One of my favorite “Modern Family” episodes depicts the hilarity and nonsense of a real estate agent’s daily life as Phil Dunphy rattles off deed restrictions and the proper pronunciation of the word “Realtor” (real-TOR).
While I am nervous about what these NAR settlement changes mean for my residential real estate business and community, I am pleased that we’re all turning our eyes and ears to a company whose pockets have gotten too big and too dark for too long.
But enough about NAR.
Brokers, their agents and our local associations are scrambling to decide how to restructure serving residential buyers fairly without undervaluing our work. It feels a bit like a bomb just went off, and we’re running up to each other screaming, “Can you hear me talking? Are you talking? What are we going to do about this?!”
We have only until mid-July to figure it out.
Here’s what we know now: Buyer broker compensation is no longer allowed to be included on the Multiple Listing Service (MLS). And buyers are now required to sign a Buyer Representation Agreement, which includes the buyer broker’s compensation.
Real estate agents are worth it. So how do we get paid?
Buyer services are harder and more unpredictable, I think, than seller services (even in a buyer’s market!). Some buyer clients take years to find a property, while others take only a few weeks.
The stories we agents could tell would make anyone roll with laughter or cry – probably both. Being a real estate agent is like a reality TV show. How will we divide our whole job into billable hours? Billable tasks?
As an agent, I’m not only giving advice about market data and negotiating terms for sale. I’m also an on-call therapist, a babysitter, an interior designer, a cleaner, an exterminator … agents gladly do an endless list of tasks for our clients. Just ask your favorite agent what she keeps in her car for emergencies!
One thing I can predict with much certainty: Buyers will have to do more work to buy a property in the future. Private tours will be less common and replaced by 3D tours, video tours and open houses. Buyers might also have to meet with their inspectors, contractors and others without their agent.
Maybe buyers really will do it all themselves without losing money.
If you’re hoping to buy in the next three months, my recommendation would be to close by July 1. Most first-time homebuyers have no idea what has happened or how it will affect their ability to negotiate.
In the past week, I’ve had to explain the NAR settlement to every friend, neighbor and client outside the industry. I can only tell you that we’re all racing to get it figured out by the time it does affect everyone.
NAR settlement explained: How will this impact home sellers and real estate prices?
Seller-paid buyer broker commissions were created with equitable rights to good representation in mind. Specifically, so that first-time buyers could afford to have a fair negotiation, instead of being swept under the rug by a seller’s agent signed to protect the seller (a law in most states).
My heart breaks for those sellers who were swindled into commissions. As much as I’d like to blame NAR, this error is also on agents, brokers and local boards who clearly violated our ethical code. It’s maddening to watch agents and brokers feed right into the stereotype that real estate agents are lazy and just in it for the biggest paychecks.
So, who will pay the buyer’s agent now, and how will this affect home prices?
It’s commonly acknowledged that the 5-6% sales commission was “baked into” the sales price. Investor agents and builders have been using low-to-zero percent buyer broker commissions as leverage for years.
While I do think that 5-6% sales commissions will be a thing of the past, there is a chance that sellers will find a way to simply advertise buyer broker commissions through a different medium. This compromise walks a fine line with the new restriction.
Seller-paid “buyer credits” is my favorite idea bumping around. Buyer credits would be offered on the listing, and could be distributed as the buyer sees fit at the closing table. The buyer could use the funds for themselves, their broker or both.
If buyers are responsible for the buyer broker commission on top of other purchasing costs, the sales prices will have to come down. Lower sales prices should not affect the sellers’ net proceeds in this instance, since the sales price deficit should roughly mirror the now absent buyer broker’s commission.
In short, even though most sellers think they should be celebrating now, these new rules probably won’t affect sellers much, if at all, once the dust settles.
What does the NAR settlement mean for buyers?
Gone are the “Let’s go tour this house for fun!” days.
A signed Buyer Representation Agreement is now required before a property showing. This has always been best practice. For some states this will be a big change.
For example, I usually complete a buyer consultation and one or two property tours before requiring a buyer’s agreement. I do this to be sure we’re a good match for each other. A successful client-agent squad requires a lot of trust and a common communication style.
Take the tours off the table, and I think things will get awkward. Now I spend one hour with a potential buyer and then prompt, “So do you trust me to guide you through your biggest life purchase? Sign here.” I’m sure thankful many of my clients are referrals.
How will the commission change impact real estate agents in 2024?
The part-time agents and small brokerages will likely diminish over time, which will either be great or horrible for the industry. Agents will have to do more with less, and our 60 to 70 hour work week will feel impossible without high sales volume.
Once in escrow, the brunt of the work usually lands on the buyer’s agent, too. If there are more transactions without buyer’s agents, then the seller’s agent will have to pick up the slack.
I often joke that as a 1099 real estate agent, I’m either overpaid or underpaid on each property. Still, my annual income mashes up into a worthwhile sum despite the work-life balance.
Without that 2-3% buyer’s commission propping up half my income, I am not sure the 11:30 p.m. phone calls, 6 a.m. texts, missing my daughter’s basketball game for an impromptu showing, and never having paid time off or maternity leave will be worth it.
Maybe I ought to go back to copywriting.
It feels like most brokers and Realtor associations are strategizing how to make the buyer agent obsolete with new technologies. I think they’re focusing on the wrong solution, but that’s a story for another day.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
