Life Unscripted with Kevin Shook
Welcome to 'Life Unscripted with Kevin Shook', a heartening podcast where embracing vulnerability is the key to success. Join your host, Kevin, as he dives into the stories of remarkable individuals who have transformed their lives by opening up, facing challenges, and finding strength in their most vulnerable moments. Each episode features inspiring conversations with guests from various walks of life. Kevin's journey of embracing vulnerability has led him to meet amazing people, and now he brings their wisdom, laughter, and insights to you. Tune in and discover how embracing your vulnerabilities can lead to your greatest victories in life, both personally & professionally.
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Life Unscripted with Kevin Shook
Deciphering the Real Estate Legalities of the Expected $418 Million NAR Settlement with Derek Tiemann, Realtor
Prepare to navigate the choppy waters of the real estate market with Fathom Realty's Derek Tiemann, as we uncover the truth behind the National Association of Realtors settlement on "Life Unscripted". This episode peels back the layers of commission disclosures and ethical practices across states, offering a treasure trove of insights for everyone from the rookie homebuyer to the seasoned investor. With Derek's expertise, you'll be armed with the knowledge to understand how these changes affect your real estate ventures, and what you can expect when it comes to the real cost of buying or selling property. Plus, we're shining a light on the legal intricacies that continue to reshape the housing market, so you can stay ahead of the curve.
As the industry gears up for significant shifts this summer, we're here to guide you through the evolving real estate documentation and the importance of buyer agency agreements. Our discussion is your compass to ensuring you don't miss the finer points when signing on that dotted line. With an eye on future tech advancements like fiber optics in urban zones, we're forecasting the landscape ahead. And don't miss out on our upcoming live-streamed roundtable, where fellow agents will dissect the implications of the NAR settlement in even greater detail. Join us for an episode that not only informs but transforms your approach to the ever-changing realm of real estate.
Life Unscripted with Kevin Shook. Catch Life Unscripted with Kevin Shook on YouTube Plus, sprout, spotify and Apple Podcast.
Speaker 2:Boom, there it is and we're live. It worked? Yeah, absolutely, we're live. And as soon as I hit, as soon as I tagged you in it, the countdown ended. But welcome to Life Unscripted. I love it Totally off the rails, which is life. And speaking of life, we have Derek Tiemann here. He's a real estate agent at Fathom Realty, your expert real estate team here in Richmond, and today he's going to share some insight, his opinions, some market outlooks. Recent headlines was the NAR settlement? I said that? Right? Yeah, I already forget what NAR stands for National Association of Realtors. All right, so he's going to explain to us what's going on with that and how it might impact first-time buyers, sellers, vets, Sellers.
Speaker 1:I mean, really the big point, man, is get straight through all the misconceptions, straight to the point what's facts, what's not facts, what's being, you could say made up or just kind of overly projected, because at the end of the day there's a lot of. I mean, come summer, when everything really goes into effect and the changes that they make, it's all going to be decided. Then what happens is going to be what the agents take and where we come out with it. So really nobody knows exactly what's happened. We just know the facts that we have and those are super simple. There's two big changes coming happened. We just know the facts that we have and those are super simple. There's two big changes coming. Change one is, as of now, as agents, if I list a house, I sit down with the seller.
Speaker 1:In Indiana we've always done things very ethical and kind of opposite to. Some states seem to have done it due to some of the things you see in some of these settlement statements and getting some of these settlements to the point that they were. But we sit down with the seller. If you was listing your house today, I'd sit down with you. Part of this listing contract is going to specify what my commission is that I'm charging you to list your home. So I'm like hey, I'm charging you 6%, that's my fee, that I decide that's what I'm going to do. And then in there also specifies I'm splitting part of my commission with a buyer if they bring an agent to the table or if they bring a client to the table. So I work that out with you at the table. So you know that I'm getting paid 6% and I'm splitting that in with the buyer if another agent brings a buyer. So that's how we've done things.
Speaker 1:Come summer we're no longer going to be able to disclose if we're paying anything to the buyer side. So that's the big thing that I think a lot of people are getting tied up on. Is what does that look like for sellers? Are they not going to have to pay this fee, are they not? But at the end of the day, I'm, as a listing agent, still going to charge the same and I would still attend it. Pay out the same, do things kind of business as usual? None of that changes.
