With summer turning to fall, and kids back to school, it’s a great time to take stock of the current state of our local real estate marketplace. In addition to going over current data and trends, I thought I’d share how the National Association of REALTORS®(NAR) settlement has impacted our local market.
What’s happening in the market?
As of Sept. 6, the Wall Street Journal indicated that the 30-year mortgage rate had descended to 6 percent. This gives renewed hope that rates will settle into the fives by year’s end, which was my Bold Prediction number one at the start of the year. This is only good news for both buyers, whose monthly mortgage cost will descend with lower rates, and potential sellers, who may have been reluctant to give up their existing low mortgage rates to switch to a different home, but might now be coaxed into moving.
We had 25 new listings in the Multiple Listing system in the 14052 zip code in August. This represents the most fresh listings in a month since we had 37 in June of 2022. Due to pent-up demand, the market is absorbing that inventory fast, as there were only 15 homes still for sale in the zip code at the end of August. The average days-on-market is only six days, which is actually the lowest number of any month in the last three years. Anecdotally, we have seen our listings at JRS Morgan near the median sale price of $390,000 in East Aurora, which are in good condition, continuing to garner multiple competitive offers. However, each listing is receiving three to five offers, which is a drop from earlier in the season when we were typically seeing eight to 12.
My read on the market is that we are seeing the market very gradually “unstick” and inch closer to equilibrium for buyers and sellers.
How has the NAR Settlement impacted the Greater East Aurora marketplace?
The new requirements for members of the National Association of REALTORS® went into effect on Aug. 17. This has injected a handful of changes into the marketplace.
The first change is that before touring any property with a buyer’s representative, you must sign a compensation agreement with the agency that is representing you. The contract must stipulate a start and end date for the engagement, as well as a clearly articulated compensation amount for the services that you are to receive. It could be a percentage of sales price, a flat fee, or an hourly rate. That fee can be paid to your agency directly, or can be negotiated to be withheld from the transaction amount at the time of closing. It must be made clear to you by the agency that this compensation level is negotiable.
Based on what I have seen in suggested form contracts locally in the first few weeks of this change, I would offer a word of caution to consumers. I would not sign any contract that doesn’t give you the ability to cancel the contract with your agent for any reason, with or without cause. If there is no way to exit the contract before its expiration date, you could be stuck with someone that you don’t have a great rapport with, and owe them contractual compensation, whether or not you have received useful service from them. It is fair for an agent to receive compensation on any property that they have brought to your attention and/or toured with you, but if you want to continue your property-buying journey for new properties with another agent, you should be free to change your representation without repercussions.
Alternatively, you can tour a property with a listing agent without an agreement. If you do so, proceed with caution. That listing agent will have a fiduciary duty to represent only the seller’s interests in any transaction that you pursue. It is generally helpful to have someone that you can trust on your side in your property search, representing your interests and who will learn what is important to you in your search.
