Et tu, NPR? New Rules for Real Estate Explained

Sometimes what you hear isn't the whole story.

NPR recently did a short piece on the outcome of a lawsuit that accused National Association of Realtors of not explaining to sellers why the sellers pay the buyer's agent.    

Most buyers cannot buy a house and pay their agent 2-3% of purchase price. That's why. And yes, having the seller pay the buyer's agent increases the price on a house but it also means the buyer has representation in a huge transaction that could easily go awry. Otherwise, the buyer has to ask the seller's agent to write the contract and negotiate for them. Good luck with that!

The truth is that most states have not had a buyer's agency agreement which states that the seller usually pays the buyer's agent but if they don't, the buyer is liable for their agent's fee. Colorado has had this agreement for years.

The only thing that changes in Colorado is that a buyer's agent has to contact the listing agent to find out how much the seller is contributing to the buyer's agent fee. That's because they are not allowed to state any compensation on the MLS though they can print it on marketing materials. Then we write it in to the contract or create an amendment or whatever is agreeable to the lender.

NPR said that sellers no longer need to pay a buyer's agent's fee so buyers have to deal with the listing agent. NOT TRUE!!!!

Buyer's agents are the ones bringing buyers to homes, providing them with information on neighborhoods, schools, inspectors, what price to offer, how to negotiate obstacles and inspection items. We spend hours talking over fears and concerns with our clients. And if the house or timing or whatever isn't right, we listen to our clients and act accordingly.

In Colorado, we have been telling our clients--whether a buyer or seller--for years how buyer's agents are paid. But some sellers will decide not to pay a buyer's agent. As a consequence, buyer's agents can't show their houses unless the buyer agrees to pay their agent. And that is not always possible.

Will this rule bring down home prices? Will it decrease the pool of buyers? Will it bring chaos and confusion to an already complicated transaction.

I don't have an answer yet to any of those questions but if you have questions, talk to your agent. Ask them how they are going to navigate these new rules and how will it affect you. Or give me a call and let's talk about it.

Meanwhile I'm going to send NPR a strongly-worded email!

The Real Estate "Unicorn" Years?

Sometimes you just have to steal

Trying to explain the real estate market today is hard. On the one hand, sellers think it’s still the beginning of 2022 and buyers think it’s 2008. I might’ve stolen that idea but can’t remember from where!

But I know I stole the idea that the last three years have been real estate UNICORN years!

Unicorn: Something that is highly desirable but difficult or impossible to find.

Kudos to Keeping Current Matters for their idea that the last three years in the housing market have been extraordinary. “Unicorn-ish,” I dare say. But it was only “highly desirable” for sellers who could ask outrageous prices for their homes and get it from desperate buyers. In most areas in Colorado homes were appreciating at 1-2 % a month. Low interest rates spurred more people to buy, and first-time and second-time buyers were flooding Open Houses for EVERY. SINGLE. HOUSE.

That has ended.

Back to "Normal?"

We are now hanging out in pre-pandemic territory AKA "normal." Prices dipped a bit at the beginning of the year when financial pundits were screaming “10% interest rates!” or “massive recession” or even “housing market crash!” Now we hear the words, prices rising slowly, 3% inflation, soft landing, and even 6% interest rates by the end of the year.

In other words, excluding the "unicorn" years, we are looking at a market similar to the last 20 years.

Depending on your news source, you might see headlines like “foreclosures up” or “buyers not interested in buying.” None of that is true. Okay, yes, foreclosures are up but that’s because almost all foreclosures were in forbearance during the pandemic. So one foreclosure is more than zero, so I guess that’s up. And yes, buyers are interested but not in your overpriced, not-well-maintained 2-story with terrible curb appeal.

Homeownership & Wealth Building

I just heard a story on NPR on KUNC FM that some home builders are attracting clients with 6% mortgage rates and prices under $400K to attract first-time homebuyers! Of course, that doesn't apply to northern Colorado--yet. There is more new construction but their target is still the more affluent buyer.

If you've held off buying, maybe it's time for you to step out there again. Go to Open Houses, check in with your lender, look at new construction (but be sure to bring your Realtor!), be realistic about your wants vs. needs.

Homeownership is still one of the best ways to create wealth. Just ask any northern CO homeowner.

The Therapist Is In!

This is a bit of continuation of my last post, but I just wanted to speak to sellers for a minute. So, if you are not a seller but interested in buying, you can either go check your Instagram or keep reading.

dear Sellers, Be realistic

Ok, some of you have overpriced your property. Not all of you. Many of you did listen to your real estate agent but some of you insisted on overpricing your home, saying “Hey, let’s just see. It can’t hurt, right?”

Wrong.

It’s true, no one wants to leave money on the table. To some sellers that’s akin to being “unfairly” assessed by the county in order to determine property taxes. (That’s another post.) On the one hand, you want to see if you can reach for the sky when pricing your home, but you’ll go toe-to-toe with the county assessor and tell them your house needs major renovations and is nearly inhabitable in order to get them to reduce the value of your home.

Hey, why not, right? We’re complicated people.

let's get serious

But if you’re serious about selling your home, listen to your agent and make sure your agent listens to you. Overpricing your home can discourage buyers still in sticker shock from the last two years, assuming there’s no room for negotiation even when there is. If you get an offer that’s more than the asking price with great terms, kudos! You probably priced it right, especially if there is a competing offer.

If you overpriced it, you’ll probably get feedback telling you that.

And if the feedback includes any of the following—“they should clean the house,” or “it would help if they picked up the dog poop in the back,” or “what’s that smell,” you really didn’t listen to your agent.

dear Buyers, be patient

Ok, buyers, you’re not going to incur a mortgage with a 7% interest rate for a house that stinks. Or that needs to be fumigated. (Put those gym socks in the laundry, people!) Or that’s overpriced.

But buyers still want a home and sellers still want to sell. And that’s why we have agents who make sure both sellers and buyers don’t tank the deal by being unreasonable or clueless, or rude to the other party, or even doing something illegal. Many of us have been in the business for years. Maybe we haven't "seen it all"--but we've come damn close.

I love being a real estate agent! It’s like being a therapist without having to get that master’s degree in psychology.