Peter Fountain

Tag: 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.