Posts Categorized: Executive Insights

Pending home sales tank in July, but the slump is likely short lived

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Mortgage rates are finally dropping, but pending home sales fell even further into the toilet in July.

That’s according to the July pending home sales index from the National Association of Realtors. On an annual basis, the index fell by 8.5% to the second lowest seasonally adjusted rate in the data’s history, topping only April of 2020 when the market was frozen by the pandemic.

The index fell by 5.5% month over month to 70.2. Anything above 100 is considered to have a higher level of activity relative to 2001.

“A sales recovery did not occur in midsummer,” said NAR Chief Economist Lawrence Yun in a statement. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election.”

In addition to the election, there are a number of reasons why buyers might be hesitant to jump back into the market. While rates are falling, they’re still high relative to recent history. With the Federal Reserve almost certain to cut rates in September, buyers might do well to wait a couple months.

Some buyers also are considering the recent rule changes related to the $418 million settlement of antitrust lawsuits signed by NAR. Buyers are accustomed to sellers paying for their agents, so shoppers who’ve bought a home before feel uncertain about how to navigate the new landscape.

Then there’s the obvious — affordability remains incredibly strained, with home prices at or near all-time highs in most markets.

Despite the disappointing numbers for July, economists expect the slump to be short lived as rates drop further, the election passes and shoppers get more accustomed to the new rules.

“With rates set to drop beginning next month and expected to continue declining through the remainder of the year, we expect America to be on the move again soon,” said Move Concierge CEO Gabe Abshire in a statement. “It will take a month or two longer, however, until we see home sales beginning to trend back upward. But we believe the market will turn.”

On a month over month basis, the index fell in all four regions of the country with the midwest (7.8%) and the south (6.5%) falling the most. The west fell by 3.8%, while the northeast dropped by a more modest 1.4%. The south posted the highest index number at 83.5, and the west posted the lowest at 56.2.

However, the numbers are more mixed on a year over year basis, with pending home sales rising in the northeast but falling in the midwest, south and west.

Fine Times: MLS Execs Ponder Penalties for Compliance Culprits

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No-nonsense approach taken to ensure no nonsense is attempted by agents considering shortcuts and/or commission no-nos.

Now that the now-famous date of Aug. 17, when complying with the National Association of REALTORS®’ (NAR) settlement became mandatory, has come and gone, the newest question is what happens if and when real estate renegades operate outside the box? What penalties might there be for those who ignore, bend or outright flout the rules, putting themselves and potentially their brokerages at risk?

Michael Ketchmark, the lead attorney for the Burnett plaintiffs, has vowed that there will be eyes everywhere, and any funny business will be met with new, stone-cold serious litigation.

It’s shaping up to potentially be a fine mess, literally.

Sajag Patel is a real estate industry analyst and chief revenue officer of Move Concierge and the former COO of Keller Williams. His advice pre-Burnett differs from post-Burnett, making sure real estate professionals understand what has happened and how things have changed, with much closer scrutiny on buyer agents especially.

“The new rules are intended to create transparency for both homebuyers and homesellers so that it’s clear how much compensation is being provided to each respective agent,” he says. “They reaffirm that all agents are allowing the seller to determine how much compensation, if any, they are willing to pay the buyer’s agent. It also reasserts that buyers’ agents are not telling their buyers that their services are free, but that their services are for a cost, and now that cost must be communicated. 

“This means that agents today must now look for ways to add value to the transaction in order to justify the fee for their expert services, and those who succeed will be the ones who get creative about how they do this. There is some speculation that this ruling may spur some agents to leave the industry, but the past has shown that real estate agents are surprisingly adaptable and often embrace change, and I think this time things will be no different.” 

For those who decide to try and outsmart the system, there will be penalties if caught. RISMedia spoke with major MLSs about plans they have for offenders, finding that fines are the common punishment.

“We are readying fines, but taking a much more benevolent approach with our members,” says Anne Marie DeCatsye, CEO of Canopy REALTOR® Association/Canopy MLS, which encompasses North and South Carolina. “I have said this when I speak, that ‘We’re in this with you.’ We didn’t ask for this any more than they did, but it’s on us to enforce now. We may have already started violation notices, to let our members know that ‘Hey, this is a violation. You need to change it, fix it.’ We’re not going to fine, though, until after the first of the year. 

“We’re hoping that we can really use from now until the end of the year as an education opportunity. I believe the only thing we’re forcing immediately is if we discover that data from the MLS is in any way used to set up a platform for sharing compensation. And if that’s the case, we’ll shut you down immediately until that issue is resolved. Otherwise we’re trying to all learn it at the same time.”

Richard Haggerty is CEO of OneKey® MLS, New York’s largest such organization. He doubles down on those trying for an unfair advantage.

