‘NAR needs to get out of the MLS business’: Windermere’s Jacobi

by | Jun 27, 2025 | Industry, News Feed

MLSs are just too important to the health of the industry, and to the homebuying and selling process, to keep them under NAR’s control, Windermere co-President OB Jacobi writes.

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Recent events surrounding private listing networks and the National Association of Realtors’ Clear Cooperation Policy (CCP) have made one thing clear to me: NAR needs to get out of the multiple listing service (MLS) business. That may sound bold — and it’s probably not a position the organization will welcome — but I believe much of the mess we’ve experienced in recent months could have been avoided if MLSs had the power to govern their own rules.

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Over 90 percent of the Multiple Listing Services around the country are Realtor-owned and operated and must follow overarching policies and rules set by NAR, such as CCP. By contrast, the Northwest Multiple Listing Service (NWMLS), which covers most of Washington State and parts of Oregon, is a broker-owned, not-for-profit organization that operates independently from NAR.

OB Jacobi

Its policies and rules are developed by committees, task forces and experts and reviewed by elected board members for the benefit of its 30,000+ members and their clients. And it is for this reason that the NWMLS was one of the only MLSs in the country not included in the NAR antitrust lawsuit or settlements.

The fallout of these lawsuits and the confusion NAR caused by modifying CCP earlier this year calls into question their fitness to dictate MLS rules. MLSs have become too complex for them all to have blanket rules, and they should be trusted to figure out what’s best for their memberships and their communities.

MLSs are too important to leave them under NAR’s control

This isn’t meant to be a bash on NAR — I genuinely believe they provide a great deal of value to our industry. But they should focus on their strengths: education, research, member benefits and, especially, advocacy. The value of NAR’s lobbying efforts in Washington, D.C., cannot be overstated.

But MLSs are just too important to the health of our industry — and to the homebuying and selling process — to keep them under NAR’s control. The more NAR tries to jerry-rig the MLS process, the more confusion they cause. And that confusion opens the door to anti-MLS brokerages pushing private listing networks that could set our industry back decades. Not to mention the lawsuits that follow when they don’t get their way.

NAR, I really do appreciate everything you do for our industry. But when it comes to managing MLS rules and policies, it’s time to relinquish control and focus on what you do best. That shift would be a true win-win for everyone.

OB Jacobi is the co-president of Windermere Real Estate.

Should You Keep or Sell Your House? Use This Tool to Find Out in Minutes

by | Oct 15, 2024 | Investing, News Feed

Real estate investing is one of the best vehicles for building wealth, reaching financial independence, and saving for retirement, but you don’t need to become a full-time investor to reap the benefits. If you have no plans to leave your W2 job or manage rentals, there are several ways to use real estate for passive income!

Welcome back to the BiggerPockets Money podcast! When Devon Kennard entered the NFL, he ran into more money than he had ever made. But with no guarantee of a pay raise or second contract, Devon forewent the flashy car and multi-million-dollar home and started saving and investing instead. Shortly after buying his first rental property, Devon realized that he was going to need passive or semi-passive income streams if he wanted to have success on the football field. He landed on four different types of passive investments that have helped him scale his portfolio to twenty-nine doors and over forty syndications!

In this episode, Devon talks about the importance of increasing your income in your working years and why small wins make all the difference early on in your investing journey. You’ll also learn about the dangers of “shady” real estate syndications and how to properly vet an operator, as well as the differences between fast and slow money!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Mindy:
Interest rates were at all time lows, and then they jumped and they jumped and they jumped and they jumped. If you were lucky enough to lock in a sub three or 4% interest rate, you definitely don’t want to let it go, but that doesn’t mean that your house is always going to continue to work for you. Q the, I’ll just turn it into a rental mindset. Today Scott and I are going to run through his epic spreadsheet so you can do the math to see if it’s truly a good idea to hold onto that property and that interest rate. Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and with me as always is my huge spreadsheet nerd cohost Scott Trench.

Scott:
Thanks, Mindy. Great to be here with you. You always excel at these types of introductions. I’m looking forward to really nerding out today. This is going to be a little bit different of an episode. I know that many of you are going to be listening to this on a podcast. We will try to make it as helpful as possible, but this might be one that you might want to come back and rewatch on YouTube because the problem that we’re solving just has to be addressed in great detail with a large number of calculations which are done in a spreadsheet. So I’m going to be sharing a spreadsheet. This is available on BiggerPockets. You can go to biggerpockets.com, hover over, analyze deals in our navigation bar, and then go to the sell versus keep link there and you’ll be able to find the spreadsheet. And with that, let’s get into it and I’ll share my screen and preview What I’m trying to solve for here, and the way I’ll do that is I’ll actually start with a quick story about the last couple of years.

Scott:
So let’s set the scene here. We’ve got, I’ll call this person lovingly average Joe. This is a use case I like to start with in a lot of analyses, right? This is the median American home buyer. The year is 2019 and our perfectly average or more specifically median American home buyer. And this average Joe bought his first home. Joe bought this for $258,000, which yes was actually the median home price in 2019. He uses an FHA mortgage and puts 5% down. And what happens next is crazy, right? So over the next several years, the market explodes and by September of 2021, Joe’s property is worth $395,000, a 53% increase in value in just 18 months. So that $12,500 down payment is now worth close to $137,000 in home equity, and it doesn’t even stop there. It keeps getting better. Again, this is the median situation for a homeowner who bought in 2019.

