Peter Fountain

Category: real estate

real estate

The World Of Real Estate Is On Fire

Mar 20, 2024 #real estate by Pete

I’m beginning my 6th (and final) year as a real estate agent and as a near the end of my time in the business, the real estate world is about to undergo radical change.

This past week, the National Association of Realtors (NAR) announced that they plan to settle a huge lawsuit against them, a decision that has set the real estate universe on fire.

You can read more about the settlement here, but the important take away is that NAR will pay over $400 million and more importantly they will erase the buyer compensation data from MLS listings.

I’m not an attorney, so I won’t get into all the details of the settlement, but the part that has the real estate world on fire is the part about buyer agent compensation.

Be it true or not, most people on the internet have decided that the settlement will mean that buyer’s agents will no longer receive their commission from the listing agent (in most cases, the seller pays their agent a commission of 3-6 percent, and the listing agent then shares part of that commission with the buyers agent).

Quite frankly, I’m not sure what will happen except that something will happen.

And I hope it does.

Real estate in our country is broken.

Many entities have found ways to dip their hands into the pot to enrich themselves with each and every transaction.

Take a look at any closing disclosure or settlement statement and you will likely be surprised by the number of entities getting paid at closing and you will likely be even more shocked at the amount of money some of those entities are getting paid.

For now, anger is directed at real estate agents, particularly buyers agents.

Many agents work hard and are decent and honest people.

But many are just goofballs looking to make easy money.

Unfortunately the goofballs give everyone else a bad name.

That being said, it’s always been odd to me that the seller pays the full commission for both agents.

There aren’t many industries I can think of where someone is required to pay a party that is actively working against their best interests.

It is widely believed that this settlement will result in buyers having to pay their agents commission.

I’m not sure if that’s how things will shake out, but I suspect this is just the beginning of tremendous change in the industry.

For someone new to home buying or selling, I think an agent can provide quite a bit of value, although not necessarily for their knowledge or skill.

In the future I suspect agents will primarily be project managers. They will make sure the processes and steps towards bringing a transaction to the closing table all happen in a timely manner.

I imagine the days of a percentage based commission will come to a close and flat fee or menu based pricing will take over. Buyers and sellers will pay set fees for the services they want.

But I could be wrong. I often am.

I’ve had to limit my social media exposure the past couple days as the emotions have begun to reach a fever pitch.

Some agents are angry. Some are confused. Some are done. Some see opportunities.

Change is hard.

Change brings out the best in some people, and the worst in others.

Thanks to social media, we are seeing it played out before our eyes, and it’s hard to watch.

For my part, I decided before all this hoopla that I would leave the business in a few months.

It’s been 5 years and while I could blame Covid or the market or interest rates, the simple truth is that I suck at prospecting.

As an INFJ I possess the innate ability to connect with people, but I have not learned to harness it for sales. After 5 years of trying, I’m ready to move on.

The NAR settlement will undoubtedly drive many agents out of business, and that’s a very good thing.

Thin the herd! Cut some of the dead weight.

The strong will survive and thrive, and I suspect others will find ways to help buyers and sellers in ways we haven’t though of yet.

I’ve lived long enough to know that things are rarely ever as bad as they first seem (never, in fact).

The real estate business is ripe for change. “We’ve always done it this way” is a tired old phrase spewed by people who can’t let go of the past.

It will be exciting to see how things change, and hopefully how home buyers and sellers benefit as a result.

Rethink your mortgage
real estate

Rethinking High Interest Rates

Oct 31, 2022 #interest rates, #living, #money, #real estate, #refinance by Pete

This past week interest rates for a 30-year mortgage went above 7% for the first time in recent memory. That alone would be shocking, but it is even more shocking considering that less than a year ago it was possible to get a mortgage for around 3% interest.

When compared to the 3% interest rate of a year ago, a 7% interest rate will add hundred of dollars to your monthly mortgage payment.