“The enforcement of the new rule prohibiting any mention of compensation in the MLS is structured around two key components,” he says. “First, we are heavily investing in the education of OneKey® MLS participants and subscribers, ensuring they are fully informed of the new rules and requirements, including the mandate for written buyer agreements. Second, enforcement through fines will be implemented when necessary to address willful non-compliance.

“As a REALTOR® association-owned MLS, we are obligated by the terms of the settlement agreement to enforce these rules, and we are committed to doing so with the utmost fairness and transparency. Brokers who seek to circumvent these rules not only put themselves at risk but also endanger the interests of their peers. Therefore, ongoing education, coupled with rigorous enforcement, remains essential.”

The same “get educated and follow the rules” mindset is stressed by Bright MLS EVP of Customer Advocacy Rene Galicia. His is the second-largest MLS in the country, representing mid-Atlantic states.

“Bright, like other MLSs, is tasked with enforcing the terms of the NAR settlement, which prohibits any mention of compensation in the MLS,” he says. “Bright has worked since the settlement all summer to educate our thousands of subscribers and meet them where they are with both virtual and in-person training, live and recorded webinars, weekly communications and a thorough library of information on our website. 

“We have a new tool in our system to help flag any words that would be considered an attempt to convey compensation, giving the subscriber a chance to fix the issue before the listing is completed. If a listing is found to have compensation information included, either directly or by an attempt at a work-around, the information will be pulled, and the subscriber will be issued a fine.”

On the Stellar MLS website, CEO Merri Jo Cowen speaks on several topics via video, including compliance. Stellar is owned by 19 REALTOR® associations and boards representing over 80,000 real estate professionals in Florida and Puerto Rico, and is the third-largest MLS in the U.S. and the largest in Florida.

“The big question is who’s going to enforce this?” she says in the video. “Well, unfortunately, or either way, however you look at it, it is Stellar. We will be enforcing as it relates to the MLS rules and regulations that the buyer broker agreement (BBA) was executed before touring or showing a property. And then we also must enforce that all of those required components are included in the document. 

“So how are we going to enforce this? That’s the biggest question we’re getting. If we receive a notification of a possible non-compliance or violation through one of our reporting systems through metrics or through an email, our compliance team will follow up, contact the showing agent, request a copy of the BBA, and that needs to be submitted into Stellar within one business day. When we get that copy we’ll look at it and make sure it’s compliant.

“Not only must it be complete and meet the requirements of the not open-ended compensation and all of those pieces, but we’ll also be reviewing the form itself. And along those lines we’ll want to be sure that the brokers are being diligent about making sure the form itself is compliant, and that’s how you’ll avoid any penalties.”

Cowen went on to say that Stellar was enforcing the new rule for BBA before showings starting Aug. 6. “We will have a 60-day grace period to give you a chance to get used to it,” she concluded. “We’ll be sending corrections or notices, but there will be no penalties assessed.”

CRMLS is the nation’s largest subscriber-based multiple listing service. It serves more than 110,000 real estate professionals from 41 associations, boards and MLS organizations. On Aug. 13, CRMLS enacted new rules and policies to remain compliant with the regulations set by the commission lawsuit settlement. Most notable of these changes is the removal of Buyer’s Agency Compensation fields. Along with their removal, it is now against CRMLS rules to note offers of compensation in the MLS and doing so will result in a $2,500 fine.

“CRMLS has taken substantive measures to educate our users on the new rules and associated fines,” says CEO Art Carter. “The goal is to ensure compliance and help reduce potential broker liability.

“The CRMLS executive team has attended numerous in-person brokerage and AOR meetings to present the changes that have resulted from the NAR settlement. The Marketing & Communications department also created a robust communication plan consisting of frequent emails, REcenterhub dashboard articles, MLS system pop-ups and social media to help prepare users prior to the changes’ enactment.

Additionally, while in the listing input process, warning messages in bold, red text appear on Private Remarks, Public Remarks and Showing Instructions text fields. Private Remarks may also display a pop-up message titled ‘Private Remark Warnings and Errors,’ which indicates that a prohibited word was entered and the listing may result in a violation. CRMLS has also partnered with ShowingTime to provide prominent alerts to explain that buyer representation agreements are required before showing or touring a home.”

Unlocking Opportunities: Key Moving Trends Mortgage Professionals Should Understand

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By Gabe Abshire

More and more Americans are considering moving to a smaller town or county because they want a simpler life or to be closer to their loved ones. This accelerating trend, seen across the country, did not start during the pandemic either; it was merely exaggerated by the ability to work remotely. 

People have adapted to the new reality of remote work, which allows them to make lifestyle changes — including where they live. They now have more freedom to find a place or location that will make them more productive, such as a quiet town with fewer distractions. It’s also more economical  — these homeowners can now have a place in a suburb with much lower living expenses without worrying about the long commute. There’s also more chance for work-life balance, allowing them to spend more quality time with family and pets.