Scott:
So Joe, average Joe used a 4% interest rate mortgage when he bought his first home between his principal interest, taxes and insurance. His payment in 2019 was 1687. Again, the median home payment for a new home purchase at that point in time, by 2021, average mortgage rates had fallen to 2.75%. So what does Joe do? He makes the average decision to cash out, refinance his home. He takes a mortgage for $297,000 or roughly 25% of the new $395,000 value. And because his current mortgage or his then mortgage is $245,000, he literally extracts $52,000 of cash, puts that into his pocket, and he lowers his payment because he’s getting rid of his PMI and he’s got a 2.75% mortgage. So at the end of this sequence of events, which if you can’t follow, I totally understand, all you have to know is Joe buys for 2 58 in 2019, he refinances in 2021 to a lower payment and puts $50,000 of cash in his pocket.

Scott:
And today here in 2024, he’s got a property worth on average $412,000 with a whole bunch of equity of very low payment in cash in his pocket. And this is the median situation that extraordinary set of circumstances has created what we’re calling the lock-In effect, millions of people are in the same position where they’ve got a low interest rate and they’ve got a home that they can’t sell right now or don’t want to sell. And I think that this is a major problem that’s going to confront about 20 million people over the next five to 10 years is because I have that low interest rate mortgage because I bought back in 2019 or I refinanced back in 2021, should I sell this thing or should I keep it? And that’s the analysis I want to go through today. So any questions about that median situation before we run through the calculation?

Mindy:
No. Although I am going to say I have all these numbers in front of me and it was still a little bit difficult to follow. So if this is your situation and you need to really determine should I sell it or should I keep it, go watch this on YouTube. Our YouTube channel is

Scott:
Just type in BP money into YouTube

Mindy:
And look blam, there it is.

Scott:
Okay, so let’s pull it up here. Alright, so this is not an easy thing. I tried to simplify it. You saw how I failed miserably just now and trying to talk it through. The spreadsheet is no less of a beast. You have to make every single one of these assumptions or inputs in order to make a quality decision here in my view. And so I’m just going to walk through them one by one for average, Joe, the person that bought that property at a medium price point in 2019 and has and refinanced it in 2021 with that lower interest rate mortgage. So today the median home price is $415,000. In 2019, the medium home price was $258,000. So look, this is a beast of a spreadsheet. It is very complex. There are a large number of inputs that we have to put in here because it’s a complex analysis to determine whether you should keep or sell your home.

Scott:
I’ve built this around four use cases. So someone deciding whether they want to keep or sell their home needs to decide. A couple of fundamental things. Are they going to self-manage as a DIY landlord? Are they going to hire out a property manager for example? They’re moving and going to move out of state and they want to have somebody manage it for them and then if they sold the property, would they put the money into an index fund or would they sell, would they take the money and use it towards a new home mortgage reducing their cash outflows here? So those are the four general options people have. There’s an infinite number of options about what you want to do with the money. If you sell a place, I didn’t build it out assuming you bought another rental property or you bought a business or whatever.

Scott:
So you can put in different assumptions there. This is meant to be a tool to help people with the most common use cases. So let’s go through it. In order to determine whether we should sell or keep a primary residence, we need to know a lot of things about that property. We need to know the current value, the original purchase price. We need to know what the mortgage balance was at origination and what it’s amortized to today, which is a calculation here. We need to have an assumption about the equity that we’ve got in that property. We need to understand the term of our mortgage, the rate, and we need the insurance and taxes, PMI or MIP if that applies to you, and that gets us to our monthly PITI payment principal interest, taxes and insurance.

Mindy:
Okay, Scott, I’m going to jump back here because we just told people to gather up a lot of information. Where are they going to get an idea of the current value of their home?

Scott:
So first what people will do is they’re going to go on Zillow and look at this estimate, so go do that if you must. Mindy has opinions about whether that’s a good idea or not. The right answer of course is to look at comps, really kind of follow what other properties have sold for in your local market or better yet, talk to a local agent. You can go to biggerpockets.com/agents for example, to talk to people who can give you an opinion of value on there. If you’re considering selling or keeping your property.

Mindy:
And the rest of this information about your current mortgage should be available on a mortgage statement. The only thing that might not be is the mortgage balance, which I believe you can get from calling up your mortgage company

Scott:
And I think to, you’d obviously have to go look at your mortgage statement, which you must have at some point be able to. You can log into the portal and download that and you should get approximations for all of these things. Note that the p and i payment will be fixed, but your property taxes and insurance will grow over time and later on in the spreadsheet will have to make an assumption about what that growth rate will be, what the inflation rate will be on those types of expenses. So that gets us our PITI payment. Next we need to understand what would we get if we sold the property, and this is complex, we have to assume we have to account for what we’re going to pay to a listing agent and the buyer agent on the sale

Mindy:
If we choose to compensate the buyer’s agent. So there was this big lawsuit that I’m sure everybody has heard of and essentially sellers are no longer obligated to pay the buyer’s agent, however, they were never obligated to pay the buyer’s agent. So it’s a silly response to this lawsuit is that now sellers are being told you don’t have to pay the buyer’s agent. However, I’m a real estate agent. I’ve been a real estate agent for 10 years. Real estate agency has been around I think since the dawn of dirt. And in America, when you are selling your home, if you don’t offer buyer’s agent compensation, that then falls to the buyer themselves. There’s a lot of buyers who don’t have the money for their agent commission on top of the down payment and all of the expenses that they have associated with the purchase of a house. So this is something that I am going to encourage you to talk to your agent about what they’re seeing in the local market and strongly consider not going out on a limb here, depending on how urgently you need to sell this house offering a buyer’s agent commission could help get it sold quicker.