Of course the media has jumped on the increase and shares with us stories of buyers who can no loner afford to buy a home because of the increased monthly payments, and sellers who are struggling to sell their home because there are fewer buyers out there.

There is certainly truth to these things. Higher monthly payments will certainly push buyers out of the market, at least until interest rates go back down. Some sellers will not get the ridiculous offers their neighbor’s have gotten in the past couple years as the buyer pool shrinks.

As a real estate agent and a notary signing agent (I see hundreds of mortgage transactions a year), I’ve been challenging people to rethink some things, primarily how much home do they need?

When buying a home, it’s very common for a mortgage banker to tell a buyer how much of a loan they qualify for, and for an agent to use that number as a basis for a home search.

When people qualify for a $300,000 mortgage, they tend to go looking for a $300,000 home.

But I encourage people to consider if they really NEED a $300,000 home!

Just because the bank says they will give you $300,000 for a home doesn’t mean you have to take it.

Getting caught up in the hype and the emotion of buying a home is easy and it’s fair to say that many $300,000 homes are nicer than many $200,000 homes (although not always).

But what if you detach yourself from the emotion (and your mortgage broker’s constant phone calls)?

How much house do you really need? Do you want to pour every last dollar into your home leaving you with no headroom at all (financially).

More to the point, if the 7% interest rate makes a $300,000 home unaffordable, why not consider buying a $250,000 home, or even a $200,000 home?

Again, just because the bank will give you $300,000 doesn’t mean you have to take it!

Of course there are many variables to consider, but in many cases most people could find a lesser-priced home with which they would be perfectly happy.

The companies who lend us money love to push us right to the top. If you go to buy a car, the salesperson will take you right to the car at the very top of that range. Do you need a brand new car, or would a two-year-old car, with a much smaller price tag be sufficient? You can guess the salesperson’s answer to that question.

Your mortgage broker and your agent will tell you to look at those $300,000 homes. Why shouldn’t they? They all benefit from you buying a $300,00 home more than a $200,000 home.

While 7% interest rates will certainly price some people out of the market, I offer the opinion that many more people are pricing themselves out of the market because they want to spend every single dollar the bank will lend to them.

If you really want a home and interest rates are too high, find a less expensive home!

And let’s not forget, interest rates will come back down again. No one has a crystal ball to predict such things, but some very smart people, who make a living watching such things predict that interest rates will fall in 2023 (which is only a couple of months away).

It hurts that interest rates are more than double what they were a year ago and that is going to cause some people to put their home search on hold.

But for many, it’s also an opportunity to evaluate what they really need and how much they want to spend to get it.

real estate

Buyer Be Prepared

Oct 29, 2022 #home advice, #home buyer, #home buying by Pete

5 Tips For Making a Winning Offer on a Home

If you are trying to buy a house right now, you’ve realized that it’s a jungle out there! Low inventory, high demand, high interest rates, and skyrocketing prices have all converged to form a perfect storm of misery for buyer’s.

There is very much a sense of despair amongst buyer’s right now, and rightly so. Many have given up. Other’s drag themselves to showings while muttering under their breath about wasting their time.

But all is not lost! despite the odds, there are several things buyers can do to help tip the tables in their favor.

  • Get preapproved for a mortgage. This goes without saying right now. Almost every seller requires a preapproval letter because they can. Requiring a preapproval letter helps weed out the tire kickers and saves everyone time. If possible, use a reputable local lender for your mortgage. They can be easier to work with, especially where communication is concerned.
  • Know your budget. Knowing your budget before your start looking at houses will help keep you grounded. House hunting can become an emotional process, and it’s easy to get swept up in the emotions of finding a house you really love, despite the price. Part of your budget must include the numbers for your mortgage payment (principal and interest), taxes, insurance, utilities, and maintenance. Too many people overlook things like taxes and insurance. Both can add considerably to your monthly payment thus making an otherwise affordable looking home unaffordable.
  • Decide on must haves vs nice to haves. Write these down! What must your house have? Consider the basics like number of bedrooms and bathrooms and square footage, but don’t forget about things like central air, a deck, or a garage. Also write down things you would like, but aren’t necessarily deal breakers. Having a solid list will make your house hunting much more focused and maximize your time.
  • Decide where you can be flexible. Is your desired closing date flexible? Do you want and inspection (yes, you do) or can you live with an inspection for informational purposes only? Can you put more money down for the earnest money deposit? Do you want to offer to help pay the seller’s closing costs? Are you willing to rent the house back to the seller for a period of time?
  • Be prepared to move. Not move as in moving your furniture, move as in making a decisive decision to buy. If you’ve done your homework and you are as specific as possible you will be prepared to make a decisive move and make the best possible offer for the house you want. Things go quickly in this market, and being prepared can make the difference between getting a house you want and losing out.