Speaker 2:So let's back this train up. What the hell is this?
Speaker 1:Yeah Well, how did, how did it get here?
Speaker 2:So a lot of people so like what? What happened? What is the NARS settlement?
Speaker 1:Yeah. So it all was rooted from some sellers in a lot of bigger, bigger areas. You look at New York, California, a lot of fast paced, high scale markets where they're selling multimillion dollar homes. Their contracts look a lot different than ours. A lot of these areas weren't disclosing that. There was even some of the commission going to a buyer's agent. They were just listing their house fast-paced, paying large percentages from again 6% million dollar deals. That's a lot of money and they didn't even know that it was going to pay this other side of the transaction.
Speaker 1:So some lawyers formatted a lawsuit against the association forcing change. What I find kind of ironic is, judging by the changes that they're putting in place, the seller really sees very little impact. It really impacts a buyer more than the seller because, like kind of we was talking a little bit before If you come to list your house, let's say it cut commission in half, 3%, you get to sell your house. Well, what do you got to do once you sell your house? Right, you got to buy a house, but I'm still going to pay that another 3% to your agent on the buy side Cause a buyer's agent.
Speaker 1:We're not going to work for free. Everybody's going to still need paid. It's just a matter of less what how much is going to be and more or less who that money comes from. So if the seller wasn't paying it, refusing to pay it, that was always okay, but then that buyer would have had to be the one to pick up the slack and pay that fee. So as a seller who started this settlement, they're really not really seeing much impact on the scale of things because they're still going to be paying a 6% if it's three and three on both sides.
Speaker 2:So where does all the there's a whole uproar about this. Yeah, where's that coming in? Because I talked to another realtor today and he kind of explained all of this to me as well and all of his both of your opinions kind of go on the same ways and what you think is going to happen and how it's going to impact it. But he was explaining some situations to me where it could get a little dicey with particular agents and it might push away first time buyers or like like you mentioned. So he said that right now the veterans loan. I guess it's a federal law that they can't do that. So is this something that I mean and it hasn't completely passed yet, right, like the court still has to sign off on it?
Speaker 1:There's still so many moving parts. Now what the association has released is just two kind of minor changes. One we can't disclose if there is a commission to be paid on our MLS, which is where all of his agents go to find properties to send to our clients, to kind of communicate on the back end on what's going on and what comes with these properties. But then the second thing is every and this is going to be the thing that I think buyers are going to see immediately changing is every buyer will have to sign a buyer's agency agreement with the buyer's agent. So there's no more of that going into an open house and just kind of buying the house, like you're going to have to commit to the agent that you work with. So I love that. I mean as an agent, I think any agent out there. They've worked with people and then they find a house on Zillow and you never hear from them again. They buy.
Speaker 1:So, this is going to, in a sense, really help kind of keep that loyalty within the clients in some sense to save us time, which could help. But ultimately, yeah, I mean it's going to be interesting.
Speaker 2:So what are some things? Okay, you're a realtor, yeah, so you should advocate for your client always. What are some things you might see with this that they have to sign, that the buyer may need to beware of? Like they might not know of this change and then realize once they bought the house they're financially responsible to pay this guy just because it was in the contract.
Speaker 1:So there's two parts to it. So, on that contract, once you sign a contract, your buyer, you sign a contract with me. If you go in there, there's terms on these contracts. There's two terms that are real important the date, the extent of this contract. So if you sign it today, at six months, you're committed to me for six months.
Speaker 1:If you go and buy a house with another agent while this contract is between me and you, it predates even if they sign a contract too. It predates that you could get sued. Took the small claims court for whatever the fee was the buyer Yep, the buyer. So the second part to this contract is going to be the money that you agree to pay the buyer's agent, and this is going to be the tool to the. I mean because, at the end of the day, you're going to agree to pay X amount of commission to that buyer's agent.
Speaker 1:So, as a buyer, if things do switch and let's say the seller doesn't want to pay that percentage of a commission or they don't in our case in Indiana want the buyer's or the seller's agent to cover that commission and they just want to reduce commission or something, that buyer is going to be responsible. And so that's where I find the irony in the whole lawsuit is the sellers ain't even winning. The buyers are just getting hurt. Right, but sellers are buyers because nobody just sells a house. Usually they don't sell a house and just go go rent something. They're traditionally, you know, moving up the scale or buying something bigger, smaller and relocating so, um, I was.