Scott:
Yeah, so because this is an opinion and an initial estimate here, all these numbers are changeable. I have put some notes in here including occasional snarky ones like this one for how to think about the inputs that I have already populated the spreadsheet with on this. So I’ve assumed 5.5%, but as discussed in the spreadsheet, if you’re angry about me for putting that as the initial assumption, you can email your complaints to [email protected]. Okay, now moving on to seller closing costs. I assume 1% here for kind of miscellaneous sellers closing costs, excluding title insurance. Mindy, any opinions on those or anything you want me to change here

Mindy:
It is. So market specific, the closing costs and if you are not sure what your market is going to bear, go with 2%, go with 3% because it’s always better to run these numbers and say, oh, okay, I’m going to get a hundred thousand dollars and then you in fact get 105. Well, that’s a better scenario than you ran the numbers, you sold the house and you’re like, wait, I was supposed to get a hundred, I’m only getting 80. I always want you to do these numbers very conservatively.

Scott:
So yeah, I’m going to stick with 1%, 1% for these two numbers and my 5.5% assumption for now in this analysis, but if you download the spreadsheet, you can change those numbers at any point as well. So all of these are location specific and the best way to get good estimates is to talk to an agent, which is always linked there and always available for you on BiggerPockets. If you want to refine these and get more serious about the next steps on making a determination here

Mindy:
While we are away for a quick break, we want to hear from you, are you considering renting versus selling your property? Okay, we’ll be back after a few quick ads.

Scott:
Let’s jump back in. So those numbers get us to a net sale proceeds. Net sale proceeds are going to be a function of the current value of a home minus the remaining mortgage balance minus any transaction costs. Confusingly, that is different from a capital gain on the property because the capital gain is the sale price less the original purchase price of the property. And so that’s different in this scenario, which it is for millions or tens of millions of Americans because the average thing to do in 2021 was to refinance the mortgage often with a cash out refinance. So we’ve got a bigger capital gain than net sale proceeds here in a lot of situations in this country right now. So now that we have our capital gains number and we have our net sale proceeds, we have another function here to understand what you’re actually going to put in your pocket after selling this thing because we got to incorporate taxes here for most homeowners, taxes will not apply because if you’ve lived in the property for two or more years and have a capital gain of less than $250,000 if you’re single or $500,000 if you’re married, there’s a capital gains exclusion on the sale of a primary residence.

Scott:
Mindy, what’s that law called again?

Mindy:
Section 1 21,

Scott:
Section 1 21, right? So I have defaulted the spreadsheet to saying capital gains taxes do not apply, but you can just toggle this to a yes if you have capital gains taxes that do apply, and that will default to a 20% rate for federal and a 4.55% rate for state, which is the state capital gains tax rate here in Colorado. You will have to look up your tax state’s tax rate in order on that calculation there and then that will automatically populate with capital gains taxes for the sale of your property if they apply. And now we get our real prize, the number here, $106,503. This is what would actually hit your bank account if you sold the property under this set of assumptions. Is there a simpler way to get to this number? I don’t think so. I think you have to do all of these things in order to get to these numbers and that’s just the first two sections.

Mindy:
Oh wait, there’s more.

Scott:
Oh, we have to keep going here. Now we have to say, okay, the most obvious case, the one that we talked about BiggerPockets money is just put that money in the stock market and we have to make an assumption about what that’s going to yield here. So I assume VOO, and I’ve put in a 10 or 9% rate here. 9% is kind of the true average stock market over the last 30, 40 years return, but I’ve bumped it up to 10% and the reason I’ve done that is to illustrate that, is to increase the appeal of putting the money in the stock market relative to keeping the home. I want to make it less appealing to keep the home than putting the stock market because keeping the home is going to involve a lot of work, geographic concentration, those types of things. If you believe the stock market is going to perform better, you can bump this number up.

Scott:
If you believe it’s going to perform worse, you can knock it down here. Okay, so the next section here is assumption is the first case, right? So if case one is assuming you’re going to invest this money in the stock market, case two is you’re going to use the sale proceeds towards your next down payment. So this person is selling their home and they’re going to buy a new home and that new home mortgage is going to be at a much higher interest rate. So this was built a couple of months ago here in September of 2024. Rates have come down a little bit and I bet you can get up to like 5.8% on the next property here. So let’s change that one right now. That gives you a new monthly p and i payment, and if you put the $106,503 down and as additional down payment towards the new home, you reduce your mortgage balance from three 50 to 2 43 and therefore reduce your monthly p and i payment by about 500 bucks.

Scott:
That’s an important consideration. We’ll flow that through to the model’s outputs when we get down into the next section. Okay, another case, you can keep your home as a rental. In this case, we need to make an assumption for rents. Gross rents. I’ve assumed $2,600 here. We’ve got a rent estimation tool at BiggerPockets, which is linked in the spreadsheet. You want to use that. We know our p and i, our principal interest taxes and insurance payment from up here, so we just pop that down here. We’ve got to make assumptions for vacancy, maintenance expenses and CapEx. We have an assumption here for landlord paid utilities if you are going to not have the tenant pay those and that gives us an approximation for cashflow. Next section done. Any questions here so far, Mindy?

Mindy:
Yes. What is good cashflow?

