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Table of Contents Features 10 Celebrating Halloween 12 NAR to Appeal Burnett Trial After Being Found Liable The National Association of Realtors® RomanR©/Adobe Stock
14 Sitzer-Burnett Verdict Means Consumers Lose,
12
NAR to Appeal Burnett Trial After Being Found Liable
Class-Action Attorneys Win
The Salt Lake Board of Realtors® 16 How to Explain Local MLS Broker Marketplace to Clients
The National Association of Realtors® 18 What Realtors® Should Expect After the Sitzer-Burnett Verdict
Curtis Bullock Q&A 20 Your Value as a Realtor: 7 Things Agents Should Do After a Closing
Lee Nelson
khunkorn Studio©/Adobe Stock
22 Homeownership Horrors:
16
Help Your Clients Avoid Mishaps
Melissa Dittmann Tracey
Columns 7 MLS System Fosters a Spirit of Collaboration and Civility Rob Ockey – President’s Message
Departments
How to Explain Local MLS Broker Marketplace to Clients
8
Happenings
8
In the News
28 Housing Watch
On the Cover:
Cover Photo: Tiko ©/Adobe Stock Andrey Popov©/Adobe Stock
This Magazine is Self-Supporting
22 Homeownership Horrors: Help Your Clients Avoid Mishaps
Salt Lake Realtor® Magazine is self-supporting. The advertisers in this magazine pay for all production and distribution costs. Help support this magazine by advertising. For advertising rates, please contact Mills Publishing at 801.467.9419. The paper used in Salt Lake Realtor® Magazine comes from trees in managed timberlands. These trees are planted and grown specifically to make paper and do not come from parks or wilderness areas. In addition, a portion of this magazine is printed from recycled paper.
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President Rob Ockey Presidio Real Estate
Jennifer Gilchrist KW South Valley Keller Williams John Lucky Berkshire Hathaway
First Vice President Dawn Stevens Presidio Real Estate Second Vice President Claire Larson Woodside Homes Treasurer Jodie Osofsky Summit Sotheby’s
Janice Smith Coldwell Banker Laura Fidler Summit Sotheby’s (Draper) Amy Gibbons KW South Valley Keller Williams Jenni Barber Berkshire Hathaway (N. SL)
Past President Steve Perry Presidio Real Estate
J. Scott Colemere Colemere Realty Assoc. Hannah Cutler Coldwell Banker
CEO Curtis Bullock Directors
Michael (Mo) Aller Equity RE (Advantage)
Carlye Webb Summit Sotheby’s
Morelza Boratzuk RealtyPath
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Managing Editor Dave Anderton Publisher Mills Publishing, Inc. www.millspub.com President Dan Miller Art Director Jackie Medina Graphic Design Ken Magleby Patrick Witmer
Sales Staff Paula Bell Dan Miller
Office Administrator Cynthia Bell Snow Salt Lake Board: (801) 542-8840 e-mail: dave@saltlakeboard.com Web Site: www.slrealtors.com The Salt Lake Board of REALTORS® is pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the nation. We encourage and support the affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin. The Salt Lake REALTOR® is the monthly magazine of the Salt Lake Board of REALTORS®. Opinions expressed by writers and persons quoted in articles are their own and do not necessarily reflect positions of the Salt Lake Board of REALTORS®. Permission will be granted in most cases, upon written request, to reprint or reproduce articles and photographs in this issue, provided proper credit is given to The Salt Lake REALTOR®, as well as to any writers and photographers whose names appear with the articles and photographs. While unsolicited original manuscripts and photographs related to the real estate profession are welcome, no payment is made for their use in the publication. Views and opinions expressed in the editorial and advertising content of the The Salt Lake REALTOR® are not necessarily endorsed by the Salt Lake Board of REALTORS®. However, advertisers do make publication of this magazine possible, so consideration of products and services listed is greatly appreciated.
MLS System Fosters a Spirit of Collaboration and Civility The Wall Street Journal calls it “a case of conspiracy in real estate” A federal jury in Missouri on Oct. 31 found that the National Association of Realtors® and other brokerages were liable for artificially inflating commissions and awarded plaintiffs $1.8 billion in damages. The center of the lawsuit focuses on a seller agreeing to pay a commission to a listing agent and the listing agent splitting that commission with a buyer’s agent. Is there a problem with this method? “There is nothing wrong about a listing broker offering to share a portion of that commission with the buyer’s broker in a transparent manner at an amount both parties agree upon,” according to Curtis Bullock, CEO of the Salt Lake Board of Realtors®. “Some critics argue that this system creates an inherent conflict because the seller and buyer have differing interests. While I agree there is some transactional conflict – i.e., seller wants the most money possible and the buyer wants to pay the least amount possible – there is one overarching common goal all parties share: that is to successfully close the transaction.” Of course, NAR is appealing the verdict and the final outcome could be years away. If the lawsuit ultimately prevails, home buyers could be left footing upfront costs of hiring an agent to represent them. It would likely result in underrepresentation of buyers, while sellers would continue to hire agents. It’s important to remember that Realtors® may collect any commission amount they choose. “There are no set fees. Never have been, never will be contrary to the misconceptions by the plaintiffs,” Bullock said. “There are several business models for brokerages. Some charge flat-rate fees, set commissions, or discounted commissions. Individual brokerages can select what fees they wish to charge. That does not change.” At the end of the day, no one is forced to hire a Realtor®. Many people sell homes on their own. Some use KSL.com, while others turn to ForSaleByOwner.com. Critics argue that the MLS system and Realtors® represent a cartel. On the contrary, the MLS is a brilliant system of putting fierce competitors together to pursue a common goal of buying and selling a home. It has incentivized competitors to work with each other and do it in the spirit of collaboration and civility for decades. Who wins? The consumer.
