They’re the yangs to the high-mortgage-rate yins. The homeowners who have the 3% – 4% 30-year mortgage rates and have, over the last few years, refused to vacate, logically in most cases as they have not wanted to take on new mortgages in the 6% – 8% range.
All evidence points to a rate cut soon, and the latest Jobs report may prompt the Federal Reserve to lower its key interest rate more than just once. So might that development convince homeowners to sell, and cause inventory levels to finally begin to rise?
And what about the buyer agency changes? How will sellers adjust now? While formerly paying the freight for both buyer and seller agents, they don’t have to anymore. There are now all kinds of considerations for potential sellers. Thus, it’s likely a great time for agents to get with seller clients who are on the fence for a serious consultation.
Eric Bramlett is the owner of bramlettresidential.com in Austin, Texas. It is his opinion that sellers are unlikely to shift buyer-agent commissions to buyers post-NAR settlement. A primary reason is that sellers focus on profit and agreements.
“Sellers are primarily concerned with the net proceeds they’ll receive and the overall terms of the contract,” he says. “If a deal offers favorable net proceeds and reasonable terms, sellers typically don’t care who pays what. For decades, sellers have accepted costs such as title policies and home warranties, expenses that directly benefit the buyer. As long as the net figure satisfies the seller, who gets paid what in the transaction is a secondary concern.”
Another point is that buyers are cash-sensitive, with limited liquid funds for closing, and any additional upfront costs can reduce their purchasing power.
“It’s much easier for a buyer to offer a stronger bid when the seller covers the buyer-agent commission, as it lowers the buyer’s cash-to-close requirements,” he says. “Given this dynamic, buyers are more likely to structure offers where the seller pays the buyer-agent commission, making it easier for sellers to accept these offers and keep deals moving forward.
“While some cases may arise where sellers question paying the buyer-agent commission, the market standard has been firmly established for decades. The vast majority of transactions will continue with sellers covering it. These dynamics are deeply ingrained in the structure of most real estate deals, and there’s no reason to believe this will change significantly.”
Pam Rosser Thistle is an agent with Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Philadelphia. City markets differ from suburban ones, obviously, but some of the core reasons owners sell are the same.
“In my market, many buyers are cash and buy in Center City Philadelphia for a specific reason,” she says. “For example, a parent buying for an adult child who is doing a four-year hospital or timed graduate program. So they would likely sell after four years. No issues.
“Those who bought with low interest rates will eventually squeeze out of their homes. I have a two-bedroom home listed that I helped a single gentleman purchase. He now has a wife and kids. They moved to the suburbs, he rented it for a good return for a while, and is now selling it. Some with low rates are sitting tight in their homes. Some keep their properties and flip them into investment properties. Some sell their houses and go into a rental. Most accept that their life situation requires a different house and sell.
“We are balanced with buyers and sellers. Center City here is not as starved for inventory as the suburban and shore markets. I am seeing a healthy amount of new listings come on the market.”
At RISMedia’s 2024 CEO & Leadership Exchange Sept. 4 – 6 in Washington, D.C., CoreLogic Chief Economist Selma Hepp presented a new analysis showing that over 13 million homeowners have rates between 5.5% and 6.5%, and suggested that there is “potential” for these homeowners to list as rates fall into this range. At the same time, Hepp noted that the average rate varies significantly by geography, meaning agents need to know where their region falls as far as that potential tipping point.
On a more personal level, a reluctant seller may be convinced via a frank conversation with their agent.
“First talk with them about what would motivate them to sell and what is causing them to hold back on selling,” advises Julie Fisher, a REALTOR® with Crye-Leike in Chattanooga, Tennessee. “Knowing the answers to those questions is helpful in determining how much time to spend with them. What are their goals? What is the status of their mortgage, if they have one, and what would they owe at closing?”
“People don’t tend to be serious about a move until they are happy about where they are going,” adds Deb Dorsey, a REALTOR® with Berkshire Hathaway HomeServices, Fox & Roach REALTORS® in Rosemont, Pennsylvania. “If it is truly the right time for the seller, they have to come to the decision on their own. It’s bad practice to push them. There will be people who just need more time.”
“There is always a reason the seller called in the first place,” says agent Lauren Walz, with the Dawn McKenna Group at Coldwell Banker Real Estate in Chicago. “It’s important to remind them of that. My job is to educate sellers to make the best decision for themselves and the house. Sometimes that means advising people not to list their house. Sometimes it means agreeing to push the price and managing expectations early that a price reduction is necessary if the house doesn’t sell within a certain timeframe. Often, unmotivated sellers get motivated when they understand the data. There are many factors that help a seller decide if it is the correct time to sell. It is important to know all factors, as they change for each client.”
