adplus-dvertising
Connect with us

Real eState

“People Really Want to Own Real Estate”: GTA Homebuyers Will Reenter the Fall Market with Fresh Hope – Storeys

Published

 on


It has been a roller coaster of a year for real estate in the Greater Toronto Area. While homebuyers faced hearty competition and rising prices at the start of the year, conditions began pointing to a buyers’ market as early as April.

Since that time, both demand and prices have faltered significantly, but as we head into fall, things are looking back up.

According to data for August from the Toronto Regional Real Estate Board (TRREB), home sales were up 14% from July. Though that figure was down 34.2% on an annual basis, it was the mildest year-over-year disparity in four months. Detached home sales led the pack, followed by condo apartments, semi-detached homes, and townhomes. There were more new listings sold compared to the three months prior.

300x250x1

Meanwhile, home prices were more or less on par with what we saw last year at this time, rising just 0.9% from August 2021 and 0.4% from July 2022 — but rising nonetheless.

For those who held off on purchasing throughout the turbulent spring and summer seasons, fall has historically been a time to regroup and get back to house-hunting. And while experts agree that this autumn will see more interest and follow-through from buyers, the consensus is that buyers — jaded from the recent BoC rate hikes — will approach the market with more trepidation than in years past.

Homebuyers Will be Eager to Reenter the Market

Christopher Alexander, President at RE/MAX Canada, says that while activity this fall probably won’t match that of Fall 2021, the market will see healthier buying demand than we saw over the summer.

“It’s been so competitive for so long and you do have a lot of people that put the brakes on their buying decisions,” he says. “What I’ve heard — even since things really slowed down in April — is that people want to buy, they’re just waiting for the market to bottom out. But I think a lot of those people that needed to buy are like, ‘okay, I can’t wait anymore, so I’m going to make a buying decision.’”

This is in line with what RE/MAX has found in their market research, notes Alexander.

“People really want to own real estate in Canada,” he says. “They believe in the long-term asset value that it gives you.”

He adds that an uptick in sales activity is not unusual for the fall. With prospective buyers wrapping up their summer travel plans, they return to the real estate market with fresh expectations in September and October — many with the intention to lock something down before the holiday season.

“I would say [fall] is probably the second-best time of the year to buy.”

Bargaining Power Will Shift in Favour of Buyers

With less demand overall and quieter conditions all around, buyers will have the leeway to be judicious with real estate transactions.

“Buyers will have time to make better decisions, informed decisions. They can put conditions in offers, they can negotiate — sellers have started to lower their expectations a little bit,” says Alexander. “As far as being able to negotiate and buy on almost your own terms, it’s going to be a really good environment for that.”

Kseniya Korolova, an agent with RE/MAX Metropolis Realty Brokerage, is already seeing proof of those buyer-friendly market conditions. In fact, she started noticing some shifts in August.

“I’ve noticed on the MLS — and from my listings, too — that a lot of listings are at property value and it’s a lot less of listing way below the market value to bring that huge traffic and then collecting offers,” she says. “For the fall, I think we’re going to see a lot of the same. If the house is worth $1M, it will be listed at $1M or $999,999, and then the traffic will be based on that.”

And while some properties may accrue multiple offers, Korolova says it’s unlikely that we’ll see fierce bidding wars akin to what occurred last year.

With that said, depending on the number of buyers that reenter the market, prices are likely to go up and competition will naturally build, but Korolova believes that some buyers will end up holding out until next year.

“First-time buyers specifically, they’re leaning towards spring 2023 to buy because, as you know, the predictions are that we will be seeing a drop in interest rates,” she says. “Some will jump in the market in the fall time, see what’s out there, get their feet wet. And then, if that doesn’t work out, they will push for spring.”

Much Will Hinge on the BoC’s Next Rate Decision

Following a hike of 50 points on June 1 and a staggering increase of 100 points on July 13, the next rate hike is scheduled for September 7. It is expected that the Bank of Canada (BoC) will increase the key overnight rate by 75 points to 3.25%.