Speaker 2:You know I've only bought one home, so I was the first time home buyer once and um, it's nerve-wracking as hell. Yeah, there's a ton of documents and I'm impatient as hell, so I didn't read all that stuff like I should have. Um, do you think first-time buyers hearing this type of stuff do you think it might shy them to renting, or do you think like it might? How does that need to be approached from the agent standpoint?
Speaker 1:yeah, I mean it's going to be in everything. So I mean it's so early on and all this right, right, it hasn't even been signed.
Speaker 1:Yeah, that's why, like like I see all these media things and I've been, I've had past client and current clients send me this like what does this mean? What's going on? And that's why, like us having this conversation getting here is awesome is because to get in front of all that kind of misdirection, because media media does go wild with stuff but ultimately what it could mean worst case scenario, I mean forecasting if sellers did they did not want to that's now going to be more expenses for those first-time homebuyers. It could be huge for them if there was a seller that didn't want to cover that cost, because a lot of times we're already positioning offers to have closing costs paid for the buyer, whether it's going towards their. I mean so many different things. There's no room to add on fees. So my Aunt, Lisa's watching.
Speaker 2:Yeah, Hello, Aunt Lisa. So she just asked does this mean if we see a house when we are out on a Sunday drive, we have to go find an agent instead of dropping in and saying I want this. We can no longer have an agent act for both sides? You can, yes.
Speaker 1:Yeah, so they're not doing away with what we call limited agency. So I could be representing the buyer and seller, and so that's fine. And as of the first kind of question on the Sunday drive, if it's an open house, it's really not clear. And so that's where we kind of get into the procuring clause and stuff like can we still do open houses? Do we have to have consent papers in there when?
Speaker 2:people come in, so there's a lot of unknown.
Speaker 1:There's so much unknown and that's where it's really just going to be like. There's no way anybody can forecast it, but I think there's going to be more or less disclosures or something that's signed at open houses maybe. But to answer her question there, yeah, you definitely will be able to pop in, but the best practice I think would be is to find an agent, find an expert agent, definitely with these changes and things coming along, that really knows how to navigate the future and what's what's happening and what's changing.
Speaker 2:Thanks, for the question At least. Yeah, absolutely. Anyone else have questions? Just uh, thumb in the comments. We can see them in real time. This doing to the market in the next five years, the next 10 years, I would say.
Speaker 1:Okay, let's start here. Here's the big thing is I don't think and this is all kind of my personal opinion, right, I don't see there being much within at least our local marketplace too much being changed. There's not much you could do to really adjust and change from the scale, because at the end of the day, two people are getting paid from one commission. You know what I mean. So buyers, agents who is kind of targeted towards changing the way buyers are handled, not going to be, not going to do it for free. So when I'm going into a listing appointment, once all this stuff goes into effect, I'm going to explain to sellers where it's like hey, this is my commission to list your house If I find a buyer.
Speaker 1:So let's say you want to list it at a reduced commission, that's half of it. I'm only listing your house If I bring a buyer to this. If you want me to represent them, I'm going to want paid for that as well. So there's going to be two sides. So it's going to really be in the hand of us agents and how we represent our clients to their best interest, because at the end of the day, you can not want to pay a buyer's agent but if they're bringing a buyer or either their buyer wants representation, you know what I mean. Absolutely so it's there's still a need and a demand for the services that are out there. It's just an uproar of people wondering what's going to happen and how it's going to play out, and really it's. It's more just the documentation side changing and that's how.
Speaker 2:So I'm not an expert with real estate at all, I just take pictures of it. Oh, that's pretty um in video, whatever. But uh, it, from what you've told me, um, from what jason falcon told me earlier, um, explain this, all of this to me it it seems like it is just more of a documentation thing. The pay doesn't really change for the realtors, it's more so the documentation of where that other half's coming from and here sign this. Buyers are going gonna have to be more aware of what they're signing because it's going to be in that agreement and I feel like, you know, you might have an agent that's not the most honest or the most like, empathetic towards their buyer. That might just slide to hey, six months, 12 months, yeah, and I mean and it is.
