Realty Digest April 2024

My Listing Commission in the NEW ERA of Real Estate will most often be 3.5% or Less!

We've entered a NEW ERA in real estate, where the Buyer’s Agent is paid based on the compensation identified in the Buyer Representation Agreement… not an amount published in the Realtor MLS.

Any thought of Buyer’s Agents steering buyers away from homes which offer a lower commission has been eliminated because the agent compensation is set by the representation agreement with the buyer.

Marketing Success in the NEW ERA of Real Estate beginning July 2024 is determined by the skillset & follow-through of the Listing Agent.

Included in the 3.5% Commission is our home preparation coordination and beautiful imagery: Still photos, drone shots, 2D Floorplan, video, and 3D Virtual “walk through” Tour on every listing. The best-in-the industry imagery I create combined with aggressive marketing techniques is highly effective in attracting qualified buyers. I upload all my listings to the top websites including Zillow, Homes.com, Trulia, Realtor.com, ColdwellBanker.com, Redfin, and the Realtor MLS. Of course, the marketing strategy is much more tha n just websites and the MLS. I also expertly use social media, eBlasts, brochures, retargeting, direct mail, and signs. Showings are done via a combination of Open Houses, Private Showings, and Scheduled Showing Hours as determined by the preference of the home seller.

In the NEW ERA, many buyers coming to see my listings will not have a Buyer’s Agent yet. Others will have already signed a Buyer Representation Agreement with a professional agent they know and trust.

Of course, I will continue to welcome and encourage cooperating agents to show my listings and submit offers. I anticipate many sellers will consider compensation to Buyer Agents per the terms of their Representation Agreement Certainly, offers submitted with the Highest Net Proceeds, best terms, and most qualified buyers will be given serious consideration by many if not most sellers regardless of the compensation paid to the Buyer’s Agent.

If a qualified buyer has not signed a Buyer Representation Agreement, I will represent that Buyer as a dual agent … this service is included in the 3.5% commission.

At Coldwell Banker-Campbell Realtors, we believe this client- centric approach is best aligned with the needs of sellers, and it offers ample incentive for cooperating Buyer Agents to show and submit offers on our listings.

In the NEW ERA of Real Estate, I am offering the services desired by home sellers and the buyers who want to buy their homes.

Under what circumstances can the listing commission be less than 3.5%? Contact me by phone, text, or email.

Scot Campbell ~ Real Estate Broker ~ 714-336-0394 (Moblie/Text) ~ Scot@CampbellRealtors.com

How’s the Huntington Beach Mar ket?

On January 18, 2024, the Days of Supply for all homes in Huntington Beach was sitting at 78, which is well into the Balanced Market Range and starting to get close to a Buyer’s Market. This was attributable to mortgage rates spiking to over 8% in October 2023. Then, the Federal Reserve indicated they were going to start easing, and mortgage rates fell to the 6.75% level. Buyers entered the market again in droves. Many experts predicted mortgage rates would continue to fall, but they have since jumped back up over 7%.

Who knew, but all can agree that 7% is better than 8% and we are now moving into the best time of the year to list a home. The Days of Supply* has dropped to the lowest level of the year, and now sits at 38 days. This is a level consistent with a Strong Seller’s Market.

*Days of Supply is defined as the number of days required to sell all the homes currently on the market at the present rate of home sales.

History of Agency in California Residential Real Estate Transactions

By Scot Campbell, Realtor - March 28, 2024 Broker of Record - Coldwell Banker-Campbell Realtors

As one of the very few practicing real estate professionals in California who has worked through all the Agency changes in California Residential Real Estate Transactions over the last 40 years , I am uniquely qualified to explain where the real estate industry has been with the rules of agency, and where it is today given the recent NAR Settlement.

In 1982, I started working in my father ’s real estate office (while I was still in high school). A licensed California Real Estate Broker since 1957, E.J. Campbell is the founder of our brokerage. At that time, the standard real estate practice in California when selling a home was to hire a Seller’s Agent. That brokerage was known as the “Listing Agent”, and customarily a portion of the commission was “offered” throug h the Realtor MLS to a “Cooperating Brokerage” who was deemed a “Sub -Agent” of the Seller’s Listing Agent.

The fiduciary duty of the Seller’s Listing Agent and Cooperating Brokerage (Sub -Agent) was entirely to the Seller of the home. This would be just as you would expect at a car dealership... everyone you speak with is trying to sell the vehicle for the maximum profit for the dealership. There is no one looking out for the interests of the “ car buyer” at the automobile dealership, and prior to 1984 there was no one looking out for the interests of the home buyer. The concept of “Buyer Beware” ruled the day.

Easton V. Strassburger (Buyer Agency Begins)

In 1984, there was a revolution in the rules of real estate agency. The practice of “Buyer Agency” was introduced following the Easton V. Strassburger case . It became best practices and Real Estate Law for real estate agents to be either: The Buyer’s Exclusive Agent, the Seller’s Exclusive Agent, or a Dual Agent Representing Both Buyer & Seller. However, to the dissatisfaction of many home sellers, the law and existing practice in the industry provided that the Seller pay the commission for both the Seller’s Agent and the Buyer’s Agent.

