NAR (National Association of Realtors) recently agreed to settle $418 million dollars in regards to the NAR lawsuit. For those of you that haven't heard, the lawsuit is essentially about real estate commissions being inflated. On the Today Show this morning, they talked about "big changes" coming to the real estate industry because of the NAR lawsuit. So, how does this lawsuit change the steps to buying a house?
NAR Lawsuit: What is Changing?
In most cases, when a seller lists their home they agree to pay a commission that is split between two agents. For example, if the total commission is 6%, it is common for 3% to go to the listing agent and 3% to the buyer's agent. However, in the near future, many sellers are going to opt out of paying for the buyer's agent. If a purchaser wants representation it will be up to them to pay for it.
That makes sense right? You pay for your side and I'll pay for mine. It sounds so simple, but there are a few things to consider.. It is already becoming common practice for a buyer's agent to have their clients sign what's called an "Exclusive Buyer Agency Agreement". In the agreement it basically says if the seller doesn't cover the buyer's agent commission that the purchaser will assume the fee. So what does this mean for buyers and sellers?
First Time Home Buyers - First time home buyers will now have to save up for a down payment, closing costs, inspection / appraisal fees, a year of homeowner's insurance, and an extra 3% (or whatever the negotiated amount is) for commission. Not to mention how high home prices are, and oh yeah, what about furniture?
For potential buyers that can't afford a commission there are still options to make sure you have representation. You could search for homes that specifically offer to pay a buyer agent's commission. You could also work directly with the listing agent by signing a limited agency agreement. Continue reading to learn more about limited agency agreements. Limited Agency - Limited agency is when one real estate agent is representing both sides (buyer and seller) of a transaction. The agent can't give one side an unfair advantage over the other. Why does this matter? Since many home buyers can't afford to pay a commission, they will likely try working directly with the listing agent. When there are two real estate agents they can each strategize with their clients about negotiations on price, inspection items, and various other things. When one agent represents both sides there isn't much they can do to help their clients strategize, because it would be giving an unfair advantage. They pretty much have to give both parties the same information and let them decide how to go about negotiations.
Sellers - As a seller, if you are only offering a commission to the listing agent, it will eliminate a good portion of potential home buyers. A lot of first time buyers will only be able to purchase if the commission is paid by the seller. If they love your house but can't afford to pay their agent, it's no longer an option for them. For sellers that need to sell in a hurry, I would strongly recommend still offering a buyer's agent commission. It will appeal to a much wider audience and help your listing stand out amongst the competition.
Conclusion As the real estate landscape evolves with changes from the NAR lawsuit. Buyers will increasingly have to bear their agent's commission. Navigating these changes requires adaptability and informed decision-making from both buyers and sellers. For buyers, especially first-time buyers, it's crucial to plan financially for this additional cost amidst rising home prices. Sellers must consider the broader implications on their potential buyer pool and sale timeline, possibly opting to cover the buyer's agent commission to enhance appeal. The shift towards more limited agency scenarios underscores the importance of transparency and fairness in transactions. By staying informed and collaborating closely with real estate professionals, both parties can navigate these changes successfully, ensuring their real estate goals are met in this new paradigm.
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West Lafayette stands as a beacon of community spirit and educational excellence, thanks in no small part to Purdue University. This vibrant city presents a unique and dynamic real estate market that captivates both locals and newcomers alike. Whether you are a potential homeowner searching for a place to lay down roots, or an investor eyeing the next big opportunity, West Lafayette offers an array of opportunities.
In this post we will discuss current home values with a comparison to years past. Additionally, we will add links to stats in specific neighborhoods, and more. Without further ado, let's dive in and explore the real estate market in West Lafayette, Indiana. West Lafayette Real Estate
So far in 2024 there have been 59 site-built homes sold in West Lafayette. The fast-paced world of real estate hasn't slowed down with homes averaging just 21 days on the market citywide. Prices have ranged from $196,000-$739,000 with an average sale price of $362,157. The average price per square foot has been $186.31. Lastly, the list-to-sale price ratio has been 100.10% which means sellers are accepting offers slightly above their asking price.
During the same time last year (January 1st - March 17th, 2023) there were 68 site-built homes sold in West Lafayette. The 2023 prices ranged from $160,000-$1,100,000 with an average sale price of $379,949. Homes were selling in just 35 days with an average price per square foot of $177.19. The list-to-sale price ratio was 98.52%. 2024 Market Stats (January 1st - March 17th)
2023 Market Stats (January 1st - March 17th)
Want to learn more about home prices in specific neighborhoods? Check out some of our Lafayette and West Lafayette neighborhood pages below. |
AuthorKirby Parker Archives
March 2024
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