Scott:
What is good cashflow? It’s all relative to your property. In this case, let’s say this is about 500 bucks a month. That’s going to be a little less than $6,000 a year. So to five and a half, 6% cash on cash return on this 1 37 in equity or 106 and true net equity. That’s pretty good. That’s probably like a at least four and a half to maybe bumping up against five and a half percent cash on cash yield in this scenario, if you believe these assumptions, if you don’t like these assumptions, bump ’em up. I have a hundred bucks a month for a small, nice newer property and three bucks a month for a old crappy larger property. So it’s really a tough guess here. Some people do it on percentage of rents. I’ve kind of taken a middle ground here and assumed a different assumption for each maintenance and CapEx here, but this is about 10% of rents for example, 8% of rents for both categories for example, which I think a lot of landlords would agree with on here.

Mindy:
Okay, so when I’m looking at these numbers, how do I know this is good cashflow? Remember, I am a homeowner, not an investor.

Scott:
Well, that’s what the tool’s going to do. So the tool’s going to show you what your cashflow is going to look like in each of these scenarios in the first year and over time as we roll through with the assumptions. So what does good look like? Well, good is relative. It’s what do I do with this $137,000 in equity in my home or $106,000 in equity that I’ll realize after taxes if I actually sell the thing. And so my choices are keep it where it is as a rental property, put it in the stock market or put it towards my new home mortgage. Again, there’s other choices there. If you have a better use case than any of these, sell the property and put it towards that, but that’s not what I think most homeowners are going to struggle with these fundamental challenges. Do I keep my old home and rent it or do I sell it and if I sell it, do I put the proceeds toward my new home mortgage during the stock market?

Scott:
So those are our kind of four cases and then we have to assume several additional things here. We have to say, what is this thing going to appreciate at on a long-term basis? I’ve assumed the case Schiller 3.4% rate growth rate for both home prices and long-term rents. You can certainly change those and I’ve assumed expenses will grow in line with that, although expenses may grow in line closer to the core inflation target at about two to 2.5%, but this is I think, reasonably conservative here unless you’re a big bear on inflation. Again, that’s why it’s an assumption you can change it. I’ve just populated with what I think are reasonable assumptions for average Joe in a median situation here

Mindy:
And I’m curious to see how other people’s calculations shake out. So if you do this and you want to share this with us, [email protected] [email protected] or email us both,

Scott:
We got to take one final break, but stick around for more on the numbers you need to be considering before you sell your property.

Mindy:
Welcome back to the show. Let’s move down to these graphs because I know you look at these graphs all day long. I don’t look at graphs all day long. What is this one telling us?

Scott:
I wanted to kind get to two fundamental outputs with this exercise. One is how much cash comes into the person’s life based on either decision? And this is less important in this specific example, but when we go through a higher priced house, I’ll show you why this one could be a major impact here, but it is an important consideration. If you keep this place as a rental and you believe these cashflow numbers, then keeping the thing as a property and DIY managing is going to make a big difference for you. That’s $7,000 in year one cashflow compared to what is that $1,400 in cashflow from an index fund investment. Now one caveat here is all additional cash once we get into the model for building this out, there’s a complicated model here, you can go and dive into it for all this. This one’s a real beast to look at and I had a lot of fun constructing, but what I do just behind the scenes for anyone who’s wondering is I take all of the cash flow and I invest that cash flow in the stock market at whatever this assumption was.

Scott:
So if you generate a couple thousand bucks in rent, then I’ll take that rental income and profit and I’ll put it in the stock market and I’ll assume that you get these returns on that investment. Make sense? So that’s going to come in there and that’s not going to be exactly the same as the outputs in the model here. It’ll add that in, okay? Just to be fair, from an opportunity cost perspective, so the stock market’s going to produce the least amount of cashflow in this particular example, the passive landlord is going to produce the second least amount of cashflow. The DIY landlord is going to get the most and that will ramp dramatically over the next few years. But in year one at least I want to call out that selling the property and using those proceeds towards a new home mortgage will reduce that mortgage balance by enough and the cash outlay for that, that this will, you’ll actually have a bigger bank account balance at the end of year one if you just sell your property and put the proceeds towards your new home mortgage to pull that down, which I think is interesting.

Mindy:
So based on this graph, Scott Trench, real estate investor, CEO of BiggerPockets, creator of this beast of a spreadsheet, what would you do if this was your numbers?

Scott:
Oh, I’d keep this. So first, this is the cashflow impact. I keep this thing as a rental all day. Look at this, you’re going to produce a ton of cashflow in year one and it’s because you have this low interest rate mortgage and high leverage against it. And even with this low rent to price ratio, that mortgage is such an asset in this case, this is a keep decision all day and it gets even better when we think about the net worth impact. So this starts out pretty close and let’s, let’s actually walk through what’s going on in the net worth impact and why I got this funky spike going on. Okay, so let’s start with this. If I use the proceeds towards the new home mortgage, then I will have bumped down that mortgage a little bit and I’ll be saving from a net worth perspective the amount that I’m spent not spending an interest, I’ll be able to invest that in the stock market and grow wealth.