“This fall is going to be interesting. What the Bank of Canada does with interest rates, that’s really going to be what dictates the remainder of the year,” says Alexander. “There is lots of speculation that this will be the last rate hike until the end of the year. If that is true, I think we’ll have a little bit slower… start to the fall than normal. But I think come early to mid-October, things will pick up in a big way.”

So far this year, changes to the stress test environment, induced by the BoC hikes, have already reduced borrowing power amongst consumers — according to Elena Bogomaz, a chartered professional accountant and mortgage agent with Dominion Lending Centres, it has already been reduced by approximately 8% or 9%.

Bogomaz saw a shift in consumer behaviour to a “wait and see approach” following the July 13 hike. Now, with another hike looming, she suspects buyers will be cautious — though not nearly as wary as they were in July.

“We anticipate the market will become active [in the fall], but activities might be reduced by the anticipated Bank of Canada rate increase. If they increase as predicted by 50 or 75 basis points, the market will slow down for a little bit, but after the shock is kind of observed, people who want to buy, they will buy,” she says. That said, she forecasts that if the BoC raises the benchmark rate by the aforementioned amount, buyers will qualify for smaller mortgage amounts — around 20% less. “It’s significant. Instead of $500,000 it will be $400,000.”

Lack of Inventory Will Continue to be a Concern

“Inventory levels are low. They went down 5% from June to July,” says Alexander. Although he says this is on par with activity for August, immigration is rapidly driving up the need for more housing. “We’ve got a tremendous amount of new Canadians coming every single year. We had almost 20,000 in the first quarter alone and typically about 40% to 60% of those end up in the GTA. They’ll all need a place to live.”

Ontario is currently facing a shortage of approximately 500,000 homes and will need an additional 1M by 2031 to meet demand. But according to a recent report from Smart Prosperity Institute, it’s unlikely that the construction sector has the capacity to produce 1.5M new homes in that timeframe.

On top of what the GTA is already facing, Bogomaz adds that inventory shortfalls will be compounded by investors, and that will be regardless of the rate decision.

“For investors, the rate is not as important”,” she says. This is contrary to traditional homebuyers; their main concern is what they can afford, so the rate can make or break a buying decision. “But investors, they are just looking for the positive cash flow. Since the rental prices went up, investors are still finding cash-producing properties to purchase. So investors will be buying regardless.”

Lending Options are Tightening Up

On the lending side of things, Bogomaz says a number of factors might tack some extra time on the approval process this fall.

“It’s been noticeable across different lenders — they’ve been feeling a shortage of qualified personnel needed to process the big volume of mortgage applications in the first and second quarters,” she says. “That’s why some applications get declined due to insufficient timeframe. For example, if it’s less than 30 days even private lenders will decline the application. It’s a little bit unusual to see.”

READ: Lenders Now “Super Picky” On Appraisals as Home Prices Continue to Drop

To be safe, Bogomaz suggests that buyers who are planning on using a mortgage lending service should leave themselves plenty of time to get their applications approved — as much as two months if it’s possible.

“Lenders are also asking to provide more documents to satisfy their funding conditions,” she warns. “I don’t know if that’s because there is increased risk or maybe they’re just doing more due diligence.”

Buyers Will Need to Invest Smart and Think Long-Term

Going into the fall season, buyers should closely consider whether they’re best suited by a fixed- or adjustable-rate mortgage. There are pros and cons to both.

“If you go with an adjustable rate, then every time the Bank of Canada increases or decreases the rate, your payment will change,” says Bogomaz. “To have a more stable cash flow, I would recommend clients to go with a variable rate with static payment. But if the Bank of Canada rate increases to the point where the payment is not covering the interest portion, they will be asked to increase the payment. The perfect product doesn’t exist. That’s always something property buyers have to consider.”

Overall, Korolova urges homebuyers to think long-term when it comes to purchasing real estate. This is particularly important when you’re buying in an unstable market.

“It’s always important to consider, ‘what if I’m in this house for two or three or six years?’” she says. “You never know what’s going to happen. The market could drop another 10% or 20%. At that point, you should be able to stay in that property until the market bounces back up.”

And if affordability is a concern, Korolova advises buyers to purchase what they can and leverage the hot rental market in their favour.