Rob Ockey President
OFFICIAL PUBLICATION OF THE SALT LAKE BOARD OF REALTORS ® REALTOR® is a registered mark which identifies a professional in real estate who subscribes to a strict Code of Ethics as a member of the NATIONAL ASSOCIATION OF REALTORS®. October 2005
November 2023 | Salt Lake Realtor ® | 7
Happenings Utah Continues to Attract New Residents In 2022, Utah saw an influx of more than 91,000 new residents, most of whom came from California, according to a new report by the Census Bureau. However, it’s worth noting that the number of Californians moving to Utah decreased 20% compared to 2021. The report also shows that other states like Washington, Idaho, Texas, and Arizona played a big role in Utah’s population growth in 2022.
Top States Feeding Utah's Population Growth In-Movers to Utah 2022
In the News Utah ranked No. 49 of 51 states and the District of Columbia in highest houseprice appreciation in the second quarter, according to a report by the Federal Housing Finance Agency. Utah home prices dipped 4.48% in the April-MayJune period compared to the same three months in 2022. Besides Utah, home prices fell in eight other states: Oregon, California, Colorado, Arizona, Washington, Idaho, District of Columbia, and Nevada. At 7.59%, Maine saw the highest price appreciation in the country. Connecticut ranked second, with home prices there increasing 7.58%. New Hampshire was third at 7.09%. U.S. home appreciation in the third quarter averaged 3.02%. “U.S. house prices appreciated at a slightly higher rate in the second quarter amid low inventory,” said Dr. Anju Vajja, Principal Associate Director in FHFA’s Division of Research and Statistics. “While prices in a number of western states continued to decline year-over-year, house prices rose in all states quarter-over-quarter.”
High Mortgage Rates Threaten New Home Production Dejan Eskic, chief economist for the Salt Lake Board of Realtors®, cautioned that today’s high mortgage interest rates are slowing new home production, which will worsen Utah’s housing shortage over the next two years. In 2017, Utah had a deficit of 56,000 housing units. “We managed to reduce it to about 28,000 units last year,” he said. “However, this year and the next, it is projected to increase to around 40,000 units.” New construction starts in Utah are currently 25% to 30% below the levels seen during the early pandemic years. The silver lining for the housing industry is that Utah’s growth is expected to continue surging over the next decade due to both in-migration and births. “We are currently navigating a very tough financial environment,” Eskic stated. “The primary challenge is getting buyers/renters in homes. The demand certainly exists.” As of Oct. 26, the 30-year fixed-rate mortgage averaged 7.79%, according to Freddie Mac. “Rates have risen two full percentage points in 2023 alone, said Sam Khater, Freddie Mac’s Chief Economist. “Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory.” 8 | Salt Lake Realtor ® | November 2023
House prices rose in 74 of the top 100 largest metropolitan areas over the last four quarters. The annual price increase was greatest in Camden, NJ (MSAD) at 10.6%. The metropolitan area that experienced the greatest price decline was San Francisco-San Mateo-Redwood City, CA (MSAD) at -12.2%. In Salt Lake City, prices fell 5.95% over the past year, but increased 0.90% from the first quarter. Salt Lake City ranked No. 94 of the 100 largest metro areas in highest appreciation. The FHFA HPI is a comprehensive collection of publicly available house price indexes that measure changes in single-family home values based on data that extend back to the mid-1970s from all 50 states and over 400 American cities. It incorporates tens of millions of home sales and offers insights about house price fluctuations at the national, census division, state, metro area, county, ZIP code, and census tract levels. FHFA uses a fully transparent methodology based upon a weighted, repeat-sales statistical technique to analyze house price transaction data.
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Celebrating Halloween The Affiliates Committee of the Salt Lake Board of Realtors® organized a trunk or treat on Oct. 30. Roughly 200 members attended the event, which was held at the Realtor® Campus. Affiliate members make up approximately 400 members of the Board and represent many different professions including: lending and mortgage, warranty, title, home inspection, extermination and decontamination services, media, staging, builders, and insurance. Utah is ranked one of the best in the nation for Halloween festivities, in two surveys — No. 1 for trick-or-treating and No. 3 for Halloween spirit — according to KSL.com.