Scott:
So that’s going to grow the least relative amount of long-term net worth. In this particular example, if I sell and invest in passively an index fund, then I start off with that basis and compound it and reinvest the dividends with this blue curve. In the case of keeping the home, what’s happening here is I’m computing your net worth on an after tax realizable proceeds basis. What does that mean? Well, remember this tax component here. If you sell this property and you don’t live in it for the last two years, the gain becomes taxable. And so you at least for the first two years can still realize that tax exclusion after year three, you age out of that. You haven’t lived in that property for two out of the last five years and you no longer can get that tax exemption. And so the net worth impact the real value of this property to you on a net worth after tax basis declines. Now, this is a very conservative way. This is the most unfair possible way I can build this in favor of selling the property and moving the proceeds into an index fund because the index fund, if you sell this, you’d pay taxes on it on this fund, but I’m trying to keeping the property as unappealing as possible because I know there are the soft problems that go along with it of the active management piece. Is that making sense, Mindy explaining that? Well,

Mindy:
Yes, and I know that three year rule, and I was still until you said that, I was like, what’s with that big weird jump? Yeah, that’s great.

Scott:
That’s why you’re seeing this funky bump here. Now, the next two charts on the right here are just the same graphs, but pulled out 30 years to show the long-term impacts of this decision. And now we can see that these really begin to amplify, right? The DIY landlord is going to generate a lot more cashflow for the life of the loan. And then in year 27, remember our mortgage is already three years old on our property, the mortgage will get paid off and therefore your cashflow will bump. That’s why you’re seeing this spike at the end of the tail here. For those who are curious in true spreadsheet nerds and then the cashflow impact on the payoff, the mortgage and the stock market are much more muted down here on a relative basis. You get way more cashflow over life of this, whether you keep it as a DIY landlord or hired out to a property manager.

Scott:
And in this situation, you also get way more net worth over a 30 year period. I think it compounds to what, $3.4 million in this particular example versus a $1.8 million. This is a $1.6 million decision over 30 years. If you believe this set of assumptions on this, and I got beat up in a comment on this from somebody in the blog and they’re like, yeah, the average American can’t manage their home, they can’t. It’s like, guys, yes, renting a rental property is work. Yes, it is not going to be completely passive, but the average American I think should take the time to run these numbers and say, do I believe this? And if I do, am I willing to just keep this thing and deal with some of the headaches in exchange for the opportunity to make an incremental $1.6 million over the next 30 years? How much am I going to earn for my career during that time period in there?

Scott:
And so I just think run the analysis and make the decision right now. Why is this happening? It’s because of leverage. This is a highly levered property, still a $277,000 mortgage on a $415,000 property with a low interest rate, and every year, if we believe it appreciates on average 3.4% and the growth at 3.4%, those magnify the returns. And that’s why you’re seeing this outcome really compound so much in favor of the landlord in this situation. So this is the median, and I think that millions of Americans who are in situations similar to this really should, I think the tool says keep the property or really strongly considerate and know that they’re giving up a big opportunity cost if they sell it, if they believe again, these long-term assumptions. Okay, so that’s part one. Mindy, are we ready for part two and more expensive property?

Mindy:
Yes. Because you said you made this as unappealing as possible towards keeping the house. I’m wondering if these change so that it definitely makes it an easier decision to keep or sell.

Scott:
Well, yeah, look, so one of the things here is the stock market return for, so the real estate equity piece in this is computed as the realizable proceeds after tax. If you were to sell the property to make it more fair in favor of stocks, we’d have to say we have to do the same thing. And we’d say, okay, if I took $106,000 and compounded it to $1.8 million over the next 30 years, then that $1.8 million, if I sold that, I’d pay a 20% long-term capital gain and I’m left with $1.5 million in this situation. So that would bump that down if it was apples to apples on this, and I would actually say that you could reasonably do that, you could bump this down to 1.5 and bump this one up because real estate has opportunities to 10 31 exchange, pass it on to your heirs at a stepped up basis, those types of things. But those are not factored into the spreadsheet. So the actual gap, if you’re willing to be really smart and crafty from a tax strategy perspective is potentially much larger than this.

Mindy:
Run your big numbers. Let’s see how this works with a higher,

Scott:
This is all fine and dandy. So this is the median home price in America. BiggerPockets money and BiggerPockets general members tend to be wealthier and live in nicer, larger, more expensive homes than this median price point. And I’ll tell you right off the bat, once we plug in different numbers here, this is going to change and it’s going to be sell all day rather than keep the thing on this. But let’s go through it. Let’s take a Mindy, what’s a home you recently sold to somebody maybe like in the seven, $800,000 range. Can you build that picture in your head?

Mindy:
Angie’s under contract at six 50.

Scott:
So let’s do a $650,000 home and let’s say this home was purchased at 400, let’s say it was purchased at 3 85. Okay, in 2019, let’s say that they’ve got a mortgage, they didn’t refinance it or they refinanced it at a lower mortgage price. So we’ve got a $325,000 mortgage back from 2021. Oops. By the way, this number has to be entered as a negative number. I’m sorry for my bad UX here on this, but if you’re going to use this tool, enter as a negative number. I’ve called that out here, but you saw, I just forgot it there as well. Okay, so we’ve got this new mortgage at 3 46. We’ve got our low interest rate. Let’s bump these property taxes and insurance up. They’re not going to sit there at a property of this level. So let’s call $4,000 in property taxes and let’s call it a 3,300 in insurance. Does that sound reasonable, Mindy?

Mindy:
Yes.

Scott:
Okay, awesome. We’ve got our brokerage fees and all those types of things. Again, if you don’t like those, you can know who to email. We’ve got our net sale proceeds and we’ve got our capital gain here. So we are still under the tax threshold in this particular example, and we can pull those up. Okay, let’s keep the same assumptions here for a new home mortgage on this. Keep the same. And let’s now change the assumptions for the rent situation. So what would this place rent for Mindy?

