Good Monday Morning!

This past week, I had two different people ask me if the slowdown in home sales was due to the recent class action law suits against NAR and some of the major national Real Estate companies. These law suits did change the way that Realtors now have to deal with compensation for an agent who represents a buyer in a transaction. This is all that it changed, and I can say with great confidence that this has nothing to do with the slowdown in home sales both locally and nationally. The slowdown has come from a variety of factors, of which I have spoken about at great length over the past few weeks. The national economy, inflation, and mortgage interest rates are the largest culprits of the slowdown.

As I mentioned, the class action law suits did change the way that a Real Estate agent who represents a buyer has to deal with compensation. The largest change is that previously, the brokerage fee that a seller who had their home listed for sale with a broker was entered into MLS, and it included the fee to the selling agent and the fee to the buyers agent. For over one hundred years, the seller has always paid the brokerage fee for both sides of the transaction. This fee has never been a set fee and has always been negotiable. As a result of the law suits, the portion of this fee that is paid to a buyers agent cannot be mentioned in MLS. This fee, if paid by the seller, now has to be stated outside of MLS. The reality of this is that the fee can still be paid by the seller, just as it has been paid for decades. The fee for both the selling agent and the buyers agent has been baked into the sales price of the house and also into any appraisal that is completed by a lender for a buyers mortgage. The result of this is that the home buyer, in reality, is paying part of the brokerage fee in the price they pay for a home.

The assumption by some is that the seller now does not have to pay the buyer broker fee. This is true and has always been true. Nothing has changed here. As we enter into this slightly different way of doing Real Estate transactions, it has become obvious that most sellers remain willing to pay a buyer broker, and really nothing has changed except for the way MLS has to deal with broker fees for buyers agents. Wise sellers understand that a buyer for their home needs to be represented, and they understand that they would never want to deal with a non-represented buyer. A broker who represents a buyer needs to be paid for their services, and they can be paid either by the seller or the buyer. The easiest way to do this is the same way that we have been doing it for over one hundred years; both agents get paid from the home sale proceeds. Today, most buyers are barely able to come up with enough money for a downpayment and closing costs. Adding an additional fee for a buyers agent is unlikely. So, for most transactions, the sellers will continue paying agents on both sides of the transaction. This makes the most sense, because, as I stated previously, this fee is already baked into the market value of the house.

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

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