10 | Salt Lake Realtor ® | November 2023
Photos: Dave Anderton
NAR to Appeal Burnett Trial Verdict After Being Found Liable
The association says it will continue to advocate for pro-consumer, pro-competition MLS rules. By The National Association of Realtors® The National Association of Realtors® and two codefendants were found liable Oct. 31 in the federal Sitzer/Burnett trial, which challenged MLS rules and the real estate compensation model. The eight-person jury also found liable HomeServices of America and Keller Williams Realty, which were named in the lawsuit. During the 11-day trial, NAR presented the facts and law about pro-consumer, pro-competition MLS rules, which class-action attorneys called into question. The case covers the Missouri markets of Kansas City, St. Louis, Springfield and Columbia. 12 | Salt Lake Realtor ® | November 2023
“NAR rules prioritize consumers, support marketdriven pricing and promote business competition,” the association said in a statement. “This matter is not close to being final, as we will appeal the jury’s verdict.” In presenting their case, plaintiffs argued buyer representation is obsolete and should only be afforded to wealthy buyers who can pay for the services out of pocket. They also alleged commission rates are too high, buyer brokers are being paid too much and NAR rules, along with the corporate defendants’ practices, lead to fixed pricing.
•
• •
•
is because there was a need, identified more than 100 years ago, for a higher level of ethical practice in real estate. NAR rules are made as part of a public rulemaking process and are consistently shared and made available publicly. NAR does not seek, track, receive or set commissions for buyers’ or sellers’ agents. NAR is an advocate and resource in the real estate market for its members and their clients, and only NAR members can call themselves Realtors®. NAR membership includes robust benefits, such as exclusive access to health, home and auto insurance. NAR offers business and marketing services, as well as extensive opportunities for learning through designation and certification programs.
About Realtor® Value •
•
•
Agents who are Realtors® play a critical role in guiding consumers through all the legal, financial and community complexities of buying a home. They also make local broker marketplaces, which online housing portals tap into, possible because of all the information they input into those databases. Real estate agents are consumers’ advocates.They lead as entrepreneurs, experts and philanthropists to protect consumers, build generational wealth and contribute to local and national economies. Having a local expert manage the process is more important than ever. All of the sellers who testified in the case said they used an agent and were very satisfied with the services provided to them.
About Broker Compensation RomanR©/Adobe Stock
NAR countered that consumers are better off and business competition is able to thrive because of MLS rules and how well local broker marketplaces function. NAR’s cooperative compensation rule ensures efficient, transparent and equitable local broker marketplaces. Sellers can sell their home for more and have their home seen by more buyers, while buyers have more choices of homes and can afford representation. NAR also argued that Realtors® are everyday working Americans who are experts at helping consumers navigate the complexities of home purchases, as well as advocating for fair housing and wealth-building for all. NAR plans to appeal the jury’s verdict, but that process could take years to resolve. NAR says it remains committed to pro-consumer, pro-competition practices and is confident the association will ultimately prevail. Key points that emerged throughout the trial:
About NAR •
The very reason NAR exists as a trade association
•
•
•
•
Agent compensation is set between brokers and their clients and has always been negotiable at any point in the transaction, as set forth in NAR’s publicly available guidance for members. And those costs are spelled out to buyers and sellers. If buyers had to pay out of pocket for representation, that would reduce the number of buyers and the money buyers have to purchase homes from sellers. Every plaintiff in this case knew the commission they were paying to their agent and agreed to it in writing. The cooperative compensation rule ensures both buyers and sellers are well represented and that the buyer broker knows what they will be paid before they commence work.
For more about what the trial outcome means and related questions, see these questions and answers. Also, visit competition.realtor to find facts, infographics, videos, articles and other content to share about the value of Realtors® and how local broker marketplaces increase consumer access and opportunity and foster business competition. November 2023 | Salt Lake Realtor ® | 13
Olivier Le Moal©/Adobe Stock
Sitzer-Burnett Verdict Means Consumers Lose, Class-Action Attorneys Win Despite the plaintiff’s alleged conspiracy, commissions for home sales have always been subject to negotiation. By The Salt Lake Board of Realtors® On Oct. 31, a federal jury delivered a verdict that will ultimately change the home buying process, making it more complicated and hindering home sales. Jury deliberations lasted just two hours and 28 minutes before a verdict was reached. The jury’s determination alleges a conspiracy to artificially maintain high commissions for home sales. Defendants in the case included the National Association of Realtors® and prominent residential brokerages, holding them liable for approximately $1.8 billion in damages. Rob Ockey, President of the Salt Lake Board of Realtors®, said, “Commissions for home sales have always been subject to negotiation. Regrettably, this verdict could potentially hinder both sellers and aspiring homebuyers. In the aftermath, it appears that classaction lawyers have emerged as the beneficiaries, while 14 | Salt Lake Realtor ® | November 2023
consumers are left to contend with the fallout.” It’s important to note that commissions on home sales have never been universally fixed at 6%. Real estate agents always engage in commission negotiations with their clients. Nationally, the average agent commission in the United States is notably less than 6%, and in Utah, the average real estate commission rate stands at 5.36%, ranking the state 18th (tied) for some of the lowest average Realtor® fees, according to Clever.com. “The agreed upon commission rate paid by the seller occurs during the listing appointment,” Ockey said. “That negotiated rate is determined by the value the agent provides and what the seller is willing to pay.” The plaintiffs argued that without NAR’s “Mandatory Offer of Compensation Rule,” homebuyers would be required to cover their agent’s commission costs,
creating an opportunity for increased competition among agents competing to represent homebuyers, potentially resulting in lower commission fees.