“Buy a two-bedroom and rent out one of the rooms. And then you’ll have a little bit help,” she says. “Get into the real estate market. No matter where you are, what you buy, you will typically have a return — we roughly say you’re guaranteed a 4% per year increase.”

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Real eState

Will the NAR, U.S. case impact the CREA lawsuit in Canada? – Business in Vancouver

Published

 on


Two North American court cases are taking the real estate industry to task over commissions paid out to Realtors.

While the Canadian lawsuit has the potential shake B.C.’s housing market, experts don’t agree on what the fallout might mean just yet.

“The fundamental issue … is that there’s a belief that a buyer’s agent will steer their client to listings that have higher commissions offered by the listing agent,” said Tom Davidoff, an associate professor at the UBC Centre for Urban Economics and Real Estate.

300x250x1

“Somebody who buyers are trusting should be looking out for the buyer’s best interest, not shopping offered commissions. So anything that can be done to avoid that, I think is helpful.”

A proposed class-action lawsuit filed in January alleges that the Canadian Real Estate Association (CREA), alongside dozens of provincial and local real estate groups “conspired, agreed or arranged with each other to fix, maintain, increase or control the price for the supply of buyer brokerage services for residential real estate.”

South of the border, the National Association of Realtors (NAR) agreed two weeks ago to a $418-million settlement, as well as changes to the standard six per cent sales commission. This brings an end to a lawsuit that accused the industry association of artificially inflating real estate agent commissions.

“This is about fair play between participants in the real estate industry and in the public, and these rules are just not fair,” said lawyer Garth Myers, a partner at Toronto-based Kalloghlian Myers LLP, who filed the proposed class-action lawsuit in Canada.

There are 10 B.C. real estate boards named in the Canadian suit and eight brokerages.

Myers said that changes to the standard commission in the NAR case “eviscerates any defence that the Canadian defendants will have in relation to the necessity of these rules.”

“The fact that NAR walked away from these rules in the States, we think is very important,” he said.

“The main defence that we expect in Canada … is that these rules are so important to the proper functioning of the system, the whole system would break down in their absence. And the fact that the NAR was able to walk away from these rules in a system that is virtually identical, is proof positive that this system can function just fine without them.”

Trevor Koot, CEO of the British Columbia Real Estate Association, said that there is no question that the NAR case has captured the attention of the real estate industry and Canadian consumers. 

“Canada however, is a different country with a differing legal and business framework than the US. As the CREA has indicated, they deem the case in Canada to be without merit,” he said in an email to BIV

In Canada, real estate commissions can vary from three per cent to seven per cent of the sale price, however, there is no set commission or standard. However, because this is a percentage of what a home sells for, as home prices rise so too is the price of commission, said Myers.

“People are queued up to be upset about anything to do with the real estate market, mostly because housing is a human need and there’s a lot of people who see themselves at risk of not having the housing that’s going to make them reasonably happy,” said Davidoff.

“I don’t think this litigation is really fundamentally about housing affordability.”

If successful, Myers said that the case will put money into the pockets of sellers who have overpaid for commissions.

“I think it will make it less costly to buy and sell real estate generally. Will that have a downstream effect on the buyer? I don’t know. But we’re seeking to represent sellers and that’s who we’re acting on behalf [of],” he said.

When it comes to whether or not the CREA lawsuit will result in lower home prices, Davidoff said that it may not be the case.

“If there’s more homes on the market, there’s lower prices, but the people who are selling their homes are very likely moving to another owner-occupied unit. It’s not common for people to transition from owning to renting. So the net increase in houses available isn’t great and with more transactions, usually prices are actually higher,” he said.

“Buyers may have to start compensating Realtors out of their own pocket. I don’t see this as a win for first-time buyers. … This is not a silver bullet or magic carpet ride to affordability.”

This is not the first time that the Canadian Real Estate Association or other real estate boards across the country have been challenged when it comes to commissions.

A 1988 order of prohibition from the federal government’s Competition Bureau states that the CREA and all real estate boards that are members of the association are prohibited “from fixing, establishing, maintaining, suggesting or controlling in any manner commission rates or fees for MLS.”

