Asheville Market Insight, February 2024. Plus An NAR Update

February saw our market gearing up for spring with more new listings and more inventory on a year over year basis. Several stats were relatively flat but I'm guessing what's on many of your minds isn't the stat sheet but rather the NAR lawsuit settlement and what that means for the future of real estate. There are several answers to this. One answer is that it may be good for many parties to a real estate transaction. Another is that exactly how some of the specifics will play out are still unknown. However, an answer that I strongly object to is that it will be the end of real estate, the end of realtors and that home prices are going to plummet because of it. That's just not true. 

A few of the agreed upon changes the National Association of Realtors will implement will be to make having Buyer's Agency Agreements mandatory and in place before an agent shows any property. How agent commissions are paid and by whom will be made very conspicuous in the contract and any seller offered buyer's agent commissions will be removed from the MLS. I'll start by saying that we're in very good shape here in North Carolina because we've had Buyer Agency Agreements for years, we're comfortable with them and comfortable talking about their contents. How commissions are paid and by whom has been and will continue to be conspicuous within our contracts and we've had to have these in place in writing before we can submit an offer for any client. So on that front, not much of an adjustment for us here.

The purpose of removal of commissions from the MLS is largely to help discourage agents from steering clients towards homes that offer more money to buyer's agents. I have no knowledge of how often this may happen and I have never seen it or heard of it locally. I do believe that agents, like any population sample, are mostly good and well-intentioned. With a buyer's agreement in place it is actually our fiduciary duty to show any and every home a client would like to see and I'll go further by saying that our moral compass at Engel & Völkers is strong and we don't keep company with those who ignore its direction. In fact, our motto has always been white glove service at any price point, because our clients come first. 

Another item that is likely coming down the pipe which isn't a part of the NAR settlement is decoupling of commissions. Rather than a seller paying one fee to the listing firm and the listing firm divvying part of it to the buy side firm, the Department of Justice wants home sellers to be able to separately negotiate their fee with the listing firm and the fee to the buy side firm. These fees have always been and will continue to be negotiable but decoupling in this manner is a simpler, more sensible path, I believe.

So, how could these changes be good for real estate? More clarity and more understanding are always good. Competition is good, choice is good. It's actually good for agents and realtors who will stay in the industry because it will force them to improve, to be more educated, more efficient and to provide more value which in turn benefits their clients. Let's not overlook buyers, though. There is some worry about how this will affect buyers who can't afford the fees of an agent. If a home seller isn't offering a commission to the buyer's agent, will the buyer have to pursue a home unrepresented? Will they meet somewhere in the middle with an agent? Will lenders make adjustments to their laws and rules to more clearly help buyers in this regard?

We're entering a new era and change is here. I still believe in the value, guidance, local, national and global knowledge as well as fiduciary responsibilities we have as Engel & Völkers advisors. The laws, rules and customs in North Carolina are very unique and different from most other states and countries so to have someone on your side advocating for you is worth every penny. I'll leave you with one last example. I know an agent who recently moved here from Florida. He had been an agent for years in Florida, lots of experience, great negotiator and so forth. He decided to buy a home in Asheville without representation - without a buyer's agent on his side. When the process finished, he reflected back and said he wished he had a buyer's agent to help him through the process because of how different North Carolina is. To me, that speaks volumes.

Have a great weekend and Happy Easter.