“Commissions for home sales have always been subject to negotiation. Regrettably, this verdict could potentially hinder both sellers and aspiring homebuyers. In the aftermath, it appears that class-action lawyers have emerged as the beneficiaries, while consumers are left to contend with the fallout.”
However, the Mandatory Offer of Compensation Rule has always allowed a seller to offer as little as $1 or even nothing in compensation to a buyer’s agent. “Consumers, and particularly home sellers, have always been able to negotiate commissions,” said Curtis Bullock, CEO of the Salt Lake Board of Realtors®. “For the seller to pay the listing agent a brokerage fee, and the listing broker to then share some of that fee in the spirit of cooperation and collaboration is not a bad thing. It helps the seller when there is a qualified buyer agent on the other side of the deal who is incentivized to smoothly get the transaction to closing. It has worked well for many years. Our MLS system is the envy of other countries where selling real estate is uncertain and chaotic.” Bullock added that going forward, agents should continue running their businesses as they have for years. “Like in any other profession, Realtors® should not apologize for being compensated for the tremendous services they provide,” he added. “Buying and selling a home is more complicated than ever. Having professional representation protects the consumer.” The class action lawsuit was brought by home sellers who listed their houses in multiple listing services for the Kansas City metropolitan area, the St. Louis metropolitan area, the Southern Missouri area, and the Columbia, Missouri area, and sold them between 2015 and 2022, according to Justia Legal News. The defendants found liable include the National Association of Realtors, Keller Williams, and HomeServices of America (owned by Berkshire Hathaway). Re/Max and Anywhere Real Estate (whose subsidiaries include Coldwell Banker and Century 21) settled before trial, for $55 million and $83.5 million, respectively. Ricky Carruth, a real estate broker in Alabama, said in a recent YouTube podcast that the case is a money grab by class-action lawyers. “Michael Ketchmark, the plaintiff’s attorney, will likely make 40% of any winnings,” Carruth said. “The rest is split among 500,000 plaintiffs. He doesn’t want to help the people who evidently were caught up in this conspiracy who sold their homes through small-time brokerages. He’s going to go after all the brokerages that have a lot of money.” The plaintiffs also argued that commissions by real estate agents were too high. In fact, the median annual wage of real estate agents is $49,980, according to the U.S. Bureau of Labor Statistics. Realtors® play a crucial role in guiding consumers through a complex, infrequent, and often the largest financial purchase of their lives. Their responsibilities encompass a wide range of tasks, such as:
– Rob Ockey, President of the Salt Lake Board of Realtors® • • • • • • • • • •
Meticulously reviewing/explaining legal documents, notices, and forms. Ensuring the prompt delivery and deposit of earnest money within stipulated deadlines. Skillfully negotiating and professionally presenting offers. Effectively marketing properties to qualified buyers. Advising the seller on disclosure law related to material defects in a property. Providing valuable advice to clients regarding potential legal pitfalls. Managing showing appointments and ensuring property security. Skillfully handling multiple offers on behalf of their clients. Market analysis, problem solving, and handling objections. Hours of time spent on phone calls with clients, lenders, title representatives, inspectors, home warranty companies, city officials, and attorneys.
About the Salt Lake Board of Realtors® The Salt Lake Board of Realtors® is the Wasatch Front›s voice of real estate and the No. 1 source for housing market information. The Salt Lake Board of Realtors® is the largest shareholder of UtahRealEstate.com, one of the leading Multiple Listing Services (MLS) in the United States. Since 1917, the Salt Lake Board of Realtors® has been a leader in promoting homeownership and protecting private property rights. The Salt Lake Board of Realtors® empowers its members to better serve the public by providing continuing education, advocacy, and a professional code of ethics. About UtahRealEstate.com UtahRealEstate.com is where real estate listings originate, and it is the official property information platform for real estate professionals in the state of Utah. We proudly serve approximately 96% of all Realtors® in the state of Utah, according to T3 Sixty 2021 Real Estate Almanac. UtahRealEstate.com operates one of the largest Multiple Listing Services (MLS) in the United States. November 2023 | Salt Lake Realtor ® | 15
khunkorn Studio©/Adobe Stock
How to Explain Local MLS Broker Marketplaces to Clients
Local broker marketplaces give buyers access to the most housing options on the market at any given time, and they help sellers get the most buyer attention for their listing. By The National Association of Realtors®
It might not be the easiest or most thrilling conversation, but there’s so much your clients can learn about the ways a local MLS broker marketplace sets them up for a successful home sale and how it benefits buyers and sellers everywhere. After all, they see marketplace data throughout the entire home buying and selling process, as well as on broker websites and popular online home search portals. It’s important that consumers—and real estate professionals—understand the value these marketplaces bring. Let’s dig in. The first step to having these conversations with your clients is understanding how to define the local broker marketplace. There’s no difference between “MLS,” “multiple listing service” or “local broker marketplace.” All marketplaces are local; there’s no singular MLS 16 | Salt Lake Realtor ® | November 2023
or multiple listing service for the nation. Each one represents a different marketplace for a different region and is run by local brokers. These marketplaces house data in one place for all the verified, up-to-date home listings in their area. Realtors® participate directly in local broker marketplaces to ensure home buyers and sellers have full access and equal opportunity in the market. In short, the local broker marketplaces are a custom, local collection of data that helps buyers and sellers understand the landscape of their market and make informed decisions in consultation with real estate professionals.