As much as some home Sellers were dissatisfied with the concept, the policy benefited the Sellers; here are the reasons why:

1) VA buyers have zero money to pay a Buyer Agent commission. In fact, the Veterans Administration does not permit them to pay a commission. If the seller does not pay the commission for VA transactions, these buyers leave the pool of potential home purchaser s.

2) FHA buyers have zero money to pay a Buyer Agent commission. They are scraping up 3.5% to put down on a home, it could take months or years to save enough money to pay a Buyer Agent commission. If the seller does not pay the commission for FHA transaction s, these buyers may never join the pool of potential home purchasers.

3) Most buyers are trying to reach down payment thresholds to lower their payment and qualify for a higher loan: 5%, 10%, 15%, and 20%. Each time one of these levels is reached, there is a savings in the cost of borrowing with either a lower rate/points or the elimination of Private Mortgage Insurance (at 20% down). The higher the buyer’s down payment as a percentage of the purchase price, the easier it is for the buyer to qualify for the loan.

4) Seller paid Buyer Agent commissions allow the Buyer’s downpayment to be larger. For example: with 20% down, an increase in the Buyer’s down payment of $20,000 allows the buyer to finance an additional $100,000. The sellers benefit from the buyer having more money to put down , thus pay more for the home. Example: If the seller pays the $20,000 commission, the buyer can pay $100,000 more for the home.

Once these facts were explained to the “dissatisfied” home sellers (who were upset that they were paying a commission to a Buyer’s Agent), the sellers quickly agreed to the practice. They did this not do this because they were “nice”, it was done because paying the Buyer Agent commission was in the best interest of home sellers.

Burnett v. National Association of Realtors (Jury Decides Changes are Needed)

Fast forward to 2023. A law firm found a new group of “dissatisfied home sellers” and filed a lawsuit against the National Association of Realtors which alleged that these sellers had been defrauded. The contention was they were forced to pay a Buyer Agent commission and Realtors were preventing nego tiations on commission rates.

The case was filed in the State of Missouri, Burnett v. National Association of Realtors ("NAR"), et al. In October 2023, it was reported that a jury (none of whom were home owners) found in favor of the disgruntled sellers. The Missouri Jury was successfully convinced that Home Sellers felt compelled (or were explicitly told) to pay a commission to Buyer's A gents.

The jury felt that it was implied (or stated) that Buyer Agents might refuse to show their property (if a lower commission was offered), fostering fear that their home would not sell.

They felt it was unreasonable that the commission remained the same even if the Buyer independently found the home, attended an open house without an agent, conducted an analysis of comparable properties using publicly available data, and only contacted th e Buyer's agent for assistance with the offer paperwork.

Compounding the issue, the real estate industry enacted arguably self -serving rules (MLS Rule 9.7 and NAR Standard of Practice 1616) prohibiting licensed real estate agents from assisting Sellers in negotiating lower Buyer's agent commission as part of the offer/counter- offer process.

A L andmark Settlement (NAR Agrees to Rule Changes)

On March 15, 2024 the National Association of Realtors entered into a settlement in the Burnett V. NAR case which as of today’s date is awaiting approval by the court.

As part of the settlement, NAR agreed to the following MLS rule changes which will become effective in July 2024:

• Agents are required to sign a written Buyer Representation Agreement with their Buyer Clients wherein compensation to be paid by the buyer is specified.

• Seller paid buyer commissions will no longer be published in the Realtor MLS .

NAR has issued specific guidance that agents should always tell clients :

• “Compensation arrangements (including commissions) are, and have always been, negotiable and set between a broker and their respective client… "

• "Listing brokers in consultation and agreement with their seller clients decide how much compensation to offer to serve the seller's best interest, and it can be $0, $1, or any other amount. NAR rules do not specify an amount for commissions. This is solely a matter that's negotiated between brokers and their clients."

Effect of the settlement on Coldwell Banker – Campbell Realtors policy & practices

A New Era in real estate is beginning soon. The marketing success and closing of a home sale in this New Era will be determined by the skills of the Listing Agent. As always, for our seller clients, it is our intent to maximize:

• The number of qualified buyers coming to see the property

• The number of offers submitted by buyers & cooperating Buyer Agents.

• The sale price & net proceeds (based on the seller’s desired terms)

Our policies and practices as the Listing Agent will remain aligned with the home sellers who have hired us to market their properties. Accordingly, we invite sellers to read our New Marketing Plan to Sell your Home which is now being completely revised for the New Era in real estate which begins in July 2024.

In consultation with California Assn of Realtors attorn eys, we have found elegant solutions for: VA, FHA, and buyers with downpayment threshold issues.

Scot Campbell is an experienced, trustworthy, knowledgeable, reputable, and above all caring Realtor with 100% 5-Star Reviews. In 2024, he already has 12 Transaction Sides Closed or In Escrow Totaling over $30 Million. Scot has Brokered over 3,500 Homes in the last 34 Years.

COLDWELL BANKER Campbell Realtors

1720 Pacific Coast Hwy, Suite 101

Huntington Beach, CA 92648

17241 Lynn Ln “Brightwater Area” Huntington Beach

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