How the NAR Ruling Taking Affect Impacts Your Relationship With Your Agent

The Weekly Recap

Good morning and happy Friday! Mortgage rates ticked down again this week and the treasury yield softened as US job growth was revised down over 800k jobs (which means we probably could’ve gotten a rate cut sooner if accurate numbers were relayed). Median price of existing homes sold nationwide in July is up 4.2% Goldman Sachs is no longer worried about a US recession, Kamala Harris floated the idea of giving some first time homebuyers $25,000 in order to purchase their first home. A judge struck down a rule banning noncompete agreements. One in ten US homes are now worth over $1M. If you happen to have a gold bar just sitting around your house, its value just crossed over the $1 million mark for the first time ever and NYC supers are begging for tenants to break down their cardboard boxes.

How the NAR Ruling Taking Affect Impacts Your Relationship With Your Agent

Back in March, the National Association of Realtors agreed to make some changes regarding real estate brokers’ commissions in order to settle a class action lawsuit and as of August 17th, these new rules took effect which will impact the relationship that some buyers may have with their agent. New York City and its agents are not governed by NAR but are members of REBNY (Real Estate Board of New York) so most of these changes impact if you are purchasing outside the city.

So what exactly IS changing?

1. Before the change Sellers’ agents were able to advertise commission fees to buyers’ agents on broker portals and databases such as the MLS. The change aims to prevent buyers’ agents from steering their clients toward a listing with higher commission fees.

2. Before touring a home (and this will be much more prevalent outside of NYC) a buyer and agent must sign a legally binding representation agreement which would disclose more information about their rates.

What IS NOT changing?

1. The standard industry fee for a transaction is between 5-6% of the purchase price, which is supposed to be split evenly between the sale-side and the buy-side.

2. Sellers will still be expected to pay the commissions for both parties as it behooves them to do so in a highly competitive marketplace.

3. Commissions always have been and always will be negotiable. The commission percentage negotiation is set by the listing agent who is working directly with the seller while trying to procure an exclusive listing. In those contractually enforceable exclusive listings, it is clearly laid out the total percentage being paid for a successful transaction and which party is receiving what.

These changes have made some headlines over the past week with superfluous headlines about how the ‘industry wont be the same’, ‘buyers agents are no longer needed’ and that ‘prices could come down’. I can say with certainty that neither of those things are going to be true.

A Buyer/Client agreement is just an additional piece of paperwork for buyers agents to give to clients that go alongside the Agency Disclosure and Fair Housing Disclosure. Buyers agents will ALWAYS be needed as buying a home isn’t like shopping online or buying a car, it is the largest asset you will own and clients are better served working with a buyers agent who has their best interests in mind versus trying to buy on their own and going up against a seller with representation. Prices continually increase because of lack of supply, until hundreds of thousands of new homes get built nationwide to address housing shortages, sellers passing on the cost of a buyers agent to a buyer will only make the barrier to entry to purchasing higher and result in their home sitting on the market longer.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past WEEK as well as newly signed contracts in Manhattan.

Mortgage Rate Update

Softer incoming economic data suggests that rates will gently slope downward through the end of the year. Earlier this month, rates plunged and now linger just under the 6.5% mark which has not been enough to motivate potential homebuyers. With rate cuts imminent, that effort may be the driver to create more buying demand.

News You Can Use

• Fed Minutes Show Several Saw Case for Cutting Rates in July Bloomberg

• Fed Steaming Toward September Rate Cut, Minutes from Meeting Show Reuters

• Treasury Yields Fall After Fed Minutes Point to September Rate Cute CNBC

• US Payrolls Marked Down by Most Since 2009 in Preliminary Data Bloomberg

• US 30 Year Fixed Mortgage Rate Falls to Lowest Level Since May 2023 Reuters

• What Happens When You Give People Money to Buy Houses Axios

• Home Sales Rose for the First Time in Five Months in July CNBC

• The Share of Million-Dollar Homes in America Just Hit an All-Time High Wall Street Journal

• Federal Judge Blocks FTC Noncompete Ban The Hill

• New Data Shows US Job Growth Has Been Far Weaker Than Initially Reported CNN

• Fed Confronts Up To A Million US Jobs Vanishing in Revision Yahoo Finance

• The Price of Gold Passes Another Milestone SoFi

• Wells Fargo to Sell Most of Its CRE Loan Servicing Business to Trimont Bloomberg

• How Younger Consumers Are Reshaping the Luxury Market Yahoo Finance

• NYC Supers Begging For Boxes to Be Broken Down Gothamist

The Deep Insight

Contact Me

Feel free to reach out to discuss more in-depth about your real estate goals, share your thoughts about my newsletter, or to share what you're experiencing in this market. Looking forward to hearing from you!