Who Should Pay the Buyer’s Agent?

Traditionally in America, the home seller pays the buyer’s agent, however--that tradition is under fire due to new lawsuits filed in Chicago against the National Association of Realtors and others. The outcome of the cases could have far reaching impact in the world of American real estate.

According to a recent Washington Post article, class-action lawsuits have been filed against NAR, the nation’s four largest real estate brokerages, and the MLS companies they use. The suits state that federal anti-trust laws have been violated by the named entities by forcing sellers to pay the buyer’s agent inflated commissions.

The claimants state that the buyer’s agent should be paid by the buyer in a competitive market, and also that the split commission contracts enforced by MLS companies often cause the seller’s agents to be unfairly compensated.

The outcome of these suits could affect home owners and buyers as well as agents and brokers.  Some say that if the courts rule against the defendants that commission rates for buying and selling agents will go down in order for agencies to stay competitive in a customer’s market. If home buyers were required to pay their agent’s commissions instead of the sellers, they would negotiate directly with the agent to pay only for services rendered, as opposed to the blanket commission currently paid by the seller.

The downside to such a situation going into effect is that when it comes to purchasing a home, buyers are already at a financial disadvantage—forced to pay for closing costs and moving costs on top of the price of a home. According to the Post, some Realtors say that the added expense of having to pay their agent’s commission would put a heavy strain on “first-time and other cash-short buyers”. This could have a negative impact on real estate markets across the country.

 


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A New Type Of Credit Score Is Coming

The current score system works well in that it provides a sufficient way to figure out low costs and in an automated way how likely someone is able repay you. But it has a disadvantage in that a lot of people don’t provide a payment history because they don’t have credit cards such as younger people and immigrants.

Ultra FICO changes that dynamic by using consumer contributed data. The Fair Isaac Corp., the creators of FICO, announced that Ultra FICO will be more widely released in April 2019. Alongside traditional metrics, the Ultra FICO looks at your banking behavior in 3 areas:

  • Your account history
  • Your account balance
  • Your account activity

It gives consumers the ability to give permission for their data—rich data that can be used as valuable insight for lenders. It has the potential to score people that are considered unscorable and enhance existing scores. This may help people get better interest rates.

Marketplace.org reported that “there are 53 million people in the United States who do not have FICO scores, and the new Ultra FICO will catch 10 million to 15 million of those.”

Don’t look for Ultra FICO to replace the regular FICO score. Ultra FICO is voluntary, so it will likely be used to give more insight to lender if the regular FICO is not high enough to qualify the consumer.

 


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Steph Curry is Selling his Beautiful North Carolina Mansion

Steph Curry's North Carolina Home | Realtor.com

Golden State Warriors star Steph Curry plays like a champion and lives like a king. To see what I mean, just check out his North Carolina home on Realtor.com, the place is stunning. The European-style new construction home features four bedrooms, three full and three half baths and is 7,467 square feet on a half-acre lot.

The home, built in 2008, has luxurious touches including stone fireplaces, stain panel rooms, mahogany doors, a four car garage, huge tub in the master suite, a movie room and finished basement. Jacarr Realty is selling the property and asking $1.55 million. The North Carolina native moved into the home 30 miles south of Charlotte in May 2011 and paid $1.275 million.

Currently, his wife, Ayesha and their children live in Alamo, California. The Sacramento Bee says their new pad is 10,290 square feet with a 1.56 acres. They’ve lived there for nearly three years.

 


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Artificial Intelligence Opportunities in Real Estate

Real Estate, along with every other industry, has advanced from using Artificial Intelligence to improve and support healthier lifestyles for people. In commercial real estate, health-focused principles are more than just trends. They are the beginning of the industry’s promising future. From 2008 to 2017, the number of tech-oriented real estate startups have exploded from a mere 176 to over 1,200 companies. The areas in Real Estate that can really use artificial intelligence to offer healthy solutions are safety, data-driven comfort, and sustainability.

Artificial intelligence in the safety sector of commercial real estate has made a big impact. It provides, for example, better security for those that occupy these spaces. AI and machine learning use anything from voice commands to facial recognition to improve accessibility, security, and infrastructure stability after construction. Eventually, developers will be implementing robots to assist with inspection and repairing damage without utilizing human workers, making it safer for everyone.

Real Estate companies have realized the usefulness of AI data and sensor technology to provide higher comfort and more efficient spaces for consumers. Buildings can become personalized for monitoring, home safety and even senior care. For example, motion sensors can track the tenant’s daily movements so it can then adjust door locks, faucets, electronic devices and monitor optimal temperatures for each tenant. Even though these are simple solutions consumers will enjoy focusing on bigger things while your home adjusts to your comfort.

