Market Update - October 23rd, 2023
Interest Rates Higher / Existing Home Sales Lower
Rates have touched 8% and appear to be trending higher this Monday morning. At the same time, existing home sales are also at their lowest levels in almost 15 years. “Hard times create strong men & women”. That’s our mantra. Business was like shooting fish in a barrel a few years ago. That’s not reality. We are back to working hard for each and every deal. Persevere through this difficult time and we’ll all be better on the other side.
NAR’s Commission Lawsuit Starts
Last week, the class action lawsuit’s opening arguments against broker commissions began against NAR. Over the last few months, this has been the topic at every realtor meeting Kreg and I have attended. It’s important that we try and set our partner’s minds at ease during a very pivotal point in history.
Tommy Choi, one of our coaches, is a real estate professional in Chicago. He wrote a very compelling piece that we wanted to share. It really delivers a concise breakdown on the ramifications of the trial. The key takeaway : realtors are resilient.
I'm tired of the fear-driven headlines about our industry.
"Are Realtors Going Extinct?"
Lawsuit settlements
Future of buyer's agents
Cooperative compensation
The need for the MLS & NAR
Here's my perspective, as an in-production active real estate agent.
The compensation lawsuits claim:
The NAR rules violate antitrust laws
These rules inflate home prices for buyers
Anticompetitive rules cause inflated commissions
If the verdict favors the plaintiffs:
Agent compensation could change
MLS business practices could change
Significant financial damages for defendants
1. Agent Compensation
What could change?
Currently, the listing broker retains the right to determine the amount of cooperative compensation.
Example: "As your listing agent, my professional fee is 20 apples. I'll give 10 to the buyer's agent."
In the future, the listing agreement may give the sellers the choice of how much the cooperative compensation will be.
Example: "As your listing agent, my professional fee is 10 apples. Would you like to offer compensation to the buyer's agent too?"
If a seller doesn't offer compensation to a buyer's agent, we will continue to use an exclusive buyer-brokerage agreement.
Example: "Home buyer, as your agent, I will seek to be compensated, for my professional services representing you, from the listing broker or from the seller if there is no listing broker. In the event that the seller or listing broker does not offer compensation, then you shall compensate my professional fees of 10 bananas at the time of closing."
What won't change?
The importance and need for buyer's agents.
Buyer's agents being compensated for their services.
Sellers will always have the right to compensate a buyer's agent.
2. MLS Business Practices
What could change?
Currently, buyer's agent compensation is required in the MLS.
Example: We can offer 1 banana to a googolplex of bananas.
In the future, the buyer's agent compensation will not be required.
Example: We can offer 0 bananas to a googolplex of bananas.
What won't change?
The largest database of available homes.
Equal opportunities for home buyers + sellers.
Most up-to-date and accurate home information.
MLSs will continue to be local broker marketplaces.
Foster cooperation between buyer and seller brokers.
3. Financial Damages
What could change?
Defendants will have to pay damages to plaintiffs.
What won't change?
Brokerages, MLSs, or NAR will still be in business.
$13 billion dollars in damages. The defendants don't have that.
That's Apple-level money. Speaking of Apple. The picture below was the cover of Business Week on 2/15/96.
They were predicting the demise of Apple. Here are some quotes from the article:
“Apple as we know it is cooked. It’s so classic. It’s so sad.”
“Apple went from hip to has-been in just 19 years."
Today, Apple's market cap is $2.66 trillion dollars. I know, we're not Apple. I think we're better.
The fact is these lawsuits wrongly label us as anticompetitive. The U.S. model of local independent brokerages is globally seen as the most competitive with the best value, and most efficient, with no hidden fees and more verified data than other countries. There are a lot of opinions about our industry right now. Some are scary, ugly, hateful, and insightful. Take them for what they are - opinions. They are not right or wrong - just ideas.
What won't change?
Our grit
Our focus
Our resilience
Our adaptability
Our determination
We are one of the oldest professions in the world. Our industry has faced change before and we're still here. I'll continue to bet on us.
Give our friend Tommy Choi a follow!
Realtor Value Bomb : Selling in a Slow Market
With the holiday season right around the corner, the seasonal home sales slump is quickly approaching. A recent Curbio report notes the biggest ROI to capture the attention of potential buyers still in the market. Kreg and I pulled together the top 8 takeaways from the report and attached them to this week’s update.
Instagram Posts from Last Week
Don’t hesitate to reach out if you need anything at all. Have a wonderful week!