Janie and John's August Real Estate Newsletter

Real Estate Insights

SPECIAL EDITION ~ August 2024
A deep 6 minute read

Major Changes are Upon Us

As of now, everything changes! While that may sound a little melodramatic, we are in the midst of the most significant change in real estate practice in the 25 years Janie and I have been in business. Let's dive in!

Historically, when a seller listed their home, the listing paperwork not only specified the commission paid to their agent, but also the commission paid to the buyer's agent when the house sells. Today, that is no longer the case. As a result of the settlement between the Department of Justice and the National Association of Realtors, buyers and sellers must now separately negotiate compensation with their respective agents. Read on to see some of the implications of this.

Sellers

The first change that sellers will see is that the listing agreement no longer contains any reference to a buyer-side commission. While the seller can still specify a buyer-side commission in a separate addendum, this information is prohibited from being referenced anywhere on the MLS (which feeds Redfin, Zillow, etc.) - and any buyer-side commission specified at listing time can be superseded by the terms in the purchase contract. About the only buyer-side commission information that can be given on the MLS is (this is the latest approved wording), "Seller willing to consider offering concessions as part of the purchase contract."

Buyers

Buyers will see even greater changes. For starters, before even showing a home (in person or virtually), buyers are required to sign a buyer representation agreement - a binding contract that specifies, among other things, the commission the buyer will pay to their agent upon completing a home purchase. Yes, you read that right, buyers must have a contract in place with an agent (that they are possibly meeting for the first time) before they can be shown properties. Even open house visitors will need to sign something, if only to clarify that the open house host is not their agent. If they refuse to sign anything, then the open house host is only allowed to parrot the information available on the flyer.

Buyers also have decisions to make when writing an offer. The new purchase contract includes the option of asking the seller to pay the buyer's agent commission and other concessions, which may be a necessity if the buyer is already stretching to purchase the property. There are possible property tax and offer competitiveness implications in doing so, of course. Finally, determining the party responsible for paying the buyer-side commission becomes yet another possible point of negotiation before successfully getting into contract. No matter what approach is taken, henceforth the seller will be looking at the net proceeds and not just the offer price.

Concluding Thoughts

To be sure, there are many more nuances and implications contained in the settlement, but hopefully the above provides a solid foundation for further discussion. And lest you think this is something that was cooked up locally, I saw a full-page ad in the Washington Post discussing this very topic as it relates to Maryland just a couple of days ago. This is a national headache, er, opportunity!

Local Market Trends

We have access to a tremendous amount of real estate data, most of which is way more current than you read in the press. If you want to take a deeper dive into the latest numbers, start here:

San Mateo County Real Estate Report
Santa Clara County Real Estate Report

Links not working? Email jbarman@compass.com and I will send you a PDF of the same info.

Want to see the data for a specific city? Let us know and we will gladly forward that along!

Featured Listings and Sales

Active ~ mesmerizing views in a serene setting

116 Foxwood Road, Portola Valley

3 beds, 2 baths plus office in 1,600 sq. ft.
$2,400,000

Sold Off market ~ Updated beauty

Los Trancos Woods, Portola Valley

3 beds, 2 baths, 1,620 sq. ft.
$2,500,000

leaseD ~ Beautifully updated ~ huge backyard

1437 Park Avenue, San Jose

3 beds, 2 baths
$5,000/month

Luxury Property Collection

Looking for a luxury property or even a brief escape from reality? Flip through our online magazine, Compass Luxury, for some of the most exclusive listings in the United States.

Please feel free to forward this newsletter to friends and family - and remember, we are never too busy for your referrals!

Janie and John Barman

DRE #01270223 & #01281597
Realtors®
M: 650.759.1182
jbarman@compass.com
JanieandJohn.co

Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.