Home Sellers: Here's What the NAR Settlement Means for You

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The National Association of REALTORS has published the following on its website concerning what the NAR settlement means for all home sellers.  It is also fully expected that California will sign into law in 2025 that all licensed agents (not just REALTORS) will be required to form written agreements with their buyers before viewing properties with them, physically or online.  Note that August 17 is the practice change date for  all REALTORS nationally:
 

What Does the NAR Settlement Mean for Homebuyers Starting August 17th?

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The National Association of REALTORS has published the following on its website concerning what the NAR settlement means for all homebuyers.  In addition, it is fully expected that California will sign into law in 2025 that all licensed agents (not just REALTORS) will be required to form written agreements with their buyers.  Note that August 17 is the practice change date for  all REALTORS nationally.

                                                                                                   

Buying a home is one of the largest financial transactions most people will ever undertake. Agents who are REALTORS® are a trusted source of advice and stand ready to help you navigate your homebuying journey and make the choices that work best for you. NAR’s recent settlement has led to several changes that benefit homebuyers, and we wanted to clearly lay them out for you.

Here is what the settlement means for homebuyers:

• You will sign a written agreement with your agent before touring a home.
• Before signing this agreement, you should ensure it reflects the terms you have negotiated with your agent and that you understand exactly what services and value will be provided, and for how much.
• The buyer agreement must include four components concerning compensation:

1. A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
2. Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
3. A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and,
4. A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.

• Written agreements apply to both in-person and live virtual home tours.
• You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.
• The seller may agree to offer compensation to your agent. This practice is permitted but the offer cannot be shared on a Multiple Listing Service (MLS)— MLSs are local marketplaces used by both buyer brokers and listing brokers to share information about properties for sale.
• You can still accept concessions from the seller, such as offers to pay your closing costs.

These practice changes will go into effect August 17.

Here is what the settlement doesn’t change:

• Agents who are REALTORS® are here to help you navigate the homebuying process and are ethically obligated to work in your best interest.
• Compensation for your agent remains fully negotiable, and if your agent is a REALTOR®, they must abide by the REALTOR® Code of Ethics and have clear and transparent discussions with you about compensation. When finding an agent to work with, ask questions about compensation and understand what services you are receiving.
• You have choices. Work with your agent to understand the full range of these choices when buying a home, which will help you make the best possible decision for your needs.

If you are an unrepresented buyer and would like to discuss working with an agent or find out more information about a buyer broker agreement, please feel free to contact me without obligation.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Rules About Broker Compensation Are Changing -- Everywhere

Broker compensation is not going away, but it will be handled in a different way than has been the previous long-established practice.  

As of August 13, 2024, revised California REALTOR forms for residential real estate are going into effect, as well as the way listings are entered into CRMLS.  These changes are the result of a nationwide settlement entered into between the National Association of REALTORS and the Department of Justice as the result to lawsuits which were filed in other states.  "To remain compliant with the settlement, CRMLS must remove all compensation fields from the MLS. Compensation negotiations will not be allowed in the MLS in any way, shape or form." - CRMLS.   Because compensation is being removed from the MLS, it is handled separately in one of the following ways, or a combination thereof:

     a) when the buyer includes a term in the offer stating the Seller will pay the Buyer Broker fee. Assuming the seller agrees, the Buyer Broker fee becomes part of the complete purchase agreement. Additionally, if using the C.A.R. Residential Purchase Agreement and Joint Escrow Instructions (RPA), the payment would also become part of the Escrow instructions.

    b) when the buyer directly compensates the buyer agent, i.e., per terms in the C.A.R. buyer/broker agreement required to be in place prior to an agent showing property to a buyer, a requirement as of August 13, 2024.

    c) or compensation from the listing agent (not made through the MLS).

This is not a practice change only in California, it is nationwide for all REALTORS that entered into the settlement, which is more than one million National Association of REALTORS members, MLS members and other qualifying brokers.

REALTORS in California have always used a listing contract which explained how compensation occurred, and will continue to do so. A seller should expect to get a clear understanding as well under the new practices when they are contemplating selling their property and going over a listing contract. 

The same holds for buyers who are now required to enter into an agreement with their brokers -- additionally, it's anticipated that this will become a California state law in 2025.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

The New Way of Conducting Open Houses

A practice change mandated by the National Association of Realtors as a result of a settlement with the Department of Justice means that all MLS participants (that's practically any agent you will run into) must enter into a written agreement with a prospective buyer before any buyer enters a home. 

