Stocks are higher and Mortgage Bonds are slightly lower to start the week.
NAR Settlement
Last week the NAR announced a settlement that includes a $418 million payment for damages and a ban on any rules allowing a seller’s agent to set compensation for a buyer’s agent – Changing the cooperative compensation agreement. Previously, when a home was sold with a 6% commission it would be predetermined and split between the seller’s agent and buyer’s agent. Also, fields displaying broker compensation on the MLS must be eliminated. Buyers’ agent compensations will still be allowed and can be negotiated, but they cannot be predetermined. These changes will likely go into effect mid-July 2024.
The Buyers’ agent compensation can still be paid by the buyer, but how? It can be paid by the buyer or negotiated into the offer like a seller concession. This is something that could raise costs for the buyer if it’s not built into the deal. It’s also unclear how this will impact home prices, as sellers could be more flexible since there is less commission paid to sell their home.
These changes will likely put a much bigger focus on how much a buyer is paying a real estate agent. Before when the seller was paying it, it was not a concern. The media has a lack of understanding of what the buyers’ agent does – They do help you find a home, and some of that has been reduced due to online shopping. But they do so much more and if buyers no longer user a buyers’ agent, they may not have help with things like coordination to see the property, access to see it, negation of price, inspection, appraisal access, education and guidance, utilities and insurance setup, and having someone quarterback the transaction with the mortgage pro and closing. These duties are important, but will a buyer be willing to pay $30k on a $1M sale? In either case, these things will now come under a microscope.
What can you do now? Be prepared to have to handle some of the services a buyers’ agent would normally perform – do you have staffing for that if possible? Listing Agents will be even more important - You can utilize List Reports to connect with them and show the value you can add on their listings with both List Reports and MBS Highway. You can use the tools to assist buyers’ agents so they can provide more value and justify why they should be used. It will also be important to educate them on how seller concessions can be used to cover their cost.
We also believe doing buyer seminars will be important to get in front of the buyer. In scenarios where the buyers’ agent is cut out, you can get referrals from the real estate attorneys or title agents as they may be the only ones representing them in the transaction. Make sure you are planning ahead and creating relationships with these individuals.
What is Highway doing? We are going to keep you in the know as things develop and adjust and create new tools to help you to assist buyers’ agents in providing more value, gain more listing agents, provide value for attorney contacts, and create buyer presentations.
NAHB Housing Market Index
The February NAHB Housing Market Index, which measures builder confidence, rose 3 points to 51, the highest level in 8 months and back in expansion territory.
All of the internals rose, with the future outlook looking bright –
Current Sales: rose 4 points to 56 (expansion)
Future Expectations: rose 2 points to 62 (expansion)
Buyer Traffic: rose 2 points to 34 (highest level since Aug)
According to the NAHB 24% of builders the percent of builders cut home prices, down from 36% in December.
Week Ahead
Tuesday: Housing Starts, 20-year Bond Auction
Wednesday: Mortgage Apps, Fed Statement and Press Conference
Thursday: Initial Jobless Claims, Existing Home Sales
Technical Analysis
Mortgage Bonds are starting to break beneath important support at the 100-day Moving Average. This is a level we have not been beneath since November and one that held back on February 22 and on Friday. With Bonds breaking under this level, the next stop is the 200-day Moving Average. The 10-year has been moving higher and is now in a wide range between support at the 100-day Moving Average and overhead resistance at 4.35%, which is the high for the year. It will be important to remain beneath this ceiling, but it does appear it wants to test this level. Begin the week with a Locking Bias.
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