Mindy:
This place would rent for $4,000 a month.

Scott:
Ooh, this one might be a keeper actually as well. We’ll probably need to bump these up. It sounds like a nicer property. Might need a little bit more maintenance. So let’s bump those expenses up here and now we’ve got a real winner on this particular property, $1,200. So this one’s also going to be a keeper here. This is a bummer example on this. Let’s cheat here a little bit and let’s bump this current value up to eight 50. This property is now worth eight 50 with those same assumptions. We have a more expensive house, 850, $500,000 mortgage on it. Same old stuff here we’ve got, let’s call, the new mortgage is going to be 600,000 on the new property, and we’ve got our kind of same assumptions here for these. Let’s put, let’s bump these up even a little further here. 5,000 and 4,000. Now what we’ve got is a very interesting and very different picture for this person in the wealthier cohort with a little bit more of a more expensive home, right?

Scott:
All of a sudden the big factor here is how much is the mortgage on the new house going to be? That’s overwhelming everything else because we’re dealing with such a big number and a big pile of equity that we’re going to be able to extract here. So this, if they’re using the 200 or the $319,000 in after tax proceeds to pay down their new mortgage at 5.8%, they’re going to reduce their payment from 3,500 to $1,600 a month. That’s a $22,000 swing in cashflow. Now, that may have different impacts on the net worth basis over the next 30 years, but that may be your primary consideration in this case and cannot be ignored. And that’s why these two graphs in combination are so important. The cashflow on this type of house is also not going to be that great because properties of this value tend not to have a great rent to price ratio, and that’s going to impede your cashflow to a large degree and it might go to zero or even negative if you’re to hire out management.

Scott:
So we’ve got a very low amount of cashflow here on the, if you keep it as a passive investment, you’ve got a very small amount of cashflow if you put it into the index fund and a little bit more if you DIY landlord, this thing on the net worth side, you’re just earning the interest rate here by not paying the interest on the new home mortgage. The other three are super close here, and once we factor in that tax advantage out after year three, the stock market becomes a clear winner in this particular case in terms of relative net worth on this. So for the more expensive home that’s less levered, if you have a lot of equity in a more expensive home, you’re probably going to be better off selling the place than keeping it as a rental. And if you’re in a less expensive home with a little bit better of a price to rent ratio or achieving a little bit more cashflow, it’s probably going to make a lot more sense to keep the property.

Scott:
And this is so case by case. You can see how each one of these inputs can blow the assumptions and the rest of the model here when we think about it. So those are the two takeaways I wanted to basically share at the highest level. I wanted to preview the tool. I don’t know how to make it that much simpler, so I think it has to be done this way, but again, this is available for anyone to [email protected]. All you got to do is go to the navigation bar, hover under, analyze Deals, and go to seller keep. So this is available for anyone to use as long as you’re a BiggerPockets Pro member. Of course, at biggerpockets.com, you hover under over the navigation bar, go under, analyze, analyze Deals, and then click on sellers Keep, and you’re going to be able to find this and use the tool and make your own assumptions about the property. Also, happy to answer questions if you want to DM me on BiggerPockets or post questions to the BiggerPockets forums about the outputs of the spreadsheet here. But I think this is a critical analysis that tens of millions of Americans are going to need to make, and the answer is going to vary by person, and the opportunity costs can be huge depending on what you think is going to happen over the next 20, 30 years.

Mindy:
Scott, I agree. I’m glad that we had these giant swings. So you could see that sometimes it is going to say sell is the best choice, and sometimes it’s going to say keep is the best choice. I think this is very, very interesting. I am definitely going to be running these numbers for potential real estate clients because they are going to want to know, I’ve had a lot of real estate listings right now saying, should we keep it and rent it out or should we just sell it? The number one question that I think you should ask yourself is, do you want to be a landlord? Do you want to deal with these issues? No, because I think that this could be a very emotional decision as well, and not everybody is going to be able to look at this and say, oh, it’s going to cashflow all day long. I should keep it. I don’t want to be a landlord. Really.

Scott:
Okay, I just want to push back on that particular thing there. I got that intimate comment here as well. Respectful, respectful disagreement. Mindy, I don’t want to be a landlord. I run BiggerPockets. I don’t want to be a landlord. Being a landlord is work. It involves managing tenants. What I want, however, more than not wanting to do the landlording duties is $1.6 million per property over 30 years. So that’s the thing that I think people need to ask themselves is, look, nobody wants, if you could get the work of not being a landlord, of being a landlord without doing the work, then of course you would take that. But that’s not the choice. The choice is there’s an opportunity cost. There is massive incremental cashflow and massive incremental net worth that could be had by maybe 20 million Americans who have own homes that are priced at the median price point in this country.

Scott:
If they keep the home and become a landlord, and again, depending on they need to run those numbers. And then you make the decision, okay, I don’t want to be a landlord. How much would someone have to pay me to be a landlord? That’s a better question. And if that answer is a hundred thousand dollars a year, then this is not enough. But if that answer is 5,000 or $10,000 a year, this is way more than enough. And that, I think is the piece that millions of people need to consider here. That’s an entire career of wealth accumulation in one decision.

Mindy:
Okay, Scott, I asked the question so people who are driving down the road don’t have to or can’t because they’re not sitting here talking to you.