So how does this affect open houses? People don't necessarily already have an agent, they just want to see an open house. So what happens then?  It's already been a very common practice for an agent to request a prospect to sign in and give basic information. But whether a buyer signed in or not, the agent would show the property and perhaps give a great deal of information about the property, pricing, perhaps some offer terms, just depending on what instructions the seller said to his/her agent. 

But the situation will soon change:

The visitor may be requested to sign a non-agency disclosure/login sheet, a non-agency agreement, or a buyer representation agreement.  As of the end of June, agents will have a new open house disclosure/sign in form for the visitor to sign, in which the visitor acknowledges that the listing agent does not represent the buyer, but the seller only. 

If an unrepresented buyer has a more serious interest in the property and wants to work with the listing agent, then the prospective buyer may sign a full buyer/broker representation agreement effective for up to 3 months (it can be extended) for that and other properties the buyer may want to see because they are searching for a new home. Or the buyer may sign a limited agreement for only the open house property and for no longer than 30 days. 

This is a new world for holding an open house, and the visitor may decide to sign nothing.  In that case, the open house agent is advised to refrain from providing any information other than what is on the listing flyer, because to engage with more information could lead the visitor to believe the open house agent is acting as his/her agent. If the visitor really wants more information beyond what is contained on the flyer, then that information will be provided after the visitor signs in as described above.  The open house attendee may also return after agreeing to work with a different buyer agent.

And, buyer/broker agreements are required prior to showing one or more properties in all situations where a buyer and an agent will be seeing properties together. While this practice is now mandated under settlement terms with NAR, it is fully anticipated that signing a buyer/broker agreement will become a California state law for any and all real estate licensees whether REALTOR member of NAR or not, as soon as January 1, 2025.

I would be happy to answer questions about the future of working with a broker, whether buying or selling, if you are anticipating selling or buying--just contact me via text, phone call or email.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

New Real Estate Practices in California

There are changes coming to the way REALTORS and all real estate licensees do business. 

One change has actually been discussed many many times since about 2004, or perhaps a little earlier, and that is, requiring buyers to sign buyer representation agreements with their agent of choice. Of course, listing a home with a listing agreement in place has been in place for decades, but working with  a buyer, until July 2024, did not require that practice.  Well, this is all changing.

The Road to Solutions

California Regional MLS, one of the largest  MLSs in California and the nation, is soon putting a rule into place that a buyer-broker agreement must be executed before property is shown to a buyer by a REALTOR.  You may have been reading about the lawsuits over the past few months, and the settlement reached with the National Association of Realtors--much information that has come out in the media is just plain inaccurate--however, the following statement comes directly from NAR concerning one of the agreements in the settlement and which I actually look forward to:

"Written agreements for MLS participants acting for buyers: While NAR has been advocating for the use of written agreements for years, in this settlement we have agreed to require MLS participants working with buyers to enter into written agreements with their buyers. This change will go into effect in mid-July 2024."

Many brokers already utilize these agreements, which have been available to the industry for years, with their clients.  The buyer-broker agreement, which is a standardized form provided through California Association of Realtors, may have varying terms, such as length of time, geographic area, commission to agent, or even for a specific number of homes or type of homes to be shown. Putting someone in their car, or meeting them at a property, just scratches the surface of what an agent does to help a buyer find the right home.  Buyer-broker agreements are legally binding contracts which  work in both directions: the buyer commitment to the agent and the broker/agent commitment to the buyer.

An agent should be first sitting down with a buyer and taking in the buyer's thoughts and questions about a home purchase, before showing property. This is how I've always done business since I started, and I believe it's the best way. When there is good communication between buyer and agent, there is usually a better understanding of the process, and less of the phenomenon known as buyer remorse. The buyer should expect a very clear and thorough review of a buyer agreement from the agent.

A home purchase is a huge commitment to a mortgage, obtaining home insurance, understanding future maintenance expenses, property taxes, and how a buyer's income will absorb these costs. A buyer is making a commitment, and that commitment deserves clear professional communication by an agent, and the agent who is offering his/her professional help also needs the commitment of the buyer in order to get to the goal of a home purchase. 

More updates will be provided on this topic, and please don't hesitate to contact me with questions!

Looking forward to the future!

 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

National Existing Home Sales Snapshot by National and California Association of Realtors May 2022

According to market research by National Association of Realtors, on a national level May 2022 brought 5.41 million in sales, a median sales price of $407,600, and 2.6 months of inventory. The median sales price is up 14.8% year-over-year, and inventory was up 0.1 months from May 2021.

