Good morning this morning!
Now afternoon...
On the following day?!
Hot damn I know how to load the work and time to a day where there is no time at all..
Me prepping to get outside my comfort zone and rock a long overdue real estate market update video.
I've done a couple market update emails, but it's been a year since my last video. I'm likely to do them more often now. I find the creative setup/grind stimulating. I feel like I am teaching.. that's the biggest win - in addition to becoming more comfortable with them. This one only took one shoot. So that's nice measurable progress :)
In this video, I dive into the seismic changes hitting the real estate industry following NAR's $418M settlement. I unpack how the agreement is reshaping commission structures, what it means for brokers and agents, and how it could impact you as a buyer or seller. From there I update what's happening in our neck of the Nation. It's of course not without sprinkles of humor, tasteful profanity, delivered in an informative unconventional approach to talking about real estate. :)
Here is a link to the video courtesy of YouTube :)
Should you not be the video watching type, and prefer reading :) Fear not!
I have it here all broken down as if watching it yourself.
I’ve got a big update for you on something that’s been stirring the real estate world. If you’ve been online or caught the news lately—politics aside—you might’ve seen that the National Association of Realtors (NAR) just settled a major case. This one’s been a long time coming, and it’s shaking things up.
Now, before I dive into the details, let me give you some context. I’m not just coming at this as a real estate professional but as a blue-collar guy who’s been navigating this industry for a decade. One of the biggest challenges throughout my career has been the debate over how real estate agents get paid—or how much they should get paid. And let me tell you, it’s not a small issue, especially here in the Phoenix market, where we rank number four nationwide for the most saturated real estate agent market. There’s one agent for every hundred people in the Valley, with around 54,000 agents before this settlement hit. To put it bluntly, the failure rate is 87% within two years.
I’ve been doing this for 10 years—celebrating that milestone in March— and for half of that time, I’ve also been a handyman contractor. That’s given me the chance to work on about a thousand jobs for 450 customers, all while handling around 180 real estate transactions. Compare that to the average agent who sells between zero and two homes a year, and I’d say I’ve earned some wisdom along the way.
The Big NAR Settlement: What You Need to Know
So, let’s talk about the settlement. Back in March 2024, NAR agreed to a $418 million settlement (give or take, depending on where you look) over how commissions are handled. They got hit hard on this one, especially regarding the idea that commissions are always 5% or 6%. It’s never been set in stone, always negotiable, but the antics over the past few years have pushed people to the brink, leading to this massive correction.
Should you want more info, check out this amazingly well produced video specifically about the lawsuit details.
For those who haven’t sold a house before, let me paint a picture:
Imagine you’re selling your car. Your buyer hires a mechanic, who will check out the car, test drive it, and even negotiate the price down on their behalf... but you, the seller, will pay for that mechanic.
No chance in hell you would ever do such a thing!!
Sounds crazy, right? But in real estate, the law used to be that sellers paid both the buyer’s agent and the seller’s agent. For easy math, a 6% commission was split, with 3% going to the buyer’s agent.
With this settlement, that’s no longer the case. Sellers are no longer obligated to pay the buyer’s agent, which means the buyer now has to cover that cost. This change, effective as of August 1st, 2024, has led to a lot of process adjustments. It’s no longer about commission; it’s about compensation, and everything is 100% negotiable now. They’ve even removed all commission information from the MLS, so we can’t see if a seller is offering a bonus or if it’s a 3.5% or 1% listing.
In the past, some agents might’ve steered clients toward higher-paying commissions—though not all, of course—but that’s out the door now. No more marketing those details online or on the MLS. If you want to know about compensation, you’ll have to pick up the phone and ask.
Navigating the New Real Estate Landscape
With these changes, we’re seeing new forms and processes that might actually make things better. Our listing agreement has changed, and when a buyer submits a purchase contract, they can now include a seller compensation negotiation. This adds another layer to the deal, making the money conversation even more complex.
Additionally, we can no longer show a house to a buyer without a signed agreement that includes compensation details.
If we do, we risk fines up to $500 for the first offense and as much as $15,000 for repeated violations. We could even lose access to the MLS. So now, just like when we list a home, we need an exclusive relationship with our buyers. I think these changes are for the better, but they do make buying a home a bit more challenging and complex.
In short, paperwork needs to be signed with buyers before showings can take place and sellers no longer have to pay for the buyer’s agent.
Thoughts on the Future?
Well, that’s anyone’s guess. I suspect sellers will always need a real estate agent to avoid legal issues, and while good representation is still crucial, I can see the role of buyer’s agents dwindling. In today’s information-rich world, buyers have more access to data than ever before, and they’re savvy enough to do a lot on their own.
The Current Market: What’s Going On?
Now, shifting gears to the current market—where are we today? Right now, in Maricopa County, there are about 18,000 homes on the market. That’s a significant drop from what we saw during COVID, but our demand is also down 25%, largely due to the interest rate challenges. Today, interest rates are at 6.54% for a 30-year conventional loan, down from the 7-8% range we saw this time last year.
For perspective, if you had a $400,000 mortgage and the rate dropped just 0.75%, you’d save around $185 a month. That’s why things are a bit slower right now.
When we dig into the numbers, we’ve got about 11,500 homes under $1 million, 8,300 under $600,000, and 3,600 under $400,000 in Maricopa County. Compare that to the COVID era, when there were fewer than 400 homes under $400,000 in the entire county. Overall, active listings are up 55% from last year, which is a dramatic increase.
But here’s the catch—sales are down. Only 6,100 homes closed last month, a drop from this time last year, but median sales prices are up 1.9%, sitting at $448,500 across the Greater Phoenix area. So, it’s still a good time for sellers, even though the market’s adjusting.
Sellers and Buyers: What to Expect
For Sellers, it’s still a seller’s market in 11 of the 17 largest cities in Metro Phoenix, though just barely. Price presentation is crucial, and homes that are priced right and show well are still getting multiple offers. As a handyman, I’m seeing about $1,000 or more in average repair requests from buyers, so sellers need to be prepared for that.
Sellers also face competition from new builds, which now account for 27% of all detached single-family home sales in the last half-year. These new builds often come with lower interest rates and other perks, making them tough competition.
For buyers, the market is starting to balance. There’s a bit more desperation from sellers, and price reductions are up 88% from last year. This opens up opportunities for first-time homebuyers, especially with sellers offering more incentives to close deals... the only dance is also covering buyer's agent compensation.
Looking Ahead
So, where does this leave us? The NAR settlement is a big shake-up, and I’m all for it. It brings more transparency and negotiation into the process, which I think is a good thing. We’re seeing some attrition among agents, which should help reduce the saturation in our market. The future of real estate is always evolving, and it’ll be interesting to see how these changes play out.
I know this was a lot of information, but I hope it helps you understand what’s going on in our market today. If you have any questions, need advice, or just want to chat, feel free to reach out to me or Chas. We’re here because we care, and we wouldn’t be in this business as long as we have if that wasn’t true.
Have a grateful weekend!
cause it's always about the money
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