Welcome to the current issue of the Garrett County Gazette. I’m Chris Nichols, your guide to helping you find out what’s going on, what’s coming up and interesting tidbits from the area. Let’s jump right in! Are changes coming to how you buy or sell real estate? I usually have a local interest story as the headline and keep the real estate stuff at the end of the newsletter, but there have been some interesting developments in the industry overall that I thought warranted a deeper dive. You’ve likely heard about the recent Burnett v. National Association of Realtors (NAR) lawsuit. On Oct 31st, the jury found the NAR and other corporate defendants had violated antitrust laws by conspiring to fix real estate commission rates and awarded the plaintiffs $1.78 billion in damages. The crux of issue is the practice that the seller of real estate ends up paying the commissions of both the agency that represents them AND the agency that represents the buyer of that property. The plaintiffs argued, and the jury agreed, that the NAR has set up the system so that these commissions are baked into every listing price and buyers especially are paying unnecessary fees with little ability or knowledge to negotiate them. The graphic below shows the flow of commission fees in most residential real estate transactions.  In a typical transaction, the Buyer pays the sale price of the property to the Seller. The Seller then pays a commission – let’s just say 6% for this case – to their agent’s brokerage. Then the Seller’s agent’s brokerage pays the Buyer’s agent brokerage typically half of the commission it received. The actual agents – both for the Buyer and Seller – receive some portion of the commission that their brokerage received. In this case, we’re just saying it’s half again or 1.5% of what their brokerage got, although that varies depending on the agent and brokerage. Although it may take some time, this model may change significantly due to the ruling. Buyer’s agents could end up negotiating their compensation directly with their client. One advantage of this approach is that Buyer’s agents could offer a “menu” of service levels. Some buyers may know exactly what property they want, and their agent’s duties would be limited to preparing the offer documents and negotiate the sale. Other buyers may want to add additional services of property showings and market consultations. There is a lot more to the this story, so if you have questions, feel free to reach out. But to wrap up this post, some things to remember and take away from this court case and ruling: For sellers: the commission rate is always negotiable. Make your agent tell you how they will earn that rate. I think the current rate is fair for the value that a hard-working agent will provide you, but don’t be afraid to ask some questions For buyers: real estate agents will likely now be asking you to sign a Buyer Agency Agreement before they will show you a property. These protect both the client and agent, making it clear that the agent should be representing the interests of the buyer (not the seller) and confirming the level of compensation that the buyer’s agent will receive for their services. Keep the Cheer Here! Saturday, November 25, 2023 is officially Small Business Saturday in the United States. The money you spend at local businesses has a BIG impact. Everyone benefits—from your neighbors who own and operate local businesses to the municipalities who maintain your roads and fund the school system. When you shop local you help create a healthier economy and a happier community. The Garret County Chamber of Commerce has organized “Keep the Cheer Here” for Small Business Saturday and lists local businesses offering some sort of special promotion. Over 30 local businesses are participating! Check out the list here and shop local! My mapping business will be participating, too! On Small Business Saturday, everything ordered on my website will be 10% off! My maps are great gifts (they are super easy to wrap!) and perfect stocking stuffers! And, of course, it doesn’t get more local than maps of your area. MD DNR Outdoor Rec Survey Calling all hunters, anglers, and outdoor enthusiasts! The MD Department of Natural Resources is conducting a survey to help shape the the future of outdoor recreation in Maryland! Be sure to take the survey and make your voice heard! https://ow.ly/Oqng50Q7opN  Local events Nov 24-25 —Festival of Trees, Garrett County@ Fairgrounds: Garrett County’s holiday kick-off event with food, crafts, activities and of course – the TREES!  Nov 24- Jan 1 —Joy of Christmas music and light show @ Oakland Community Center. Over 38,000 lights dance to music. Listen outdoors or with your vehicle’s radio. Show starts at the top of each hour. This year’s show features an interactive outdoor dance floor!  Nov 24 to TBD —JTF Ice Rink @ Grantsville. Ice skating at the Grantsville park – with a bigger rink.  Dec 2&3 — Christmas in the Village @ Spruce Forest Artisan Village. A magical, candlelit holiday event with art, music, and activities for the whole family.  Dec 3 6pm – Lions Light up the Kitzmiller Botanical Garden @ Kitzmiller. The Kitzmiller Lions Club will be putting up trees for the public to decorate throughout the Botanical Garden from Nov 22-Dec 2nd, with a tree lighting on Dec 3rd.  Dec 6 5:30 pm – Town of Oakland Christmas Tree Lighting and Parade @ Oakland town parking lot. Parade, Santa Paws, free gifts cookies and cocoa!  Real Estate Corner So, how did we get to the rather counterintuitive system of the Seller paying for the Buyer’s agent commission? It’s a but complicated but it is primarily driven by the NAR’s Cooperation Policy for the Multiple Listing Services (MLSs). The MLSs are regional databases that real estate agents use to help their clients buy and sell property. These are the databases that feed out-facing platforms like Zillow, while real estate agents have access to more data and more powerful search tools as paid subscribers to their particular MLS Before computerization, real estate agents would gather at offices and share what properties they had available for sale to other agents beginning the fundamental principle of: “Help me sell my inventory and I’ll help you sell yours.” Based on that principle, someone trying to sell property will offer some form of compensation to agents who bring them buyers and the process of splitting the sales commission between the Buyer’s and Seller’s agents has developed. From the NAR’s perspective, it is important for both the Buyer and the Buyer’s agent to understand what this compensation will be, so the Cooperation Policy it has established for the operation of MLSs around the country requires the listing agents “specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.” I’ll leave the legal issues for the courts to sort out, but it’s important to understand how and why the system has developed to where it is today. Check out my real estate website as well for more information on what’s out there, or call or email me anytime to chat about what’s going on in the market and how to build a strategy to meet your real estate goals! Mobile: 301 616-7881 Office: 301 387-4700 Email: chrisn@deepcreeksales.com  |
Garrett County Gazette, November 2023
