Real estate pro says don’t believe National Association of Realtors settlement myths:
Last week the National Association of Realtors announced a settlement agreement in the Sitzer Burnett case that would take effect in July. For those who missed the declarations in the media that this outcome will render transacting real estate almost free, protect consumers, and make homeownership affordable once again, the settlement does none of that.
Here’s the truth.
1. The settlement forces brokers to reduce their compensation. False.
The settlement in no way establishes a standard or limitation on Realtors for what they may charge, nor services they elect to deliver. Those fees have always been negotiable and there has never been any collective bargaining. In every market, there is a wide variety of fees, just as there are levels of marketing, service, and competence.
2. The settlement will, for the first time, allow sellers to no longer pay compensation for an agent bringing the buyer. False.
There has never been an obligation for a seller to pay buyer agent compensation, yet it is a practice that’s worked well. A past rule requiring an offer of some amount of compensation was a rule of display on a Realtor-owned MLS, yet it could have been as low as $1. That limitation was removed and today the MLS accepts all listings, regardless of buyer agent consideration.
3. The settlement prohibits sellers from paying a commission to a buyer’s agent and relieves sellers of the financial burden. False.
The mandate restricts properties with an offer of buyer agent compensation from displaying on association-owned MLS, yet the practice can’t be restricted in any other form of marketing. Sellers may still elect to pay buyer agent compensation to differentiate their properties. While sellers can elect not to pay buyer agent compensation, that doesn’t mean they will avoid the economics as buyers may write into any offer a contingency requiring the seller to cover the cost or request other concessions.
4. The settlement will serve to meaningfully lower prices and make homeownership affordable again. False.
Values in real estate are determined by supply and demand. Fees in a real estate transaction represent additional expenses, yet these include not only commissions but many other related charges. Should real estate commissions be reduced by 1% because of compression, that $500,000 home will now cost $495,000. Not only is the potential impact marginal at best but do you think the seller now believes the home is worth less and will happily give the difference to the buyer? The reason home ownership is increasingly less affordable is that homes in our market have significantly risen in value these last few years.
5. The settlement is a win for buyers who will now be able to negotiate the fee for representation. Questionable.
For readers who have purchased homes, it is more than likely you were happy to have the seller compensate your agent, so you didn’t have to. For buyers who had to provide the down payment and closing expenses, having the commission paid by the seller and incorporated in the home price allowed them to finance the amount over time instead of coming up with additional cash at closing.
6. The settlement will result in significant restitution to consumers who were “harmed” over recent years in their transactions by Realtors. False.
The settlement is huge, yet when one divides the amount by the number of potentially qualifying consumers it works out to about $10 per person. Those benefiting are the attorneys who have submitted a request to the court for over $80 million in fees.
As a real estate professional for over 40 years, I have had the privilege of working with Realtors who represent the public in what is likely their largest investment. What I have witnessed are the countless situations where an agent has gone above and beyond to help buyers realize their dreams and sellers maximize their returns, often serving in ways far beyond their job description.
Everyone would like to see costs lowered yet I do not see the Department of Justice going after attorneys or other professions we wish would charge less. I always believed in the concept of free enterprise. If one is willing to assume the risk of running a business, one may do so at rates that allow a reasonable return for the capital investment and time. As my dad would say during his 60-year career, you wake up every day unemployed and have to find a job. Then you spend out of pocket and don’t make a cent unless you achieve someone else’s goals.
The brokerage community has always adapted to best represent buyers and sellers whenever there is a shift in the environment. And we will again. Yet when an industry I love is singled out and the justification is for false reasons, I will not be quiet.
Budge Huskey is chief executive officer of Premier Sotheby’s International Realty. (Special to the Herald-Tribune, published 3/22/24)
The truth is the real estate transaction will become even more important to have representation by a qualified Realtor®, experienced in the ever-changing market.