Existing Home Sales May 2022

 

 California Association Realtors snapshot of the Long Beach housing market graphic shows a 14% decrease in existing home sales at a $940,000 median price for single family homes, with only a median 8 days on market overall.

Long Beach May 2022 Report

Per Altos Research:  More inventory now than any time last year. Still 50-70% fewer than normal.

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Profile of Home Sellers in 2021 - How Did They Sell a Home?

The 2021 Profile of Homebuyers and Sellers is the 40th anniversary of the first National Association of Realtors report. The 2021 report is unusual because it is the first full year in which buyers and sellers purchased or sold during the COVID-19 pandemic, in what turned out to be a record setting year.

Long Beach Spanish bungalow

As discussed in the buyer post, this was based on a survey of homesellers' experience.

The median stay in a home in 1985 was just five years, in 2021 the tenure in a home decreased to eight years (from previous year high of ten years).  (This is based on national data, some areas such as Southern California have been more than 8 and 10 years).  Tightened inventory saw sellers getting 100% of their asking price (and more) in one week or less.  Nationally, the median home equity at time of sale was $85,000 in 2021, compared to $66,000 in 2020, a significant increase.

• The typical homeseller age was 56.
• Of all homes sold, 69 percent did not have children under 18 residing in the home. 
• Eight-nine percent of sellers identified as White or Caucasian, 
• The share of first time homesellers was 32 percent, and only 6 percent of all sellers did not plan to sell the previous home.
• Thirty-eight percent of the homes sold in 2021 were located in the South region, 24 percent were in the Midwest region, 22 percent were in the West region, and 15 percent were
  in the Northeast.
• The majority of homes sold were single family homes (78 percent).
• Forty-six percent of sellers traded up to a larger size home, and a majority of sellers purchased a home in the same state.
• The over 65 age range downsized to a home 100 square feet smaller.
• Buyers (former sellers) in the 35-44 age group bought the most expensive trade-ups by an increase of $101,000.
• Sellers said they wanted to move closer to family, especially those who moved the greatest distance.

• 

  Time on Market - Sales vs. List Price

  
  

  Ninety percent of all sellers worked with a real estate agent, while FSBO sales were below the historic norm at 7 percent.
• Less than 1 percent of sellers used an iBuyer program to sell their home.
• Ninety-six percent of sellers working with an agent did not know the buyer.
• Across all regions, the final sales price was a median 100 percent of the final listing price, the highest recorded median since 2002.
  
• Sellers in home 21+ years had 162 percent equity.
• Client referrals and repeat business were the ways seller found their real estate agent.

For a more extensive review of selling and marketing your home, please contact me -- I'm a broker with more than 25 years in the real estate business of helping buyers and sellers.

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Profile of Homebuyers in 2021: How Did They Buy a Home?

Buyers in 1981 vs. 2021

The 2021 Profile of Homebuyers and Sellers is the 40th anniversary of the first National Association of Realtors report. The 2021 report is unusual because it is the first full year in which buyers and sellers purchased or sold during the COVID-19 pandemic, in what turned out to be a record setting year.

Based on data collected nationwide between July 2020 and June 2021, the survey consisted of 129 questions via paper or online in both English and Spanish.  Consumer names were obtained from Experian which maintains an extensive database of recent homebuyers derived from county records (which are public). The entire report is 164 pages with multiple graphics covering aspects of buyers and sellers experiences, and information about working with their agents. 

This post will be about the buyer experience section, and will primarily be hitting the highlights. 

First time homebuyers grew to 34 percent, greatly helped by the low interest rates but then challenged by a housing market with lowered inventory, rising prices and much competition from other buyers. Buyers reported the most difficult task was finding the right home to purchase, and the time spent in a home search was only eight weeks.  Eight-eight percent (88%) of buyers used a real estate agent to help them purchase.  

The typical first time buyer was 33 years old, repeat buyers were up to an all time high of 56 years.  Sixty percent were married couples, 19 percent were single females, nine percent single males, and nine percent unmarried couples. The largest share of buyers were in the 25 to 34 age group, and the median income was $102,000,

First Step in Homebuying for all Buyers

 

The majority of buyers either began their search online or contacted a real estate agent as a first step in the home search. Few people read books about the homebuying process or attended a home buying seminar--even visiting open houses was lower in activity as an initial step in  the home search.

 

 

Information sources used in home search

For information, all age groups primarily turned to an agent and then to an internet device , and then visited open houses.

