This past year brought significant change to the real estate industry, along with continued high interest rates, and nervous lenders. There were many challenges to be sure in 2024. But still, life and real estate marches on. Those who need to sell are selling and those who need to buy will buy, with their eye on the first opportunity to refinance.
In August, agents had to adjust to a new way of doing business as a result of the class action lawsuit and subsequent settlement with the National Association of Realtors (NAR). Buyer’s agents are no longer guaranteed compensation by the Seller of a property. In fact, no mention of Buyer’s agent compensation is allowed in the MLS any longer. So now when you’re looking for a home and working with an agent, you will be required to sign a Buyer’s Representation Contract. In addition, the purchase contract has been amended to allow negotiation of said compensation with the offer. But despite all of these changes, Sellers are still offering compensation to the Buyer’s agent as an incentive to bring qualified Buyers to their listing, and in reality, not a lot has changed, except more paperwork.
As we all know, interest rates have remained stubbornly high, despite the adjustments at the federal level. As one lender recently explained to me, “mortgage rates don’t necessarily react to federal rate cuts, but rather to treasury yields, which adjust based on long term debt, inflationary pressure and investor sentiment. When treasury yields rise, it generally pushes other interest rates higher as well, as investors demand a higher return to compensate for the increased risk in lending".
The last sentence above is in direct relation to the comment I made above about nervous lenders. Over the past 18 months or so, I’ve seen a whole new level of scrutiny on the part of lenders. Even high-net worth Buyers are being forced to provide more and more proof of their credit worthiness in order to qualify for a jumbo loan. With the possibility of renewed inflationary pressure on the horizon, it now seems unlikely we will see a significant adjustment in mortgage rates any time soon.
The affect we’re seeing in the real estate market is more hesitancy, both on the part of Buyers and Sellers. Buyers are still reluctant to get into the market. But if they’ve been looking for a while and a life event forces a move they will buy, with the intention of refinancing down the line. With much less competition from other Buyers than in previous years, Buyers are finding that Sellers are more willing to negotiate off their list price. And even though the initial cost to purchase is higher, the ability to buy without being forced to waive inspections and appraisals is a welcome change.
Sellers who are ready to sell are more willing to prepare their properties prior to listing, as a means to achieve the price they need to justify the move. Sellers are also more willing to negotiate once they have a solid offer in front of them from a qualified Buyer. As a listing agent, the job at hand is to prepare the home, market the property through every possible channel, and go further to verify the qualifications of the Buyer. After all, no Seller wants to open escrow only to have the Buyer fail to perform.
What I’ve learned after 15 years in the business, is to be flexible. After all, this is people business. Assisting clients through the happiest and sometimes, the hardest times in their lives is part of the job. Change is constant and as agents our job is to adapt and serve.