Scott:
Yeah, sorry, I get animated about this because I got beat up a comment on that.

Mindy:
I think that’s a great answer because there are a lot of people who are siding with me. I don’t want to be a landlord, I just want to sell, or, it’s not enough money. I love your impassioned speech.

Scott:
Well, thank you for allowing me to have an impassioned speech here. I hope that folks appreciate the spreadsheet. I went, it had a bunch of, went through a bunch of different cases. Really appreciate any feedback that you find here. And of course, if you need any help with the assumptions, I’ve got these notes and or links to resources on BiggerPockets that can help you out, like taxes and agents and our rent estimation tool, property manager finder, if you want assumptions for rent and those types of expenses. So go check it out and thanks for watching today. We’ve also got a special coupon code for this and all the other tools that are included in the BiggerPockets Pro membership, which includes all of the features you would need to DIY manage your property. And any BiggerPockets money listener who’s listening today can go and get the BiggerPockets Pro membership with a seven day free trial included for anybody, but they can also get 20% off by using the code BP money at checkout. So thank you for listening and we appreciate you and hope you try it out. Use it. Give us feedback.

Mindy:
Yes, [email protected]. If you have found anything you would like to comment on his spreadsheet, he created this from scratch from his big, beautiful brain. Alright, Scott,

Scott:
Let’s get out of here. Thank you, Mindy.

Mindy:
That wraps up this episode of the BiggerPockets Money Podcast. He is Scott Trench. I am Middy Jensen saying we must depart zebra heart.

Help Us Out!

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In This Episode We Cover

  • A step-by-step walkthrough of Scott’s new “Keep or Sell Your Home” worksheet
  • Two realistic examples of when to sell your home or keep it as a rental property
  • The numbers you need to make a rock-solid decision on your investment property
  • The crucial question you should ask before keeping or selling your home
  • How ONE decision can impact your future by hundreds of thousands of dollars (or more!)
  • And So Much More!

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Nykia Wright Named Permanent CEO for the National Association of Realtors®

by | Aug 19, 2024 | Industry, News Feed

CHICAGO (August 19, 2024) – The National Association of Realtors® (NAR) has named Nykia Wright its permanent Chief Executive Officer, effective immediately. 

Wright, an executive with vast experience driving organizational transformation, has served in the interim CEO role since November 2023. 

“I am thrilled Nykia is staying on board to lead us through this time of transformation,” said 2024 NAR President Kevin Sears, broker-associate of Sears Real Estate/Lamacchia Realty in Springfield, Mass. “She has been instrumental in leading us up to this point, and her unwavering commitment to our members makes her the ideal steward for guiding our association through the evolving real estate landscape.” 

During her initial tenure, Wright shepherded the association in early 2024 through negotiations to settle and resolve claims brought on behalf of home sellers related to broker commissions. She also is guiding the implementation of NAR’s Culture Transformation Commission—a group of more than 70 members, including state and local association staff and NAR staff selected through a collaborative process — which was established to identify and break down impediments to being an inclusive, welcoming and respectful organization for all individuals and to ensure that the association meets the evolving needs of members well into the future. 

Under Wright’s leadership, NAR is sharpening its focus on its core mission of serving members, communicating more deliberately, and working to become a more agile organization. Among her immediate priorities will be to continue guiding NAR past the implementation of the proposed settlement practice changes and prioritizing ongoing education, training and compliance for consumers and agents.

“I am honored to have earned the confidence and trust from the Leadership Team to guide this organization at such a critical point. I am committed to ensuring our association remains a powerful and effective voice for the industry and to fulfilling our goal to bring the privilege of homeownership to more Americans,” Wright said. “I am clear eyed about our past and present, and I am hyper-focused on building trust with NAR’s many stakeholders so that we can be successful in ensuring we are bringing the best of NAR to each and every one of our members.”

Wright brings a breadth of executive leadership and strategic advisory experience to NAR. Previously, as CEO of the Chicago Sun-Times, she led the newspaper through a sweeping digital transformation and a merger with WBEZ (Chicago Public Media), which created one of the largest nonprofit local newsrooms in the country. She is a recognized leader in the media industry for managing significant disruption, driving change and implementing digital transformation at the newspaper.

Wright began her career in the financial services industry and, prior to leading the Sun-Times, was a strategy and business transformation consultant who advised Fortune 500 companies and top tier universities on operational, financial and performance improvement projects. 

She is also the co-founder of SonicMESSENGER, a software-as-a-service (SaaS) startup helping democratize audience engagement and measurement by leveraging smart audio. 

Wright serves on the board of the Better Government Association, and she is a member of the Dean’s Advisory Council at her alma mater, the Tuck School of Business at Dartmouth. 

About the National Association of Realtors® 

The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Code of Ethics.

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Now in beta, Eden’s AI home search aims to upend ‘Big Search’

by | Aug 9, 2024 | Industry, News Feed

Agents can use Eden’s AI tools to compete for business with affordability, a unique advantage in a market that may soon find buyers having to pay directly for representation

Innovation is in our DNA at Inman — that’s why we’re excited about August’s Technology and Innovation Month. We’ll kick it off by celebrating the companies and individuals pushing the industry forward with an expanded slate of Inman Innovator Awards at Inman Connect Las Vegas. Then, we’ll continue to celebrate the brightest minds in real estate all month long.

Eden Homes (Eden), a mobile home search application and buyer agency experience powered by artificial intelligence, has formally launched its beta version in the App Store, Inman has learned through an exclusive press release.