But where the buyer found the home they actually purchased was on the internet for 51% of buyers, through their agent for 28% of buyers, with much smaller percentages for yard signs, personal contacts, homebuilders or the sellers themselves.  This is a complete contract to 2001 when 8% of buyers found their home on the internet and 48% through their agent.

This is only a partial representation of buyer characteristics in the Report for 2021, for a complete copy of this study, please contact me via phone or email. 

And for help in buying a home, I can work with you with my 25+ years of experience.

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

"Pocket Listings" Just Can't be Pocketed Anymore

The National Association of Realtors has just voted to ban this practice, a rule that is long in coming.

Called the "MLS Clear Cooperation" policy, it calls for all listings taken by Realtors for their sellers to be entered into their member MLS within one business day of marketing the property to the public.
The current rule, to be effective January 1, 2020 and implemented May 1, 2020, is as follows:

 Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.  (MLS Statement 8.0, NAR Handbook on Multiple Listing Policy)

The implementation of this rule is considered to be in the consumer's best interest, which means his/her property is exposed on the multiple listing service to a broad audience of prospective buyers and their agents, rather than the creeping practice in many highly competitive markets of keeping listings restricted to certain groups, and not known to the general public. This practice is completely contrary to the entire purpose of the multiple listing services across the country which exists for broadcasting of available properties and brokers cooperating with each other on the buying and selling of bona fide listings.  This new rule does not mean at this point that a seller cannot take a listing and then get a little more time to prepare before allowing buyers to view their home, it does mean that the property may not be marketed as described above until it is placed into the MLS (multiple listing service) to which the Realtor belongs. Doing so actually gives the consumer the most exposure on the market. To illustrate, in San Francisco, the share of homes selling as pocket listings increased 68% between 2010 and 2018. By keeping properties off the open market, and thus fewer prospective buyers, sellers ran the risk of losing offers. 

The work and final submission of this new rule did not happen in a vacuum, there is a 130-person Multiple Listing Issues and Policies committee for consideration, and if approved, the proposal moves on to NAR’s 900 member board of directors for final ratification.



Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

What Do Homesellers Really Want? Four Important Things

 Judge Judy, that icon of courtroom wisdom, says "Beauty fades, dumb is forever."

"The top four tasks that sellers want from their agent has remained consistent regardless of the housing market— sellers place the highest priority on: helping the seller market the home to potential buyers, help selling the home within a specific timeframe, help pricing the home competitively, and help finding a buyer for the home.  As many sellers use an agent that was recommended to them personally, it is not surprising that the reputation of the agent is the most important factor in choosing an agent to work with (36 percent). This is followed by the importance of the agent’s honesty and trustworthiness at 19 percent and the knowledge of the neighborhood at 15 percent."  Just a few more facts out of this 128 page report:  The typical age of the homeseller was 54, vs. 46 years in the 2009 report.  Married couples were 74% of the sellers, while single females accounted for 14% of sellers.

This report stems from an annual survey, the most recent being the  July 2014 127-question survey which was sent out by the National Association of REALTORS® with a response from 6,572 home buyers who had purchased a home during the prior year within one of the four U.S. regions.  There are many elements to this report - including agent efforts, problems buyers can have with financing, characteristics of homes sold and homes purchased, all of which is valuable profile information.


Ironically, buyers in this survey rated the top two valuable features of a real estate website as being 1) the photos of a property, and 2) detailed information about properties for sale.  Maps, tours and neighborhood information came next in importance, with videos of the property second to least most important.  I say ironically, because--and here is the unspoken elephant in the room not usually overtly addressed in these nice surveys--one of the most difficult aspects of selling for many sellers to grasp is the appearance and cosmetic condition of their home, yet most sellers always want their home marketed as much as possible.  A key factor in marketing a home is how it looks to the buyer, that means the buyer who is looking at those photographs.  The cereal box needs to get off the counter, the bed sheets need to hang evenly, because those photos are memorializing your home FOREVER on the internet.  And once the buyer gets inside the house, if only they could see past the catfood, and ignore how it smells on a 90 degree day, it would all be so much easier.  This is where the faded beauty and forever dumb enter the listing.  You would not buy a car like that off the showroom floor, not for full price.  And that's where your listing is, on the showroom floor.  But I digress.  Buyers are not always perfect either, but they do have a physical inspector and a 17-day contingency period, and a 21-day loan approval contingency period.

So to have it all come up roses, it pays to pay attention--on appearance, on disclosures, on price--so that the homeseller can get what he/she really wants -- a SOLD home. If you, however, are a seller who is marching to the right drumbeat on marketing your home, my sincere congratulations!

