Real Estate’s New Rules Went Into Effect Last Month. So? How’s it going?
 

I am not in the market to buy or sell a house right now, and I sure am glad.

I cannot imagine being on or in the real estate market now. I have not spent a lot of time trying to figure out how the new rules are supposed to help. At first glance though, it looks like there could be potential for missteps along the way.

Stress and aggravation are often a part of buying and selling houses anyway, and it seems like these new rules will just add to that.

My guess is this is going to weed out a lot of agents. I also bet there are going to be more sellers willing to FSBO and directly use a title company. (The last time we did a FSBO, it was back home and a lawyer wrote the contract and held the earnest money and then we closed at the title company.)

I think these rule changes will have consequences all around. Some of those will be unintended consequences.

Just wondering what others here think or know about how the changes will work — or are working.

Boomer

Just the start of the government and lawyers interference in business.

in my experience title companies can do everything necessary to sell or buy your home, with a few extra fees that are well worth it.

From a twitter follow who is a real estate agent in VA, and a former lawyer, this appears to be how the process is working:

The listing agent’s agreement has the listing agent’s commission. No buyer’s agent commission is mentioned.


Buyers offer includes buyer’s agent’s commission from seller.

Buyer then evaluates best net sales cash to accept. But, if the buyer offers 3% (too much) over list to pay buyer’s 3%, the house may not appraise well vs market, and mortgage is denied.

Currently it’s all in the offer terms and conditions.

Over a decade of twitter reads and nuanced learnings.

Why bother as the buyer
 

My 2 cents...

I have tried to weed through the various writings by folks (mostly real estate companies, lawyers, NAR, and agents) to get an idea what this means to me as a future buyer of a house in the villages. There are pros and cons to the new rules but the outcome (who benefits) will really depend on if it is a buyers or sellers market.

In a sellers market, assuming there is not a need for an immediate sale, the seller has the advantage because they can filter out any offer which asks the seller to pay the buyer's fees. Why not maximize their profit: it is their house for sale and what I would do.

This leaves the buyer with three options: pay the agent/broker out of their own cash reserves, deal directly with the seller/seller's agent, or go elsewhere. Another option is to only buy houses listed on the Villages website and avoid all this for the buyer???

A buyers market would essentially just be like pre NAR lawsuit where the seller pays for all fees.

Personally, I have enough experience buying and selling houses I would feel comfortable with handling a purchase on my own. I would start with FSBOs, then focus on the Village's website listings, then deal directly with the buyer and bypass hiring any real estate agent. Or hire one for very limited aspects for a fixed fee.

I am sure there are a lot of factors for different folks and buyers & sellers will have to adjust to the new procedures. On the good side, it should create competition between agents/brokers which MAY reduce overall commission costs for buyers and sellers.

Listing agents will start having the selling agent's commission added into the listing for now. This is a total disruption of the real estate business by lawyers and the gov. that harms buyers, sellers and agents.

i counted over 600 used houses for sale in the happy paper today . glad im not selling or buying.

What is the "happy paper"?

Personally, as a seller, I would not sign a listing contract where a buyer's agent received a percentage of the commission that I paid at the closing.

The "Happy Paper" is that owned and controlled (and distributed) by The Villages developer. It starts with the word Daily and ends with the word Sun.

The "Not So Happy Paper" is another source that is not permitted to be mentioned on this site, but is spelled V I L L A G * S N * W S (dot com). Replace the "*" with the letter "e." It will often. have stories not mentioned in the Happy paper. Of course the Not So Happy news allows letters to be written by anyone without restraint so you will see a variety of angry political articles as well.

OK, and if all your offers ask for a buyer's agent commission from the sale, anywhere from 1% to 3% will you sell? and how will you evaluate the offers?

I would evaluate the offers like any other offer, based on the asking price. But, I would not agree to pay a buyer's agent any commission based on a percentage of the sales price. A buyer's agent should be paid by the buyer, not the seller.