The consumer and agent-facing app provides aspiring home buyers the ability to enter specific, detailed descriptions of home wants, save results, select and be updated to ideal matches, and tour homes on request for simple, affordable fees. Agents can test now and direct clients to it via the App Store.

Eden users can also search in collaboration with their selected agent or choose to access the company’s in-house negotiation, escrow management and showing services for a simple flat rate.

Eden is not a discount brokerage but instead uses its AI to reduce the workload and add value for any agent working with buyers. According to the company, the app’s search capabilities are advanced enough — and its AI so quick-learning — to significantly alleviate the tour burden and hand-holding that has, for too long, challenged buyer agents. The buyer can be granted control of the search without the agent being left out the relationship.

In turn, agents are able to compete for business with affordability, a unique advantage in a market that may soon find buyers having to pay directly for representation in cases where sellers decline to offer a commission that will cover listing broker costs and a buyer agent’s desired fee.

“The industry is at conferences trying to hone their objection handling skills instead of fundamentally trying to lower the cost for consumers with emerging technology,” said Eden CEO and co-founder Stormey Barton, in the release. “Eden’s flat rate services allow the average customer to buy a home at less than 1/5th the cost of a traditional agent.”

Barton may be referring to the wave of coaches, brokers and industry leaders speaking out about the importance of “communicating value” in an effort to earn a paycheck directly from buyer clients, a byproduct of the industry-dominating NAR settlement.

Buyers who engage Eden directly can apply savings to buy down their interest rate, which the company will handle on their behalf.

“This streamlined process results in an average total cost of around $2,000, a significant savings compared to the traditional model’s $15,000 average fee,” the release stated.

The company states its algorithms for nailing a buyer’s home preferences rely in part on in-app user activity signals and reactions to scoring. Eden also automatically reads listing imagery and looks for matches based on favorited home features, such as “lots of land” or “family rooms with vaulted ceilings.” Loved or liked homes are scored and saved accordingly in categorized lists.

Home search solutions using AI are emerging quickly as the technology continues to evolve. At first delivered primarily through chatbots, the growth of LLMs has made it possible for consumers to have more human-like, contextual interactions with a search interface and, in the case of Eden, use it to conduct ongoing market research instead of merely initiating a search.

Lundy uses it to assist the visually impaired by pairing it with verbal input, and LocalizeOS applies it to lead cultivation and business analytics, among other emerging industry examples.

Eden’s leadership comes with diverse industry acumen. Barton co-founded land investment fund Peregine Land alongside Eden partner Noah Pape, a graduate of Stanford’s Mathematical and Computational Sciences program. Luke Mizell, who led business development and launched the tech accelerator program at Keller Williams, and Ben Richards, who was an engineer at Affirm, round out the executive suite.

Email Craig Rowe

Rival portal execs team up against a common foe: MLS red tape

by | Jul 31, 2024 | Industry, News Feed

Executives at Redfin and Zillow made the case at Inman Broker Connect that consumers would benefit from more universal standards of data sharing by MLSs. But the path to such a future is rocky, they said.

HAPPENING NOW! At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. JOIN US VIRTUALLY.

In the cutthroat world of listing portal market share, it’s rare to see top-level executives at rival firms walking in lockstep.

However, that’s just what industry relations chiefs for Redfin and Zillow did on Tuesday, taking aim at what they described as a mountain of red tape by hundreds of MLSs across the country that has greatly limited what features their nationwide portals can offer to consumers.

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The comments from Joe Rath of Redfin and Matt Hendricks of Zillow came at Inman Broker Connect, taking place this week in Las Vegas. Sam DeBord of the Real Estate Standards Organization added his perspective as the CEO of an organization working to simplify how data is used and distributed by MLSs.

“Sometimes older rules look like the old tag on the mattress that said, ‘Do not remove this or go to jail,’” DeBord said. “We don’t sometimes know at a certain point why we’re still following a certain rule — for example, ordering the photos.”

At the core of the listing portals’ complaints is the fact that their data comes through contracts with hundreds of multiple listing services across the nation. Each MLS has unique and carefully crafted rules to protect its data and, in many cases, limit how it is used by third parties like listing portals.

“When we have to deal with 500-plus different feeds that all may have a different set of rules,” Hendricks said, “it makes it tough for me, for Joe, for anybody out there, to tailor that 500 ways over, or 300 ways over.”

Hendricks said that some of the MLS rules — such as requirements that exterior shots of the home be presented first for all listings — are a carryover from the days of paper records. Rules like these often make it impractical to customize the home search process to the preferences of the user, he argued.

Rath said Redfin has a host of news tools it knows it could roll out or existing tools it could improve on with the right nationwide data environment. The data exists, the tools are there, and the permissions are all that is missing.

“In some cases, we’re just trying to cut through the red tape to be able to do it ourselves,” Rath said.

Still, Rath said, the limitations are not a huge factor holding back listing portal traffic and revenue. User activity on listing portals is driven more by overall inventory trends, he said. The limitations placed on MLS data mainly hurt consumers, appraisers and others who might benefit from more universal access to the data, and better tools to make sense of it.

Both said they were looking to leadership from MLSs, real estate brokers and groups like DeBord’s RESO to help chart a path to more universal standards of real estate data.

“Think of it as this is a chance for us to evolve a whole set of rules as opposed to, let’s all lock down more than we already have,” Hendricks said.

Email Daniel Houston