“The real estate industry at various times in various forms, both here and in the U.S., has faced various legal actions on that. And usually the end of these agreements [is] not to do that, but the world doesn’t seem to change much. Every once in a while somebody comes along with a new law, a new lawsuit, a new government action,” said Ron Usher, general counsel for the Society of Notaries Public of B.C.

“It’s a front-page story that’s been going on for 30 years.”

The Competition Bureau said it is aware of the proposed class-action lawsuit.

“We remain focused on ensuring that consumers benefit from innovation and competition in the provision of real estate services and will take action whenever we find evidence of conduct that is prohibited by the Competition Act,” the agency said in an email to BIV.

Andrew Carros, managing broker of Engel and Völkers in Vancouver, said that he is not concerned about the case and that for him, nothing changes.

“It doesn’t worry me one little bit, because I have always disclosed agency, my clients know exactly what I get paid, they understand my value. … In fact, it gives guys like me the ability to be able to explain this better and be able to get better documents out there,” he said.

Oakwyn Realty Ltd. broker Steve Saretsky said that while there is some uncertainty among real estate agents, it’s too soon to tell what the impacts will be.

“People are drawing massive conclusions, but I don’t think we know enough yet,” he said.

“What’s going to happen is you’ll probably see a bunch of different business models coming out of it, lower fee structures, things of that nature.”

[email protected]

Editor’s note: This story has been updated to include comments from Trevor Koot. 

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Real eState

NAR settlement explained: Why Realtors like me are scrambling

Published

 on

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).

A registered trademark of its originator, Realtor is a title only real estate agents who pay membership to the National Association of Realtors (NAR) are allowed to boast.

Today, after more than 10 years as one myself, the “Realtor” prestige has lost its allure.

Just when it felt like NAR was bouncing back after a sexual harassment scandal in 2023, we real estate agents and brokers now find ourselves in the aftermath of this month’s multimillion dollar NAR settlement.

300x250x1

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.

Buying a house?Don’t go it alone. A real estate agent can make all the difference.

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?

Real estate prices:Will home prices fall after Realtor lawsuit settlement? You shouldn’t count on it.

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.

Emily Ross

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.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Real eState

A settlement in a U.S. lawsuit could upend the cornerstone of real estate industry: commissions

Published

 on

The cost of selling a home in the United States may be about to change dramatically.

A real estate trade group has agreed to a landmark deal to drop what was once a cornerstone of the industry: the six per cent sales commission paid to agents.

In Canada, two lawsuits filed against various real estate bodies want the courts to come to the same conclusion and force wholesale change in the way Realtors charge their fees when a home is sold.

“We got here by a cartel of brokerages and real estate associations that control the rules, and they’ve done it for a very long time,” said Garth Myers, a litigator with Toronto law firm Kalloghlian Myers.

300x250x1

He filed the proposed class-action lawsuits in Federal Court on behalf of plaintiffs who allege that the Canadian Real Estate Association, the Toronto Regional Real Estate Board and several local brokerages and franchisors conspired to set fees and illegally drive up the price of real estate commissions.

At the heart of both the U.S. and Canadian cases is the opaque way in which real estate agents charge their fees.

Lawsuits revolve around Competition Act

In Canada, there are different fee structures in different jurisdictions. In Ontario, for example, a commission of five per cent of a home’s sale price is split between the buyer’s and seller’s agents.

With the average price of a Toronto home at $1,225,000 last month, Realtor fees would amount to $61,250.

In Vancouver, Realtors charge seven per cent on the first $100,000 of the sale price, and between 2.5 and three per cent on the balance. So agents would split between $29,500 and $34,000 in fees on a $1-million home.

A real estate 'For Sale' sign outside a single-family home.
In Canada, there are different fee structures for real estate agents in different jurisdictions. In Vancouver, Realtors charge seven per cent on the first $100,000 of the sale price, and between 2.5 and three per cent on the balance. (Ben Nelms/CBC)

In the U.S., agents generally charge a commission of five or six per cent.

But what is common among those different jurisdictions is that the fee paid to the buyer’s agent is baked into the price of the home, while a seller can negotiate with their agent and get a better fee.

A potential buyer can look up the details of a home on something called the Multiple Listing Service (MLS). The listing includes everything they would want to know about a property — from size and taxes to upgrades and amenities — but it doesn’t disclose the amount a buyer will pay in Realtor fees.