As we look at the Plant City housing data, March 2024, our market area had 123 homes sell, 241 under contract and 220 available for sale. The first quarter of the year, we saw a 32% increase in units sold versus Q1-2023 but the price increase was flat, less than 1% increase over the same time period. The markets have stabilized with the higher mortgage rates and lower inventory. Buyers and Sellers are accepting these prices and rates as the new normal. We are carrying about 2.5 month’s supply housing inventory, a 17% decrease over last month’s supply. The summer selling season is around the corner, many factors stand to change.
In March 2024, the average sold price was $362,207 or an average price per SF of $199.15 compared to the previous month, these data points are up 1.8% and 9.4% respectively. New construction homes accounted for 69 units last month at an average price per SF of $183.24 discounted almost 20% compared to other sellers in the market. Looking at another perspective of the data, if you are planning to list and sell your home, you stand to gain 15-20% more than the new construction models.
The prevailing mortgage rates from Freddie Mac for the average 30yr-term loans have bounced around the past few weeks. Your individual rate will depend on many parameters, like income, debt, credit score, etc. While we finished the year at 6.61%, the latest 4-wk average was 6.81% and the Fed has even thrown out the idea on another rate increase instead of rate cuts.
I cannot express enough this importance, if you are in the market to buy or sell your home, please seek an experienced professional Realtor® to assist you in this transaction process. There are too many consequences, going it alone without proper experienced representation. Get the real scoop on our market. If you have any questions, want a market value analysis of your home, or see what’s available to purchase, please reach out.
M Crawford
Crawford Group
Sales Snapshot
The following residential properties were a sample listed as sold on the Greater Tampa Realtors Association MLS in March 2023 for the Plant City Market Area.
The home at 3703 Pierce Harwell LP sold March 8 for $167,000. Built in 1959, it has 2 bedrooms, 1 bath and 988 square feet of living area.
The home at 737 Ashentree Dr sold March 22 for $235,000. Built in 2015 it has 2 bedrooms, 2 bath and 1185 square feet of living area.
The home at 3826 Sunflower Field PL sold March 28 for $284,990. Built in 2024 it has 3 bedrooms, 2.5 bath and 1673 square feet of living area.
The home at 3607 Red Egret Ln sold March 13 for $310,000. Built in 2000, it has 3 bedrooms, 2 bath and 1620 square feet of living area.
The home at 3808 Creekwoods Dr sold March 19 for $325,000. Built in 1991, it has 3 bedrooms, 2 bath and 1149 square feet of living area.
The home at 3619 Natural Trace St sold March 21 for $334,235. Built in 2024, it has 3 bedrooms, 2 bath and 1556 square feet of living area.
The home at 1207 Madison St sold March 15 for $345,000. Built in 1966, it has 4 bedrooms, 2 bath and 1628 square feet of living area.
The home at 3444 Silver Meadow Way St sold March 14 for $350,000. Built in 1994, it has 3 bedrooms, 2 bath and 1850 square feet of living area.
The home 1803 Walden Pl sold March 28 for $369,000. Built in 1985, it has 2 bedrooms, 2 bath and 1628 square feet of living area.
The home at 2502 Savannah Dr sold March 8 for $399,999. Built in 1984, it has 3 bedrooms, 2 bath and 2156 square feet of living area.
The home at 905 N Johnson St sold March 22 for $420,000. Built in 1950, it has 4 bedrooms, 3 bath and 2234 square feet of living area.
The home at 3403 Young Rd sold March 29 for $440,000. Built in 1970, it has 4 bedrooms, 2 bath and 1968 square feet of living area.
The home at 3701 Joe Sanchez Rd sold March 7 for $502,000. Built in 1970, it has 3 bedrooms, 3 bath and 1936 square feet of living area.
The home at 5700 Kelly Rd sold March 8 for $653,000. Built in 1983, it has 4 bedrooms, 3 bath and 2044 square feet of living area.
The home at 5924 W Farkas Rd sold March 29 for $835,000. Built in 2001, it has 4 bedrooms, 4.5 bath and 3472 square feet of living area.