To find out competitive listings in your area, just go to www.juliahuntsman.com.
Lic# 01188996

What is the January 2015 Real Estate Profile of Long Beach, Cerritos, Lakewood and Rossmoor?

Here is a brief summary of January 2015 sales, compared to January 2014:

Long Beach - Median sales price for a single family home: $481,000 (up 5.8%), housing inventory down 22%, with only 2.2 months supply of inventory on the market.

Cerritos - Median sales price for a single family home: $602,000 (up 3%), housing inventory down 9% with only 2.1 month supply of inventory on the market.

Lakewood - Median sales price for a single family home: $443,500 (up 3%), housing inventory down 44%, with 1.4 months supply of inventory on the market.

Rossmoor - Median sales price for a single family home: $807,500 (up from $800,000), housing inventory still at 2.6 months supply of inventory on the market.

By checking points along the graph, prior months' sales prices are seen. Long Beach and Cerritos are down, Lakewood and Rossmoor are up. This is a live graph, and is updated with each month's sales.

Would you like to know what buyers' home buying motivations are? Buyers who purchased brand new homes did so because of fewer electrical and plumbing problems. Sellers who take this and other items into account when preparing their home for sale are less likely to get a laundry list of repairs desired by buyers.

NAR's 2014 Profile of Buyers and Sellers

National Association of Realtors® 2014 Housing Prediction

 The annual National Association of Realtors® announced the annual housing prediction at its conference this November in San Francisco. Housing price is predicted to increase by 6 percent in 2014, banks are criticized for being too restrictive on mortgages, there is still too low of a housing inventory, and with rising mortgage rates refinancings will drop significantly.

In a presentation about the housing market on a nation-wide basis, on November 8, Lawrence Yun, chief economist of the National Association of Realtors® said:

• Existing-home sales are expected to retain the healthy gains seen this year, while prices will stay on an uptrend in 2014,
• Existing-home sales have shown a 20 percent cumulative increase over the past two years, while prices have gained 18 percent, but incomes have risen only 2 to 4 percent in the same timeframe.
• Yun said. “While the median-income family in many areas will still be well positioned to buy a home in 2014, income is barely budging given growth in consumer prices.” 
• Yun said the other headwinds moving forward include limited inventory conditions in many areas and mortgage lending standards that are still unnecessarily stringent. “Although home sales have recovered over the past two years, mortgage purchase applications have been flat for the past four years, even with rising sales,” he said.
• With higher mortgage interest rates, he expects refinancings to collapse in 2014 to the lowest level in at least 15 years, and hopes purchase applications will begin to rise. “This is an incentive for banks to increase mortgage origination, especially considering the low default rates in recent years. But even with cheap mortgages for the past four years, all-cash buyers stayed high, accounting for over 30 percent of sales,” Yun noted. 
• Yun said banks are holding onto funds for potential Department of Justice lawsuits, rather than making them available to mortgage borrowers.
• Existing-home sales this year are forecast to rise 10 percent to nearly 5.13 million, but should hold fairly even at about 5.12 million in 2014. 
• The national median existing-home price for all of 2013 will be up just over 11 percent, to about $197,000; then increase nearly 6 percent next year.
• Yun expects the inventory shortages to be felt again next spring. “Housing starts are the only way to alleviate inventory shortages,” he said. “Housing starts need to rise 50 percent to meet underlying demand.”
•  Mortgage interest rates are expected to trend upward and reach 5.4 by the end of next year.
• “If not for the housing recovery, we could be on the verge of a recession,” Yun noted. “The rent component of inflation is rising, so the only way to tame price growth is new home inventory.” 
  
•  John Krainer, senior economist at the Federal Reserve Bank of San Francisco, who said near-term economic momentum is weakening, but improvement in growth is expected going forward. “Inflation has been subdued, and is expected to remain below the Fed’s 2 percent target over the next few years,” he said. “Despite improvement in the labor market, the unemployment rate remains elevated but will be falling slowly.” 
• Krainer notes improved household net worth, aided by rising home values, is supporting consumption spending, but home sales and inventories are not growing as expected. “New-home sales are significantly underperforming, and have been bouncing around World War II lows,” he said.
• “There is a big disconnect between rising home prices and inventory slowing down,” Krainer said. Normally, higher levels of new construction would be expected in a rising sales environment.
• Krainer notes there is a relationship between the share of underwater mortgages and the number of homes for sale. “In markets where we saw a high percentage of underwater home owners, we also saw lower inventory levels.”

See full article at Realtor.org