Myers said the existing system enables agents to steer clients away from homes that aren’t paying the full commission.

“It’s clear to us that consumers are being ripped off, it’s clear to us that the rules elevate the cost of buyer brokerage commissions,” he said. “Now the open question that the court is going to have to resolve is whether this is criminal conduct under the Competition Act. And that’s what we’re fighting about in court.”

It will likely take years before the cases are resolved.

WATCH | How sweeping U.S. real estate changes could impact Canada:

How sweeping U.S real estate changes could impact Canada

15 hours ago

Duration 6:22

A landmark legal settlement is upending the U.S. real estate market. CBC’s Peter Armstrong breaks down the possible ripple effects for home buyers and sellers in Canada.

U.S. industry pushes back

In the U.S., there is already fierce disagreement over what the court settlement — which ends legal claims from home sellers over real estate commissions — actually means.

On March 15, the day the $418-million US settlement was announced, the National Association of Realtors said fees have always been set by the market, not by collusion among agents. Besides, the group said, those fees have always been negotiable.

“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,” the association said in a statement outlining the broad points of the agreement.

Rows of houses are shown in a subdivision.
A housing subdivision is shown in Middlesex Township, Pa., in April 2023. In the U.S., there is disagreement over what the $418-million US court settlement — which ends legal claims from home sellers over real estate commissions — actually means. (Gene J. Puskar/The Associated Press)

Since then, high-profile brokerages have pushed back against the notion that the industry will be forced to change as a result.

“Since the settlement announcement, there have been numerous articles and stories in the media on what this means for buyers and sellers,” Budge Huskey, president and CEO of Premier Sotheby’s International Realty in Naples, Fla., said in a statement released on Tuesday.

“Regrettably, most reflect a profound lack of understanding of the real estate business as well as mistaken claims.”

Huskey said the notion that sellers will no longer pay a fee to the buyer’s agent is simply false.

“There has never been any obligation for a seller to pay buyer agent compensation at any time, yet it has been a historical practice that’s worked exceedingly well since the advent of modern residential real estate,” he said.

Realtors in Canada, such as ReMax, aren’t saying much publicly while the cases work their way through the courts. A spokesperson for the organization would only say that “we do not comment on ongoing litigation.”

U.S. reaction watched closely here

“It’s important to note the litigations in Canada and the U.S. occur in different legal and factual contexts, and the litigations are at a much earlier stage here in Canada,” the Canadian Real Estate Association said in a statement to CBC News, adding that “we’ll continue to review U.S. developments.”

The statement goes on to say that buyers and sellers in Canada “have always been able to negotiate commissions with their agent…. On the buyer side, buyer representation agreements are required in at least seven provinces in Canada. These agreements set out terms like services and fees between an agent and their buyer. This represents more than 80 per cent of homes sold in Canada.”

Real estate experts on this side of the border have been watching the U.S. reaction very closely.

A man with grey hair and a grey beard, wearing a blue overcoat and tie, stands outside a building.
Murtaza Haider, a professor of real estate management at Toronto Metropolitan University, says he thinks the lawsuits in Canada will lead to the same outcome as those in the U.S. because the two real estate systems are so similar. (Pelin Sidiki/CBC)

Murtaza Haider, a professor of real estate management at Toronto Metropolitan University, said the two systems are so similar that he believes the court cases here will lead to the same outcome as those in the U.S.

But, he said, people should temper their expectations.

“We won’t have a system blow up. It’s basically giving the buyer the rights to negotiate with the agent, a commission for the services they may or may not use,” Haider said.

Down the road, he imagines a system where some buyers pay an agent a full commission to help them find a home, figure out a price and close the sale, while others will simply need someone to help them file the paperwork.

Haider warned that there may be some unintended consequences to changing the system. Currently, he said, the fee paid to both the buyer’s and seller’s agents is essentially included in the price of the home. Fees are not an extra closing cost outside the home price.

“Right now it’s baked into the mortgage amount, so you don’t have an out-of-pocket policy. But [if you] have the flexibility and freedom to negotiate, that amount [may be] coming out of your own pocket right away,” Haider said.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Trending