Q&A: The Evolving Real Estate Landscape

Last week, I provided an opening explanation of The National Association of REALTORS® (NAR) settlement and the industry changes taking effect this month. Since then, I've received numerous questions from readers and clients, and I'll do my best to address the most frequently asked ones now:

Do buyers have to sign a broker agreement to look at properties?

• Yes. Brokers are now required to have a signed Buyer Representation Agreement in place before showing any properties to a customer or client. This agreement may outline the broker's responsibilities, the range of services they will provide, and the buyer’s home search criteria, but it must clearly define the compensation the buyer agrees to pay for the broker's services.

What are my options if I can’t afford to pay my buyer broker?

• Buyers have three options to compensate their broker,

  1.) Pay them directly

  2.) Request the seller pay the buyer’s broker

  3.) Request a concession at closing from the seller

Will the seller's commission rate be reduced?

• Possibly. Many sellers will continue offering the same commission rate to a buyer’s broker as before the settlement. Alternatively, some sellers may choose not to provide an upfront commission, instead opting to review the buyer broker commission and any concession requests within each purchase offer before deciding which to accept. The second approach, partly used as a negotiation strategy, could result in commission savings.

How will this settlement affect home prices?

• Home values are not directly affected by commission rates. Home prices are primarily determined by market factors such as supply and demand, location, and the overall economy.

What should I look for when choosing a real estate agent now?

• Who you work with is crucial, especially now. When selecting an agent, prioritize their experience, local market expertise, reputation, and proven sales record. Effective communication and trust are vital, so choose someone who is responsive and understands your needs. Strong negotiation skills are essential to securing the best deal.

How can I stay updated on changes from the settlement?

• Continue following The Ragetté Report — we have you covered!

Where the Market Is Heading by Year-End

Realtor.com® 2024 Forecast Update predicts that home prices and inventory will end the year with gains. Inventory is expected to grow as sellers remain patient, waiting for buyers rather than delisting. Despite high mortgage rates, median home prices are forecasted to rise due to a resilient economy and limited supply. The mortgage lock-in effect is easing, contributing to the inventory increase, while mortgage rates are expected to decrease slightly, potentially boosting homebuyer activity in the latter half of the year.

Additional Projected Points:

• Lower Rates Finally Arrive: Mortgage rates to average 6.3% by end of the year

• Home Sale Prices Continue to Climb: Expected to rise by 4.6% this year

• Mortgage Lock-In Effect is Easing: Inventory growth of 14.5%

• Home Sales Rebound-ish: Small growth, increasing by 0.8%

Ralph’s Take

The most intriguing aspect of the forecast is the slight but downward revision in mortgage rate expectations. This suggests that the Federal Reserve's policies are starting to take effect, potentially opening the door for a rate cut. If this materializes, it could provide much-needed relief to buyers who have been sidelined by high borrowing costs, making homeownership more attainable. It’s also noticeable that the presidential election was not mentioned in the article, although history shows home sales may slow down a bit in November, but they usually bounce back quickly.

July’s Real Estate Statistics for Westchester

New Listings and Median Home Prices had gains across all property types last month while the total amount of homes for sale continued to decline.

• Single-family home sales in Westchester County saw a 6.6% increase in new listings and a 1.6% rise in closed sales, with the median sales price up 6.3% to $1,010,000.

• Condos experienced strong growth, with new listings up 18.5%, closed sales up 30.5%, and a 16.7% increase in the median sales price to $525,000.

• Cooperatives had mixed results, with new listings up 18.4%, but closed sales down 10%, while the median sales price rose slightly by 1.9% to $214,000.

🏠 SINGLE-FAMILY HOMES

🏘️ CONDOMINIUMS

🏢 COOPERATIVES

Ralph’s Take

It’s important to keep in mind that overall county data may not be representative of your neighborhood. If you would like localized statistics, feel free to ask!

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The six-bedroom, 4.5-bath residence features six “meticulously restored” fireplaces, refurbished plaster, and a renovated kitchen with a butler’s pantry and blue-and-white checkerboard flooring. The heating and central AC systems are new. Highlights include formal living and dining rooms, space for an office, and a screened porch. Out back, there’s a new pool and hot tub. The property comes with a deep-water dock that can fit multiple boats. Read More

Visual of the Week 🖼️

Mortgage Applications Soared Last Week - Or Did They? 👀

Many news outlets are emphasizing a 'mortgage application surge,' but the true situation is more nuanced. Mortgage purchase applications are down 8% from last year and nearly 50% from pre-pandemic levels, reflecting weak homebuyer demand. Although the seasonally adjusted Purchase Index rose by 3.0% from the previous week, and the unadjusted Index increased by 2.0%, both still lag behind the same week in 2023 by 8.0%. Read More

Mortgage Watch 📉

The average 30-year fixed mortgage rate edges up slightly to 6.56%.

> The rate you may be eligible for can vary greatly from the daily average published via Mortgage News Daily. I use this figure as a proxy for how the mortgage market is shifting.

2024 Summer Real Estate Guides 🌞

Learn the keys to home buying and selling with our free real estate guides.

That’s it for this week! Thanks for reading and have a great weekend everyone! 🫡

-Ralph