Let’s break it down. Local broker marketplaces: •
Give transparent, equitable and instant access to all home listings.
• • • • •
Ensure the most accurate, up-to-date and verifiable source of active listings and past sales. Maximize consumer choice, providing options for brokers to work with. Enable sellers and buyers to have professional representation in the complex home sales process. Encourage different compensation models to thrive. Foster competitive pricing and market competition for businesses of all sizes.
Why it matters: Now that you can define a local broker marketplace and translate its value, here are some ways you can explain to consumers why they matter and how they help. • More exposure to listings and housing opportunities can increase success for buyers and sellers. Local broker marketplaces give buyers access to the most housing options on the market at any given time, and they help sellers get the most buyer attention for their listing. • Home sellers have a greater chance of earning more. Between 2019 and 2022, homes listed on local broker marketplaces sold for an average of 14.8% more than off-market properties. For an average home sale, that’s a $45,471 difference. • The marketplaces provide a centralized home
BUILD, BUY, REFI
•
•
•
•
buying and selling process for everyone. In 2022, 86% of sellers listed their homes on local broker marketplaces, which are the No. 1 sources to broadly market homes. Local broker marketplaces foster an inclusive and accessible market for consumers. Buyers can easily access the most homes for sale, free from discrimination, regardless of which broker they choose to work with or how much that broker is being paid for his or her work. These marketplaces are all about consumer choice. Buyers and sellers have many choices about the brokers with whom they work – from how they are paid to specific expertise to customer service – all at market-driven prices. A plethora of local broker marketplaces equals a competitive market that works for everyone. There are more than 500 local broker marketplaces in the United States, all of which facilitate and encourage competition in real estate. It is a secure marketplace with timely, accurate listings. Brokers submit new listings and update current listings every day directly on local broker marketplaces, making them the most updated source of information about the most homes for sale in a market.
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What Realtors® Should Expect After the Sitzer-Burnett Verdict The following is a Q&A with Curtis Bullock, CEO of the Salt Lake Board of Realtors®, on the Sitzer/Burnett class action verdict against the National Association of Realtors® and other brokerages and what it means to Realtors®.
Now that the verdict is in, what’s next? The ruling will be appealed. There are no immediate changes Realtors® are required to make as of today. I expect the fight to preserve our tried and tested orderly system of exchanging real estate to continue. Having said that, we can sharpen the saw and get better at certain things.
Is there a problem with a seller agreeing to pay a commission to a listing agent and the listing agent splitting that commission with a buyer’s agent? This is the crux of the lawsuit. In practice, this approach has stood the test of time. Moreover, there is nothing wrong about a broker offering to share a portion of that commission with the buyer’s broker in a transparent manner at an amount both parties agree upon. Some critics argue that this system creates an inherent conflict 18 | Salt Lake Realtor ® | November 2023
because the seller and buyer have differing interests. While I agree there is some transactional conflict – i.e., seller wants the most money possible and the buyer wants to pay the least amount possible – there is one overarching common goal all parties (including the buyer, seller and their agents) share: that is to successfully close the transaction. This brilliant system of putting fierce competitors together to pursue a common goal simply works and we will continue to advocate for it. It has incentivized competitors to work with each other and do it in the spirit of collaboration for decades. Who wins? The consumer.
What should Realtors® do going forward? As of today, Realtors® will continue conducting business as they always have. They will not need to necessarily provide more value to their clients because they already do. They simply need to be better at articulating their
as part of the real estate transaction if that is needed. There are many details that will have to be worked out. That is one possible solution to the offer of compensation issue that was attacked by this court ruling.
What about commissions? Realtors® may collect any commission amount they choose. There are no set fees. Never have been, never will be contrary to the misconceptions by the plaintiffs. Realtors® may negotiate brokerage fees as they always have. There are several business models for brokerages. Some charge flat-rate fees, set commissions, or discounted commissions. Individual brokerages can select what fees they wish to charge. That does not change.
Is the MLS model threatened?
HN Works©/Adobe Stock
value, especially as buyer agents. The way buyer agents are paid will not immediately change because of this verdict. The fight will likely go on for years. Whatever changes eventually come, Realtors® will adapt.
Does the verdict affect buyer-broker agreements? Realtors® must continue to use and properly explain the Buyer Broker agreement, how compensation is earned, and how it is paid as described in that agreement. After properly explaining this, most buyers (and sellers) will understand and agree to it because it simply makes sense. Whether the agreement changes in the future remains to be seen. Either way, Realtors® will continue to provide professional services and be paid for those services.
