Real Estate Blog

It's been another fast-paced week in the market, so if you're a buyer expecting things to slow down so you can catch your breath, maybe soon, but not yet!  Here's what's happening in the market that you should know about this week:

Interest Rates
Rates are sliding just slightly higher as the battle between what the Federal Reserve thinks and what the housing and financial markets believe still isn't lining up perfectly.  The Fed talk is dovish, meaning rate cuts might still be a possibility, but the financial markets see Federal debt increasing by $1 trillion every 4 months, meaning there will be lots of new bills and bonds coming to market, increasing supply and thereby increasing the expectation for higher rates.  If you're a buyer and you're still searching for that next home, talk to your lender to get their input on where mortgage rates are and their opinion of where rates are going.  Need a good lender?  Just let me know and I'll send you a couple of great contacts (no referral fee to me, just good service for you).

The Lawsuit
Who hasn't seen the news about real estate brokers and the National Association of Realtors all paying settlements as a result of the Burnett lawsuit.  Along with those settlements, two key rule changes are coming that will affect real estate agents and home buyers/sellers alike:

• Buyers agents must have a contract in place with home buyers before "working with" a buyer or "touring a home" (see point 52 in this FAQ from National Association of Realtors https://www.nar.realtor/the-facts/nar-settlement-faqs?narmail=CEOMessage&date=04-29-2024&user=6853012&itid=9710534).  In Minnesota and Wisconsin, it's already standard practice to have a buyer's agreement in place with a buyer(s), before showing homes, so don't expect much change here.
• Buyer agent compensation will no longer be published on MLS.  This is a huge change and, in my opinion, creates challenges for both agents and buyers once buyer agent compensation is no longer stated publicly:
  • Who pays the buyer's agent - This was clear before.  I knew exactly what each seller was offering for payment, so I could tell you, my buyer client, whether you would need to plan on paying all or part of the commission we agreed to in OUR contract.  When this information is no longer available on MLS, here are some options that buyers and agents may face as offers are made:
    • Simple - expect your buyer agent to call the listing agent every time you set up a showing.  The buyer agent will want to know if the seller is contributing to buyer agent commission and, if so, to what degree.
    • More complicated - if the listing agent says that the seller is open to compensation, but that compensation doesn't cover what the buyer and their agent agreed to in THEIR contract, who's going to make up the difference?  Either...
      • The buyer covers the gap between seller contribution and the commission agreed to in your buyer's agent contract, or
      • The buyer instructs THEIR agent to include the buyer commission in the purchase offer as one of the costs covered by the seller.  In other words, the purchase offer now has a new term for the seller to consider - that of whether to lower their net sale price by covering some portion of the buyer agent costs that the seller wasn't intending to cover.  This inserts the agent as one of the variables in your offer, which is just an awful outcome for buyer, seller and agent.
      • The buyer can instruct their agent to avoid showing them homes when the seller isn't covering buyer agent commissions fully or sufficiently.
  • Bottom Line - Buyer agents and their clients will need to have more difficult conversations about agent compensation early in the relationship.  It was much easier for me to say to you, "...and 99% of the time the seller will cover your buyer's commission in full..." or something along those lines.  Now, we'll need to talk about the very real possibility of buyers paying some or all of their agent's commission directly or developing a strategy by which you select homes to see based on seller willingness to compensate buyer agents as before.

Disclaimer:  I'm a real estate agent, not an attorney.  What I've provided above are my opinions on the outcome of the NAR lawsuit.  If you need legal advice, contact a real estate attorney.

The Market
I mentioned in last week's blog that I see buyer fatigue working its way into the market.  That's happening because it's still a strong seller's market, the super nice "wow" homes that everyone likes are still flying off the market in multiple offers - sometimes before even hitting the market, and buyers who are competing in the market are losing out in multiples and sometimes more than once.  That's still a thing right now, especially if you're in the market for that "wow house".