I recently made an offer on an existing TV house listed with an MLS agent. On the new buyer's agent form there was a blank for me to fill in what I thought my agent should be paid and by whom. I wanted to put in $1000 to be paid by the seller because I found the listing and went to them. She had spent no time with me and I only needed her to show me the house and handle the paperwork.

But, the agent wouldn't accept that. She declared it should be 3% but, "everything is negotiable". That was repeated several times. The point being - negotiate who pays what fees and how much they pay, negotiate house price and terms and be thinking about the commissions when doing so, etc. I decided to focus on my buy price and put the burden on the agents to figure-out how they'll get paid...left the 3% there and selected: paid by seller. I can tell you it's going to be VERY confusing to buyers and the agents seemed quite uncomfortable with the whole thing and are still trying to clearly grasp how to handle it with clients.

That deal fell thru and I have since been working with two Villages Properties agents who are far and above better than any MLS agent I have met thus far while here. And they are not subjected to any of that rigmarole so, our interactions have been much cleaner, clearer and more productive. I am hoping the right property for me is listed by VLS b/c I'd prefer to use one of their agents given my recent experience.

Now, allow me to add something else that is likely of even more importance to current and near-term buyers. That is the insurance issue. I've been reading this forum avidly for about 10 months so, I heard all about the home insurance cancellations and huge bumps in annual premiums many of you have experienced. Well, I think it's probably worse for the new buyer and the insurance issue must be a real part of why there are many more listings than is typical. (VLS agent told me that their usual inventory for pre-owned is around 300 homes but, currently, they have over 500 listed.)

Here are two fresh examples that I sourced this week related to two properties I've considered. I think you'll find this illustrative. Both are in Spanish Springs area.
1) Stick-built in 1990, 2 bed/2 bath, 1345 sq ft, has a 10 yr old rubber membrane roof, 3 yr old HVAC. Will probably transact around 250K. Current owner pays $2700 with State Farm. I talked to Villages Insurance and the only quote they could get for a new buyer was from Tower Hill for $3000. (I asked her to change the parameters and have it quote as a 5 yr old shingle roof. That was this afternoon and, interestingly, she couldn't go back into the system to do it b/c the insurers stopped quoting due to the coming hurricane/storm. How about that?) But, she estimated using those factors would only save about $200 -300 p/year. That the age of the house was the biggest factor.

2) Manufactured built 1989, 2 bed/2 bath, 1145 sq ft, new shingle roof, new HVAC in 2024, property in great condition and was basically pristine - exterior, interior and yard. Will probably transact around $235,000. Gulp, those current owners pay $4400 annually for insurance! Don't know which insurer...maybe Foremost. What would a new owner pay, IF they can even get insurance?

So, there is an illustration of why some choose to self-insure. Can you imagine paying $44,000 over 10 years for house #2? I can't.

The major point I'm making with the insurance part is that it HAS TO be a prominent factor affecting demand, and if it doesn't ease by some means, it will continue to depress sales and prices. Potential buyers will want to do a lot of homework on insurance before moving here...only to be shellshocked if they don't.

So you will hold out for a specific buyer, one who has plenty of cash or someone who thinks your house is so unique that he has to have it and will pay 2-3% over asking to get the sale. .
And by that I mean your asking price plus 2-3% more for the buyer's agent paid out of his/her own pocket. I suspect that your house will sit for quite awhile if the asking is competitive,

Now, since TV has a large portion of retirees with plenty of cash from the sale of their prior house, you might get one. .

good luck with that strategy if you actually want to sell.

I don't see it that way at all. When I sell a house, I am willing to pay a commission to a broker who represents me, and to sign a listing contract for a specific price. I expect any agent who shows the house to be working for me, not the buyer. I am paying for their sales experience and skills. If a buyer wants to be represented by an agent, that is fine, but don't ask me to pay for the buyer's agent. If a buyer's agent cannot provide any value that the buyer is willing to pay for, then they shouldn't be in business.