In 2022, mortgage rates hit a 20-year high, a trend that has continued throughout 2023 and into 2024, with current rates hovering around 6.8% compared to about 3% in 2020.
Additionally, the National Association of Realtors (NAR) has proposed a $418 million settlement for a class action lawsuit brought by a group of home sellers in Missouri. The key takeaways of this settlement are:
- MLS listings will no longer be able to list a buyer’s commission that the seller would have previously paid
- A buyer will need to enter into a written contract with their buyer’s agent
Our concern is that the buyer may bring suit against the buyer’s broker for negligence, as they will now be responsible for paying the broker’s services. We are unsure how this will impact the real estate marketplace, as previously, most claims have been brought against the seller and the seller’s agent. This represents a shift in how future claims might be handled.
The NAR lawsuit adds complexity for home buyers, who may now need to come up with additional funds to pay their agent — funds that were previously covered by the total sale of the house. This financial burden is likely to lead more individuals to continue renting rather than pursuing homeownership.
This instability in the real estate sales marketplace has also impacted the property management and leasing industry. We have seen a decline in the number of new home buyers entering the marketplace, with decreased inventory and increased interest rates.
With high mortgage rates, low inventory and now a buyer being required to pay their agent’s commission, the real estate marketplace is expected to remain challenging.
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