In the future, what if buyers are required to hire and pay for their own agents? Most buyers won’t be willing to pay for an agent. They are not going to be represented. It would be a step backward. Ultimately, with a class action verdict like this, the attorneys win, the consumer loses. If the attorneys had it their way, low- and moderate-income buyers would have a much more difficult time obtaining professional representation on the largest investment of their life. The NAR has already started lobbying months ago to have buyer-agent commissions be financed
The MLS system is in my view one of the greatest business inventions of all time. In the spirit of cooperation and compensation, it has allowed millions of satisfied consumers realize the American dream of homeownership. No Realtor® should complain about our local MLS system (UtahRealEstate.com). It’s easy to know what a market without an MLS like ours – that embraces cooperation and compensation – would look like and why it doesn’t work. It already exists in most places in the world. Yet we are the example they look to. Our MLS system is the envy of the rest of the world. Yes it can always be improved on features and services, but the MLS system we use every day is inexpensive and more effective than anything else. We are very fortunate to have had a regional MLS created years ago at a low cost per member for so many years. Never take it for granted.
Are there better ways of selling real estate in other countries? I hear talk that other countries have average commission rates of 1.5% or 2%. Why is it higher in the U.S.? My first reaction to that question is, we are not trying to do what other countries do because we know it hasn’t worked well. Selling or buying real estate in many other countries is uncertain and chaotic. Ultimately the consumer is hurt because of it. For example, imagine wanting to sell a property in another country. You place an ad on WhatsApp to share the listing. Whoever brings you a buyer the fastest might get paid a commission. There really aren’t any agency relationships created. Or you hire an auctioneer who tries to sell the home. A buyer is finally found and it sits in escrow for 10 months. After you go under contract, the price can change all the way up to closing. These are examples of what happens in other areas of the world. Those who are accustomed to the U.S. model don’t appreciate how well it works for both buyers and sellers. If we woke up tomorrow and there was no Board or MLS, the real estate industry would be utter chaos. November 2023 | Salt Lake Realtor ® | 19
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Your Value as a Realtor®: 7 Things Agents Should Do After a Closing Help agents dazzle past clients, cultivate customers for life, and increase referrals by becoming a long-term indispensable resource. By Lee Nelson A woman in her mid-60s inherited enough cash to purchase her first home. She had $80,000; however, it’s difficult to find a house for that price in her home town of Nashville. Enter William Willoughby, broker-owner at Music City Group Real Estate in Nashville, who came through for this buyer by finding a little HUD home that needed a water heater and other renovations. It was a good brick house in a nice neighborhood, but he just couldn’t put her in the home, shake hands, and say good-bye after the closing. He felt compelled to make sure she found the right workers to get the remodel completed in the 30-day deadline given by HUD. “I told her I would stay with her for 30 days and be her project manager. I lined up all the contractors to make it a home that she could live in,” Willoughby said. Since then, he has helped six of her family members in buying and selling homes. “Nurturing our past clients and making sure we are here for them is a top priority.” Treating clients well, even after the closing, can lead to 20 | Salt Lake Realtor ® | November 2023
more business and possibly a friend for life. Here are seven ways your agents can go above and beyond for their clients after a closing: 1.
2.
Automatically do seven-day and 30-day follow-ups. Tell agents to make it a standard practice and add these follow-up dates into their CRM or calendar. Agents should call their clients to see how they are enjoying their new home and ask if they need anything. Usually by then, people are elated they have made it through the process of finding a home and moving, Willoughby said. Remember special dates. Agents should make sure every past client is on their personal holiday card list. Consider mailing birthday cards or closing day anniversary cards, said Keith Bliss, broker-owner at Bliss Real Estate powered by eXp Realty in RaleighDurham, N.C. The number one rule is to stay in touch with clients the way they prefer you to stay in touch, he said.
3.
4.
5.
6.
Show up when they are moving in. Bringing over a bottle of wine, a pizza, or an item that signifies the area will go a long way with clients. Willoughby and his agents give a piece of wall art native to Nashville showing different communities. During the visit, agents can ask if the clients need any local recommendations or contractor referrals. Be visible in your community. Encourage agents to be active in their markets while communicating their community efforts through client-targeted newsletters, emails, or Facebook posts. “They really are watching you and what you are doing,” Bliss said. Let clients know what’s going on in their town or neighborhood by posting about new businesses or housing developments with photos and Google Maps. Clients should know that their agent has his or her finger on the pulse of what’s going on locally. Become the go-to real estate resource. Whether it’s now or in the future, agents should always be open to giving free advice to a former client, whether it’s for flooring recommendations or a home valuation. An agent’s door should always be open for conversation, so don’t act too busy, Bliss said. Host an event and invite former clients. Your brokerage, team, or individual agents could rent a bounce house, sponsor at a local community fair, or
Kenadee
7.
give out candies (on a float!) at the local 4th of July parade. Whatever the event may be, send clients a personal invite. And, if your company supports a local nonprofit, get clients involved with you. Create (and update) a list of contractors and vendors. Compile a list of service providers your agents can email to their sphere. It can be useful, even for those folks who bought a house 10 years ago. Or, create a client survey and ask former customers to rate their deck builder, home inspector, dog groomer, hair stylist, or any other service-oriented business which they have used in the past year. “Instead of being their resource, use them as your resource. This way, the information is current and it’s relevant,” Bliss said. His brokerage compiles the information and sends it to agents’ past, present, and new clients.
