were 81% and 50% respectively. However, via voicemail, only 42% engaged and just 13% lost money, and for phone calls the results were still better at 39% and 11%. I’m reconnecting my land line!

Source: Elliot Eisenberg, PhD, Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the United States. All rights reserved.