Greetings friends and valued clients

Today’s market update will be followed by some notes on industry changes that are coming for real estate professionals like myself and our team.  First let’s take a look at the current residential market here in the southeast metro Phoenix area.   This morning (6/10/24) we have just under 18,000 Active status listings in our local MLS system.  A far cry from the 6000 listing average we were running with during the last seller’s market.  The 18,000 reflects an increase in inventory of available homes as buyer demand has been depressed by a long stretch of higher interest rate policy out of the Federal Reserve.  We have also seen a noteworthy increase in builder inventory homes, that sometimes make it to the MLS.  The few buyers that are shopping these days have more choices, and more leverage than they have had in the last 3-4 years.  The result is we are seeing opportunities for buyers to leverage their interest in homes into seller concessions.  Seller concessions may be applied in a variety of ways including, reducing the price, paying some of the buyer closing costs or buying down the buyer’s interest rate.  So more opportunities for buyers and more anxiety for sellers. As always, homes that are priced well and show well sell sooner than the ones that don’t.  Here are the takeaways:

-Inventory is up

-Interest rates remain higher than they have been in a long time

-Buyers have some leverage

-Sellers need to be patient and put effort into presentation of the home

Should be an interesting summer as the market goes through the next few months.  Turns out it will also be an interesting summer in our industry.  You probably heard at least something about lawsuits against the National Association of Realtors and a variety of Multiple Listing Service Providers.  There were also lawsuits against some of the larger brand brokerages across the country.  The crux of the matter was commissions and in particular buyer agent compensation.  Legal arguments proposed a lack of transparency and options for sellers when it comes to paying commission.  Part of it was listing agents requiring buyer agent compensation, and at a specific level, and not allowing options to negotiate buyer agent compensation.  The rest addressed the policy of some MLS providers requiring compensation to a buyers agent to be offered in order for the listing to be displayed on the MLS platform.  The resulting proposed settlement from the National Association of Realtors will mandate some changes to the way that Realtor members conduct their business.  Here is how are some of the changes for the industry professionals here in Arizona.

Old Way:

-Commission was paid to the listing brokerage out of seller proceeds after a successful sale.

-Part of that commission was offered to an Realtor who represented a buyer with interest in the property

-The amount of commission offered was displayed on the local Multiple Listing Service in a searchable field.

-Each agent would owe fiduciary duties to their respective clients

-Agents would cooperate towards a successful closing

-Listing brokerage would pay buyer agent’s brokerage at closing

 

Commissions have always been negotiable in Arizona and we have had a variety of brokerage models available to sellers for the 20 years I have been in the industry.  Discount brokerages, flat fee listing services, MLS input only, and of course For Sale By Owner have been available to all sellers for as long as I can remember.

New Way(?)

Here are what the proposed mandated changes would look like:

-Listing agreement includes commission to listing brokerage and the seller has the option to offer/advertise compensation to a buyer’s brokerage if they choose to do so.

-Offers for compensation to buyers’ agent are prohibited from being displayed on MLS platforms.

-Agents working with buyers MUST utilize a signed employment agreement prior to showing a property (including virtual showings).

This is all preliminary and much has to be determined before we really know what the new normal will be.  Our part will be to lead the industry as a long standing brokerage in the local community and ensure that all of our company professionals are complying with industry mandates and local laws.   We have always been transparent about commissions and how we get paid and will continue to do so.  We will remain a solid resource for valued buyer and seller clients as we bring our experience and professionalism assist with their goals and objectives.

If you have any questions about the local market, the industry in general and the changes that are ahead of us, please feel free to reach out to me directly.  I welcome the opportunity to share my insights and assist you with reliable information.

Thanks as always for your continued friendship and support of our business.

Until next time,

-Mark Newman