However, if you're willing to be a patient buyer, you might consider taking a look at homes that are still on the market clocking every higher DOM's.  Does the home need some work?  Is it just priced too high for what it is?  Not in the "right neighborhood"?  Not only are these homes great price opportunities for YOU to take advantage of, they're also likely to see price reduction from the seller at some point.

Consider:

• Offering at a lower price.  Do you know how many times I've heard buyers say, "We don't want to offend the seller"?  All.  The.  Time.  Y'all need to get over that emotion if you're considering a home that's been on the market for a few weeks.  Take your shot!  If you do make an offer on a home that's over-priced (that's the ONLY reason why homes are on the market for any amount of time right now), you'll be the only buyer in the game.  Limited to no competition!  So, if you see a home you like and it's been on the market for a bit, make a lower than list price offer and see what happens.  Because...
• Wait til the seller reduces price.  While this is your other option, here's what happens when the seller reduces price:  it's public knowledge!  Now, everyone with a passing interest in that home has now put it front and center again and you risk competing with others at that lower price.  Which does what???  Generally results in a price that's higher than the new mark down price.

Whew.  That's a lot to think about.  If you have questions or want to work with someone skilled in the craft of negotiating hard for buyers and sellers, call me!  I'm here to help.

Open House Schedule
Here are the open houses I'll be hosting this weekend.  You want selection?  Here you go...

Saturday, May 4, 12 Noon - 2 pm
5 Dorset Road, Mendota Heights, MN
$640,000   3 bedrooms, 3 bathrooms, 2 car attached garage,  2596 square feet
Link to home here:  https://bit.ly/3JJogTc

This stunning mid-century brick rambler is a must see.  Completely remodeled from the studs in.  The main floor features an open plan with an exquisite kitchen, walk-in pantry, main floor laundry/travertine mudroom, brilliant solid hardwood floors, palatial shared bath, owner’s suite with a walk-in closet & steam shower.  Just hop in the car and come take a look!

Saturday, May 4, 3pm - 5pm
6628 Londonderry Drive, Edina, MN (recent price reduction!)
$769,900   3 bedrooms, 3 bathrooms, 3 car attached garage, 3118 square feet
Link to home here:  https://bit.ly/3Ujc8x6

I held an open at this home a couple of weeks ago and I'll just tell you from personal experience that the location is incredible.  The home is directly across from Nine Mile Creek Regional Trail and Walnut Ridge Park.  On a cul-de-sac.  You could be happy just sitting on your front porch and enjoying the view - if you weren't out for a walk in it!  Very nice home with an open floor plan on the main level.  Come take a look and take advantage of the price reduction while you still can!

Sunday, May 5, 10am - 12 Noon
9388 Shetland Road, Eden Prairie, MN
$850,000   5 bedrooms, 4 bathrooms, 3 car attached garage, 4164 square feet
Link to home here:  https://bit.ly/3WojUsb

If you missed my open house just down the street from here a few weeks ago, then here's your shot at redemption!
Tastefully crafted by respected custom-builder Lecy, this well-maintained home features an open-concept design that flows seamlessly.  The chef's kitchen is a dream, boasting a center island, granite countertops, generous pantry, and high-end appliances, including a Wolf cooktop.  I could go on, but just come by and take a look for yourselves!

Sunday, May 5, 1pm - 3pm
17618 51st St NE, Otsego, MN
$549,900   4 bedrooms, 3 bathrooms, 3 car attached garage, 3242 square feet
Link to home here: https://bit.ly/3Qxw7ay

Gorgeous newer 4 bedroom walk-out rambler in desirable Highland of River Pointe neighborhood! Open floor plan with natural light and huge kitchen center island. Gas stone fireplace in family room, box vault in primary bedroom and huge walk-in tile shower with rain head. Recently finished walkout lower level that includes all the upgrades!  If you're looking to buy in the Rogers/Otsego area, run don't walk to take a look at this one!

That's what I have for this week.  Yes, I'm a realtor, so if you have questions about the market, want to know what your home is worth, need help buying or selling, I'm here for you.  Just give me a call or send me a message.

Have a great weekend!

Mitch