In Manhattan AI has been implemented in commercial structures already, one such project is the Empire State Building. It currently collects data to identify the buildings energy efficiency so adjustments can be made to keep this historical monument standing and useful for as long as possible. It’s not just HVAC systems and lighting controls that AI can help with. It can also identify roof and insulation issues during construction and water usage patterns which can then be used to identify the best materials to use during construction to offer energy efficient resolutions.

In time, Artificial Intelligence can provide the Real Estate market even more opportunities to make a sale by offering a safe haven with technology both inside and outside of the home.


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Tick Tock: Nebraska Real Estate Agents & Brokers License Renewal

Nebraska Realtors and Brokers with a license beginning with an even number are required to complete 18 hours of continuing education which must include 12 hours of designated subject matter.  The deadline is November 30th, 2018. Real Estate Training Institute has everything you need to meet Nebraska's continuing education requirements.

We provide: Nebraska approved continuing education that meets all of your requirements.

You can complete your continuing education anywhere, anytime with a smartphone, tablet or computer that is connected to the internet. These courses also allow you to print a certificate immediately upon completion.

License renewal costs:

Salesperson Renewal Fee (2 years) - $230
Broker Renewal Fee (2 Year) - $290

We've taken the liberty of answering a few of your questions below.

How much real estate continuing education is required?

Nebraska licensees are required to complete 18 hours of continuing education each two-year cycle. Of that 18 hours, 12 hours must be in designated subject areas. Courses that are approved for designated subject areas contain an “R” in the approval number.

If I am unable to complete my Nebraska real estate continuing education by the expiration date, can I still renew?

Yes, licensees may renew their license after the expiration date. Continuing education must be completed before a license may be renewed. There is a late fee of $25 per month that the license is expired. Licensees must renew their license prior to June 30 or they will be required to re-take and pass the exam. Continuing education requirements must be met before the licensee will be approved by the NREC to take the exam.

How Do I Renew My Nebraska Real Estate License?

You can complete your renewal form by following the link listed here: Submit Renewal Form Online

 


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Haunted Houses Scare Buyers Away

Sellers are required to disclose material defects such as a structural issue or a leaky roof, but when it comes to a haunted house’s reputation, if it elicits an “emotional response,” that’s when it gets tricky for real estate agents.  Haunted houses are often stigmatized and scare buyers away in what may otherwise be a perfectly fine structure.

A recent survey conducted by Realtor.com shows desirable features like a reasonable price or a bigger kitchen helps buyers get past the spook factor. The survey found that 1 in 3 people are willing to take a chance on a haunted home if the deal was attractive.

In one extreme example of a haunted house impacting the sale of a property was Stambovsky v. Ackley, a landmark case in New York better known as the “Ghostbusters Ruling.” In 1989, a woman named Helen Ackley was selling her circa-1890 Queen Ann Victorian. It was a nice house right on the Hudson River in Nyack, New York, with 5 bedrooms, 3 ½ baths…..oh, and 3 poltergeists. According to Ackley, she had reported the existence of ghosts in the house to newspaper and magazine articles on 3 occasions between 1977 and 1989. Stambovsky was a buyer from out of town and claimed that Ackley and her real estate agent failed to tell him that the home had a haunting reputation. He argued that the house’s ghosts, real or imagined, affected the value and the potential for resale.

The New York Appellate Court ruled in the plaintiff’s favor stating, “as a matter of law, the house is haunted,” mostly because Ackley proclaimed it to be. Stambovsky was refunded half of his down payment and set a precedent to make sellers disclose if their house had a ghost. After the court case, Ackley had no issue finding people who want to live in a haunted house. Singer-songwriter Ingrid Michaelson owned the home for a short while before selling it in 2015 for $1.7 million. Although, nobody reported any spooky occurrences since Ackley sold it.


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Why Would A Hospital Get Into The Real Estate Business?

A 2008 initiative by the Nationwide Children’s Hospital, located in Southern Orchards Columbus, began investing in neighborhood homes with a program called Healthy Neighborhoods Healthy Families (HNHF). In partnership with city and community groups, they are helping residents renovate vacant homes for resale, building affordable housing, and offering grants to homeowners to fund home renovations.

Increasing evidence points to a correlation between living in areas of concentrated poverty and health. The doctors at Nationwide Children’s Hospital, like Dr. Kelly Kelleher, saw this first-hand. “Houses that are falling apart, plumbing problems, mold, rat infestations, and violence. You see 26 kids a day, and maybe two-thirds of them are in these desperate straits. The impact on kids goes beyond toxic living conditions like mold and lead,” says Kelleher. The stress of living with violence, racial segregation, and other unstable living conditions leads to what researchers call “the neighborhood effect.”