Speaker 1:I mean I've always advocated for both buyers and sellers. You got to know what you're signing and you really really need you know. You got to ask questions, especially with these buyer agency agreements. So you know, cause they won't have to let you out, you might be committed to an agent and really doing more research than you did before on working with buyers agents, that's going to be huge. Know who you're working with. Yeah, because I mean I've worked with buyers who you know end up closing with other people. I know a lot of other ones has and every agent whether it's a personality type, the way they do business, or it literally is you just want that flexibility. You can demand where it's like hey, I want to see this house that you have listed today. I don't want to be committed with you no longer than one day. You're no longer than one day. You're in control of what goes in the dots. You know what I mean, so make sure that you know what that says.
Speaker 2:So what's the? We got to wrap up here in a minute. Thanks, ellen. She said I'll do a great job. She didn't say anything about you. We'll talk about that. Yeah, we'll talk about that after. So what's the timeline on this? What's like the? What was the last step?
Speaker 1:What's the next step? Yeah, as of steps, I'm not sure, but I know the changes to the contracts are coming this summer. I can't remember. It's either June or July that the changes will go into effect. So, starting this summer, we will be having those buyer agency agreements will get pushed out there, those MLS fees are going to have to come off the MLS. So the first steps to seeing the difference in the market that everybody's kind of freaking out about, those are already confirmed, those are already going to happen.
Speaker 2:Okay, so that's, that's that's when it rolls out, and then it's going to be all fun from there okay, so, um, we'll cut this, but we will follow up, because I think the next thing I'll ask you about is, uh, the lending agencies, yeah, and their reaction oh yeah, that's a whole another ball game.
Speaker 1:Yeah, I mean there there's going to be I know they've been. They've been in a lot of changes, a lot of meetings trying to adjust and stuff. So I know there's going to be changes on that end, cause there's going to be some times where it ain't it ain't covered. There's some fees that ain't going to be covered. It's going to be different. And then to ask for credits from lenders and stuff like that might come up. But it's going to be interesting.
Speaker 2:Because I mean, if I'm first time, I'm seeing all these little 3,500 here, five grand here, yeah it's, it gets less. You're not supposed to move money around in your bank account, so you're trying to get a loan, yeah.
Speaker 1:It's so overwhelming and that's what I'm most scared about is it's going to impact the people, the core first-time buyers, more than anybody. Well, them are the ones that are-.
Speaker 2:We're the intimidated, you're the intimidated.
Speaker 1:Yeah. So it's like for us at the end of the day, as from a real estate perspective, there's no one price agent for all. There's agents and brokerages out there independent brokerages and unique brokerages that allow their agents to do stuff for free if they want to. So it's not the question of are we going to take less? We already decide the price that our service is worth. If it was going to be discounted, it would have naturally been discounted from those agents willing to do it cheaper, absolutely. There are options out there that you get less. It's just like anything. You know what I mean. That's already an option.
Speaker 2:I feel like you get what you paid for Exactly. I've heard of some realtors saying I'll just cut my commission and get more business. Well, at the end of the day, if you do that math, it's still the same amount. You're just working a whole lot more Plus. You get what you paid for.
Speaker 1:And then the quality goes down.
Speaker 2:And the quality goes down, and then you just brought all everyone else's shit down and now, yeah, so it'll be interesting to see what the changes have to jump on here again a year from now and be like hey, look, yeah yeah, hey, hey, we have better wi-fi right, hey, we got fiber now downtown. That'd be great. That's funny. I would love to have fiber up here. Yeah, um, but so far we're good with this. But, uh, ellen followed up with you.
Speaker 1:There, you go. Thanks, Ellen.
Speaker 2:Got you. So I actually have to go over there to stop this damn thing. But everyone thanks for popping in Life Unscripted Talk to Derek about this NAR settlement. We'll follow up again and see where it's at here in a few months or whatnot. Stay on it, keep researching it and then you know as it progresses. We'll do this and especially if the court signs off on it.
Speaker 1:Absolutely, and if anybody out there has questions about it sees something, reach out to me. I'm always happy to talk about it. Whether it's an agent. I mean because I know a lot of agents don't got the resources or ain't talking to the right people, of agents don't got the resources or ain't talking to the right people.
Speaker 2:So they don't have questions. So, and if anybody, if any agents, want to come up here and talk, uh, do a round table right here with you and everything else. Um, we'll live stream it and drop questions, and that'd be cool, that'd be, that'd be real cool.
Speaker 1:So, all right out life inscripted with kevin shook.