Above all, be creative in how you deliver value to customers, no matter what stage of the homebuying or homeselling process they’re in. “Let your clients know that you are there to care for them and will help them in any way you can,” said Bliss. Lee Nelson is a freelance journalist from Illinois. Reprinted from Realtor® Magazine Online, November 2023, with permission of the National Association of Realtors®. Copyright 2023. All rights reserved.
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November 2023 | Salt Lake Realtor ® | 21
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Homeownership Horrors: Help Your Clients Avoid Mishaps Most horrors come about when home buyers, in excitement, make an ill-advised home purchase and make the mistake of buying without a proper inspection. By Melissa Dittmann Tracey Homeownership can be scary. Anna Altic, a real estate broker at RE/MAX Homes and Estates in Nashville, Tenn., knows that from her own experience. She once was awakened by several “super-freaked-out birds” flying around in her bedroom. And that was after watching an episode of “Game of Thrones” before bedtime. The lesson Altic learned: Check your chimney caps to make sure unwanted visitors stay out. 22 | Salt Lake Realtor ® | November 2023
That’s unsettling—but some homeownership stories are even more frightening. Recently, construction crews bulldozed an Atlanta home only to realize they had the wrong address. The homeowner returned home from vacation to find her home in piles of wood. In another recent incident, the owners of a short-term rental in San Francisco faced a mess after their Airbnb guests left a clogged toilet running for 15 hours, which flooded the entire building. The owners, who lived in the unit below,
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were left homeless with more than $300,000 in debt. Those examples are extremes, but even a broken HVAC system or a water leak could result in thousands of dollars in damage. A home inspection may help uncover potential problems before a purchase, but more than a quarter of buyers are waiving the inspection contingency, according to the latest Realtors® Confidence Index. “Getting an inspection before committing to a property can help you avoid a spooky situation once you’re the owner,” said attorney Claudia Cobreiro, founder of Cobreiro Law in Miami. “An inspection can help reveal any defects with the property that may not be apparent to the naked eye or to an unsophisticated buyer.” Real estate pros have witnessed the ups and downs of homeownership and learned a few lessons to help your clients avoid potential mishaps in ownership.
Lesson: Get Insurance Lined Up Immediately Kristy Kyle, a broker at RE/MAX Executive in Fort Mill, N.C., recalled how clients of hers spotted leaking from the air conditioning unit in the attic of their threestory condo. The clients called in a professional, who discovered the unit was frozen and worked to thaw out the system. The next day, the home caught fire. “Thank goodness the neighbors called the fire department immediately,” Kyle said. “A few more minutes and the home would have been engulfed.” The fire was contained to the attic, but the water to put out the fire made the home unlivable and destroyed most
of the owner’s belongings. “It was a total reconstruction job,” Kyle said. What’s more, “they did not have homeowners’ insurance at the time since they were still moving in. It was on their list of things to do,” Kyle said. Luckily, their homeowners association’s insurance covered all the damages under the master policy. But Kyle says the experience is a lesson: “I want to tell everyone this story so that they make sure insurance is in place as soon as the home is closed,” Kyle said. “This was a cash sale, so it was not required.”
Lesson: Don’t Shrug Off Red Flags “The greatest homebuying horror is buying a financial sinkhole,” said Rinal Patel, a broker with Everyhome of Pennsylvania Inc. in Skippack, Pa. “Many fall into this trap because, too often, they fail to read disclosures or simply do not understand the red flags when buying a new home.” Patel tries to warn her clients to be on the lookout for potential problems. While a home inspection can help, buyers also should be on the lookout for signs that might indicate costly problems, such as a sagging roof, watermarks on the wall, poor ventilation or windows and doors that don’t shut properly. Even tiny cracks in the wall can indicate a foundation problem. “As a real estate professional, I have learned that most horrors come about when home buyers, in excitement, make an ill-advised home purchase,” Patel said. “This is most often the case when buyers make the mistake of buying without a proper inspection.”
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24 | Salt Lake Realtor ® | November 2023
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Lesson: Consider Extra Inspections Brie Schmidt, broker-owner of Second City Real Estate in Chicago, recalled how just one day after closing on her clients’ new home, the sewer backed up following a heavy rain and flooded the basement and first floor. “They had just arrived with their movers to find standing water everywhere,” Schmidt said. “It took three months and over $100,000 to renovate the home before they could move in.” Schmidt uses the story to remind her clients that not every component of a home is included in the inspection. “Oftentimes, a sewer scope, lead-based paint test, radon test or termite inspection are add-on services and not included in the standard inspection,” she said. “Your insurance agent should also explain the policy to you and what it does and does not cover. Sewer backups are not always covered in standard policies and would need add-on coverage.”
“I had to deliver the news to the buyers,” Zolan said. “They had to decide whether or not to move forward on the purchase.” The listing broker had received numerous offers on the property and had a backup if Zolan’s buyers decided to pull out of the purchase. Zolan’s buyers looked at other properties but ultimately decided to stick with the house, favoring its location. They were able to renegotiate the price—and paid $125,000 less than the original ask. They also needed to get a construction loan and extend the lease on their current apartment while repairs and renovations were completed.