Mortgage professionals — whether you are a mortgage broker, lender, or loan officer — can capitalize on these trends and support borrowers moving to various parts of the country or within their respective states. You could help them find houses, inform them of the nuances of each neighborhood, or help them settle in. There are so many ways to aid in making borrowers’ transition into a new community easier.

Remote Work is Nothing New

People moving because they can work from home is not just a reality in 2024. These reasons for making that big step, among other drivers, existed even before the pandemic. The significant increase in housing costs also causes migration between the different U.S. states.

Although the growth of remote work in the 2010s pushed people to move and choose different destinations for various reasons, its dramatic rise in 2020 has made it a crucial driver of domestic migration trends ever since, according to a piece by The Demographics Research Group at the University of Virginia.

A key data point is that a third of workdays were remote in 2023. Working from home has meant that people have more geographic options, increasing their willingness to move away from heavily populated hubs, given that their chosen location offers a better quality of life.

The research group cited the Census Bureau’s 2023 population estimates for each U.S. county. The most notable trend is people moving from large metro areas and counties to smaller metro areas and rural counties, which has continued throughout the U.S. 

In 2023, migration out of counties with over one million residents was nearly twice as high as before the pandemic. On top of these, migration into the U.S.’s smaller metro areas and rural counties rose further in 2023 from near-record levels in 2022. 

The data clearly show that the pandemic hastened migration trends that were already present during the 2010s in most of the country. Indeed, the growth between now and then has been astonishing. The research group said migration to smaller and more affordable metro areas, such as Knoxville, Tennessee, doubled in the first year of the pandemic. At the same time, migration out of the biggest metro areas also doubled in 2020.

The Census Bureau’s 2023 population estimates show that 2020’s moving patterns seem to have been a demographic turning point and a harbinger for most of the U.S. instead of a fluke.

However, other things caused the shift as well. Ordinary people started to find it less and less affordable to live in the country’s largest urban centers. In fact, the research group said that in the 2010s, population growth in most of the U.S.’s biggest cities started to stall because the cost of living rose. This economic setback pushed people to move to medium-sized and more affordable metro areas, including Charlotte, Jacksonville, and Nashville. 

Added to these factors is the rise of social media, which permits smaller cities to quickly copy and raise the quality of their cultural and culinary offerings and amenities to compete with the bigger hubs. And don’t forget the growth of e-commerce sites like Amazon, with its one-day shipping. Services like these are now more accessible to most people and are available nationwide in terms of convenience, so it does not matter where people live.

There are also different reasons for different folks. As the Federal Reserve Bank of Chicago has said, many older people are already moving to their retirement locales with the aging of the Baby Boomers. Some places were attractive for those searching for a warmer climate or wanting to be next to family. Other areas in the country also permitted Baby Boomers to gradually retire by having fewer work hours or working in a different industry. 

Role of the Mortgage Professional in the Relocation Process

Mortgage professionals like you must understand these geographic and demographic trends to determine what possible roles you could play in helping borrowers move into their ideal homes in new locales. Do you work as a broker in a mid-range metro area that could attract many families looking for more space? Or are you in a suburb where more and more new entrants are moving in?

You can help borrowers understand market differences across housing markets. Mortgage professionals with networks across the country or expertise in certain regions can advise borrowers on market trends, pricing variations, and property taxes that affect affordability in desired areas. You can connect your clients with reputable real estate agents specializing in the area they are moving to. Loan programs and down payment requirements also differ from state to state, and loan officers can help borrowers get familiar with all the financing options available in their chosen area. 

After borrowers zero in on a specific location, loan officers can work on getting the new residents pre-qualified for a mortgage before they even begin looking for property to buy. You can help borrowers understand the various mortgage alternatives open in that area. Closing a mortgage in a different state can involve the inevitable logistical difficulties, including finishing the required paperwork from a distance. As a mortgage professional, you can help borrowers meet deadlines for a seamless closing.

However, the support does not end after the move. Mortgage professionals can remain a valuable resource even after the borrower has settled into their brand-new abode. You can answer questions about refinancing alternatives and home equity loans, competently assisting your clients in making economically sensical future decisions regarding the home they just moved into.

Move Concierge is Here to Help

For those mortgage professionals trying to help their clients move to that perfect neighborhood or close to their family, or prices are climbing out of their reach, whatever their reason, take advantage of the chance to tap this growing market of people moving to different parts of the country.

Move Concierge can help mortgage professionals like you prioritize your clients by making moving much easier for them. Whether it’s a big cross-country move or just to the next county, we can help you assist customers of all ages in setting up their home services by telling us about the services on their moving wish lists. We offer various services, such as finding local movers for the best price, while we make this significant step seamless.

By expanding your services beyond just the execution of a mortgage loan, you are enhancing your connection with the client. And that means that they will remember you – when a friend moves, when they move again – and you will be the person they want by their side.

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