The hospital is treating “the neighborhood as a patient.” They hope that by providing children with safe and stable housing, they can help prevent many health conditions through physical and socio-economic environments. According to NPR Illinois, “the hospital-led partnership built 58 affordable housing units, renovated 71 homes, built 15 new homes, and gave out 149 home improvement grants between 2008 and 2018. With additional grants, it also built a 58-unit housing development combined with office space.”

New changes in Medicaid reimbursement serve as a motivation to invest in community projects like housing. The fee-for-service model where hospitals are reimbursed for each procedure is losing popularity. A newer trend of states funding health organizations with a lump sum of money to help manage someone in a population helps investment in preventative care. One example of preventative care being a healthy place to live.

Some positive metrics of the neighborhood are the dramatic reduction of murders and that high school graduation rates have risen. Nationwide Children’s Hospital and Dr. Kelleher are also studying metrics on the number of emergency room visits, inpatient days, and the various types of problems that children present at the hospital. But it may take more time to show signs of improvement.


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Idaho’s Housing Challenges With Population Growth

According to the U.S. Census Bureau, Idaho was the fastest growing state between July 1, 2016, and July 1, 2017, with a population growing by 2.2% and had an increase of 1.7% in the number of housing units built. Since the last census, Idaho was number 4 in terms of housing unit growth. The state saw it’s housing stock increase by 8.1% between April 1, 2010, July 1, 2017—lagging behind only North Dakota, Utah, and Texas.

Between the years 2011 and 2015, developers built more housing units that were needed to compensate for the growth in population. According to the Idaho Statesman, “between 2011 and 2012, the state added 11,493 more people. It Needed 4,272 houses to shelter them. Developers built 5,948.” But there was a slow construction period during the recession while the population grew and experienced a bottled-up effect.

Other areas like Treasure Valley, the most populous region, are experiencing the need for more affordable housing. Building codes have lightened up to allow houses with smaller rooms and lower ceilings in an effort to spur construction towards more affordability.

Jason Blais, a city building official, said that in the last decade, Boise and the rest of the country have been building bigger homes.  According to the Idaho Statesman, Blais did an analysis of new single-family housing units built from March 2017-2018 and found that the average home being constructed was around 2,200 square feet.  “There’s just not many small and medium single-family dwellings in that 1,100-1,500 square foot range that we used to see.” He believes that if you take 600 square feet off of 2,200 square feet, that reduces the house cost by $90,000-$96,000 and allows more people to qualify for a loan and afford a home.

Being one of the fastest growing states with developers focusing on larger houses has brought new concerns on preserving local landmarks and fighting proposed subdivisions that impact agricultural land and open spaces. It’s important for the state to think about housing affordability with more people coming into the state while balancing how it will impact land use.


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Brokerages of the Future Face Challenges

According to a recent Forbes article, brokerages have been avoiding big changes in their business models to meet the needs of their customers and employees. Residential real estate continues to be sold via real estate offices, brokers and exclusive property listings, but that seems to be changing quickly. In the past, brokers closely held real estate listing data. Multiple listing services have helped centralize data and websites have made it easy to publish. In other words, technology changes are causing brokers to lose their role as keeper of the information.

Potential problems facing brokerages include:

  • Technology (e.g., artificial intelligence & blockchain)
  • Real estate agents are increasingly organizing themselves into powerful teams and putting increased demands on brokerages for more services and facilities.
  • Startups with innovative business models (e.g., Amazon & Expedia) that can potentially challenge legacy brokerages.

Forbes describes brokerages of the future will be a company that:

  • Spend more on technology and research than marketing and payroll combined.
  • Deploys AI and sophisticated technology to anticipate and meet the demands of its customers.
  • Creates a custom experience for each website or app visitor (via AI and technology)
  • Provides its customers with sophisticated tools that help them identify, locate, assess and purchase properties, aided—but not controlled or managed – by a real estate agent.
  • Leverages the blockchain to optimize and secure all interactions and transactions with its clients, employees, and partners.
  • Understands the mobile nature of our society, and creates innovative and creative ways to market to and engage with mobile client base.
  • Offer different ways to hold real estate listings, such as keeping some as exclusives, sharing others as multiple brokerages listing and offering certain types of listing via an online shopping car model of listings.
  • Becomes less reliant on physical offices for customers visits, while expanding offices as workplaces for its agents and teams.
  • Supports and brands its various agent team structures, handling them as “companies within the company,” where the teams are co-branded with the company, rather than sitting under the brand.

The human service aspect of real estate won’t go away when real estate remains a high-value transaction. But clients will demand more control and brokerages will likely spend more time studying, predicting, and pursuing their clients. The business model of how brokerages operate in the future will likely shift.


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