Lesson: Perseverance Can Pay Off
“The lesson was in patience and understanding,” Zolan said. “We had a great attorney working with us, as well as stellar mortgage brokers, so the team was key in keeping everything calm and moving forward.” In the end, the buyers remained excited about homeownership and were able to work with an architect to redesign the house to their exact specifications.
Deborah Zolan, an agent at Compass in New York, recalled working with a couple who bought their first home in Brooklyn. Prior to closing, Zolan received a call from the listing agent about a fire in the house the night prior. The house sustained significant damage.
Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine. Reprinted from Realtor® Magazine Online, October 2023, with permission of the National Association of Realtors®. Copyright 2023. All rights reserved.
26 | Salt Lake Realtor ® | November 2023
IT’S TIME TO WRAP UP THE YEAR WITH THE
2023 REALTOR® SERVICE AWARDS
ADVERTISE IN THE DECEMBER ISSUE AS WE RECOGNIZE THE BEST OF 2023. Realtor® of the Year Affiliate of the Year Good Neighbor Award Winners Distinguished Service Award Winners. A terrific opportunity to finish 2023. Congratulate the award winners and bring attention to your company.
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September 2023 Higher Interest Rates Dampen Sales as Prices Remain Steady Sales of homes in Salt Lake County fell 21% in September year over year as higher mortgage interest rates continued their drag on the housing market. Sales of all housing types dipped to 877 units, down from 1,117 units a year ago. When compared to the five-year average for the month of September, sales this year were down 43% or 654 fewer units sold compared to sales in a typical September month. Despite the drop, median home prices held steady at $515,000 for all housing types in Salt Lake County, down 1% from $520,000 a year ago. The median price of single-family homes actually increased to $614,000, up 1% compared to $606,000 in September 2022. The median price of multi-family homes fell to $404,000, down 1% compared to $410,000 last year. Properties in Salt Lake County typically remained on the market for 24 days in September, down from 26 days in September 2022. Home prices in Salt Lake County peaked in May 2022 at $560,000 (all housing types). Since then, prices have dropped 8% because of steep interest rate hikes. However, a lack of housing inventory is holding prices steady, as home buyers compete for properties. In some instances, multiple offers exist. A Salt Lake home buyer purchasing a median-priced home of $515,000, with a 10% down payment at a 7.5% interest rate, would face a $3,241 monthly payment in principal and interest. Just two years ago, when rates were 3%, that same home buyer’s payment would have been $1,954, a monthly difference of $1,287. Over the life of a 30-year loan at 7.5% interest, a home buyer would pay nearly $500,000 more in interest than at a 3% rate. Across the nation, first-time buyers were responsible for 27% of sales in September, down from 29% in August 2023 and September 2022, according to the National Association of Realtors®. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 20224 – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.” Nationally, total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – waned 2.0% from August to a seasonally adjusted annual rate of 3.96 million in September. Year-over-year, sales dropped 15.4% (down from 4.68 million in September 2022).
28 | Salt Lake Realtor ® | November 2023
“The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”
Lawrence Yun NAR Chief Economist
Salt Lake County Local Market Update for September 2023
Source: UtahRealEstate.com
KEY METRICS
NO. OF SALES
MEDIAN SOLD PRICE
MEDIAN PRICE PER SQ. FT
NEW LISTINGS
All Housing Types Single Family Multi Family
877 604 246
$515,000 $614,000 $404,000
$246.51 $236.80 $276.95
1443 990 404
$520,000 $606,000 $410,000
$243.59 $235.21 $272.13
1480 1054 386
-0.96% 1.32% -1.46%
1.20% 0.68% 1.77%
-2.50% -6.07% 4.66%
COMPARISON TO LAST YEAR 2022
All Housing Types Single Family Multi Family
1117 784 318
COMPARISON TO LAST YEAR -% DIFFERENCE
All Housing Types Single Family Multi Family
-21.49% -22.96% -22.64% NO. OF SALES
MEDIAN SOLD PRICE AUG $520,000
1117
-0.96%
$515,000
-21.49%
877
ALL HOUSING TYPES SEPT. 2022
ALL HOUSING TYPES SEPT. 2023
NEW LISTINGS
1480 -2.50%
ALL HOUSING TYPES SEPT. 2022
1443
ALL HOUSING TYPES SEPT. 2023
ALL HOUSING TYPES SEPT. 2022
ALL HOUSING TYPES SEPT. 2023
MEDIAN CDOM
26
24 -7.69%
ALL HOUSING TYPES SEPT. 2022
ALL HOUSING TYPES SEPT. 2023
November 2023 | Salt Lake Realtor ® | 29
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T H E Noah Birkeland Sales Representative
B I R K E L A N D S Greg Birkeland Area Broker/Sales
Lauryn Birkeland Internet Sales Specialist
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D.R. Horton, America’s largest homebuilder, is celebrating a milestone! 45 years in business, and an astonishing 1,000,000 homes built! D.R. Horton is also Utah's premier builder of amenity driven communities and spacious floor plans designed for living!
START YOUR NEW HOME JOURNEY HERE — 385-526-4492 D.R. Horton is an Equal Housing Opportunity Builder. Home and community information, including pricing, features, terms, availability and amenities, are subject to change at any time without notice or obligation.
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