Here’s a bonus sixth tip: Have thick skin! You will probably hear the word “NO” numerous times. You may be subjected to seemingly unfair competition or unreasonable demands from sellers. You may have a house all locked up only to have someone swoop in with a cash offer that supplants yours.

It’s tough out there. It’s frustrating, maddening, and mystifying. The worst thing you can do is to let it get to you. Learn to take a deep breath. Learn to let things go. Remember that this is not the end of the world. The house of your dreams is out there, but you will never find it if you let things get you down until you eventually give up.

business, real estate

My Sad Daily Ritual

Mar 13, 2022 by Pete

Among other things, I’m a real estate agent and as such, I check the MLS (multiple listing service) every morning so that I can keep track of what’s going on in the market.

When I first got my license three years ago, hopping in to the MLS every morning was something I really looked forward to. It was fun to see the new homes popping up, and even more fun to find something that my buyers might like.

But that fun is long gone.

It’s no secret that there is a very low inventory of homes for sale throughout the country, and especially here in Rochester. It’s shocking to look at the MLS and to see so few homes dotting the map.

Of course there are people putting a positive spin on it, especially those involved in the selling side of things, but for most, the reality of the housing market is sad, frustrating, maddening, and possibly even depressing.

For many folks, the housing market is just something to read about on the news, or something to speculate about when gathered with friends.

But for other’s it’s far more taxing.

We’ve been told that the American dream is to go to school, get a job, buy a house, raise a family, and live happily ever after.

Debating the reality (or sanity) of that dream is beyond the scope of this post, but for many people. buying their first house is a big deal.

At the moment, the path to buying any house, let alone your first house, is very difficult (although not impossible).

I clearly remember getting married and scraping together enough to buy our “starter” house. It was as struggle, but the day we were handed the keys was simply amazing!

In today’s market, I don’t know how we would have done that, at least not without several more years of saving money and waiting around.

Not too long ago, one selling point for businesses trying to attract talent was housing costs. While some area’s of the country have outrageous housing prices, Rochester was always known for reasonable prices, getting a decent house at a fair price was fairly common.

At the moment, those days are gone. Prices are crazy to say the least. One has to wonder if that will make it more difficult to attract workers to the area.

Of course there are lots or other situations and stories and all that, again far too many for the scope of this post.

Whereas I used to look forward to my morning trip through the MLS, I find myself having to force myself to log in every morning. I know what’s waiting for me on the other side of that login screen, and many mornings I don’t really want to see it.

But I do log in. I do continue to send homes to my buyer’s while encouraging them to keep looking.

I continue to prepare my buyers so that they are well positioned to make an offer when they do find something they like.

Most importantly, I encourage everyone to focus on what they can control, and to let the rest go.

It’s easy to bitch and complain. It’s easy to give up. It’s easy to become negative and bitter.

I remind myself of that every morning! I have a choice!

I don’t know if the market will turn around. I have no clue what interest rates will do. I don’t know if we are in a bubble.

I don’t really care. I can’t control those things.

Instead I focus on checking the MLS every morning, helping my folks prepare to make the best offers possible, and to keep spreading a positive message.

Just because something is hard or takes time doesn’t mean it’s not worth doing.