by Debra Trappen | Aug 27, 2024 | Industry, News Feed
The move follows a public rift between the CEO of Tesla and the maker of ChatGPT. Musk had previously been paying rent for OpenAI’s headquarters.
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The artificial intelligence company OpenAI has left its long-time office space in San Francisco after a rift with tech billionaire Elon Musk led him to stop paying for the firm’s rent, according to news reports.
The company behind ChatGPT vacated its 37,100-square-foot space in the Pioneer Building in the city’s Mission District, according to The Real Deal.
The change comes after a public split between Musk, who owns X, the social media platform formerly called Twitter, and OpenAI over a dispute about the latter’s alleged profit motive.
Musk sued OpenAI in February, alleging that the ChatGPT-maker put profit over the public good. In the complaint, Musk said that he paid for OpenAI’s rental costs.
According to Musk’s complaint, he was OpenAI’s largest financial backer, contributing over $44 million in its first five years.
“He leased OpenAI, Inc.’s office space in the Pioneer Building in San Francisco, paid its monthly overhead expenses, and even though he stepped down from the Board on February 21, 2018, he nevertheless continued to make regular contributions to OpenAI, Inc. until September 14, 2020,” the complaint said. “It is fair to say that without Musk’s involvement, backing, and substantial supportive efforts, there would have been no OpenAI, Inc.”
The Pioneer Building was also previously home to Musk’s neurotech company, Neuralink, before Musk relocated that firm to Fremont amid his ongoing detachment from San Francisco.
Musk, who is also CEO of the automaker Tesla, has relocated multiple businesses out of California and the Bay Area. His social media company, X, is leaving San Francisco for Texas.
Musk is also using X as the platform for his own new artificial intelligence service, xAI.
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by Daniel Houston | Aug 27, 2024 | Industry, News Feed
Although home price growth is slowing, S&P CoreLogic’s report also showed that first-time homebuyers are being impacted most by rising prices, since in the last five years, prices in the lower end of the market have risen more quickly than other tiers.
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U.S. home prices continued to reach new heights in June, even as the rate of growth slowed as a result of fading inflation, according to dueling reports released Tuesday by the Federal Housing Finance Agency and CoreLogic.
The S&P CoreLogic Case-Shiller Indices and Federal Housing Finance Agency’s House Price Index (FHFA HPI) both reveal a stubborn gap between housing and inflation as prices continue to rise, albeit more gradually, the new data shows.
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Home prices hit an all-time high as the National Home Price NSA Index rose 5.4 percent on an annual basis, down from a 5.9 percent gain in May, according to CoreLogic. The analytics firm’s 20-City Composite and the 10-City Composite, which track prices in the largest U.S. cities, rose by 6.5 percent and 7.4 percent on an annual basis, down from 6.9 percent and 7.8 percent a month earlier.
On a seasonally adjusted basis, the company’s National Index was up 0.2 percent month over month, while the 20-City Composite was up 0.4 percent and the 10-City Composite up 0.5 percent month over month.
“The S&P CoreLogic Case-Shiller Indices continue to show above-trend real price performance when accounting for inflation,” Brian Luke, head of Commodities, Real & Digital Assets at S&P Dow Jones Indices said.
“Home prices and inflation continue to factor into the political agenda coming into the election season,” Luke said in a statement. “While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8 percent more than the Consumer Price Index. That is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100 percent since 1974, but have slightly more than doubled (111 percent) after accounting for inflation.”
The FHFA’s home price report, meanwhile, included data for the full second quarter of 2024, showing that home prices in the U.S. rose 5.7 percent from the second quarter of 2023. Compared to the first quarter of 2024, home prices were up 0.9 percent. Meanwhile, the seasonally adjusted monthly index for June was down 0.1 percent from May.
“U.S. home prices saw the third consecutive slowdown in quarterly growth,” Dr. Anju Vajja, deputy director for FHFA’s Division of Research and Statistics, said in a statement. “The slower pace of appreciation as of June end was likely due to higher inventory of homes for sale and elevated mortgage rates.”
The FHFA’s report also noted that the U.S. housing market has seen positive annual price growth each quarter since the beginning of 2012. Between Q2 2023 and Q2 2024, home prices rose in 50 states and the District of Columbia. States with the greatest annual appreciation included Vermont (13.4 percent), West Virginia (12.3 percent), Rhode Island (10.1 percent), Delaware (10.0 percent) and New Jersey (9.9 percent).
Ninety-six out of the top 100 largest metro areas also saw home price growth in the last year, with Syracuse, New York, posting the greatest growth at 14.2 percent. Austin-Round Rock-Georgetown, Texas, saw the largest price decline during that period at -3.2 percent.
All nine U.S. census divisions saw positive home price growth on an annual basis, with the Middle Atlantic posting the greatest growth at 8.5 percent from Q2 2023 to Q2 2024. The West South Central division saw the smallest appreciation during that period at 2.8 percent.
First-time homebuyers are feeling the pain of home price growth the most, since prices in the lower end of the market are rising the most quickly, according to the S&P CoreLogic Case-Shiller Home Price Indices. Over the last five years, 75 percent of markets measured by the indices saw low-price tiers rising faster than the overall market.
“That home prices continue to increase above the rate of inflation isn’t surprising, but the report showed an even more discouraging trend: prices for starter homes are rising faster than the overall market,” Robert Frick, a corporate economist with Navy Federal Credit Union, said in a statement emailed to Inman. “This means reaching the first rung of the homeownership ladder is becoming even tougher for millions of potential homeowners. What were priced as started homes 10 years ago have now been bid up in price so that only middle-income people can afford them.”
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by Troy Palmquist | Aug 27, 2024 | Industry, News Feed
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As we move into a new reality, buyer and listing agents are both looking for ways to streamline processes and communicate effectively with their clients.
At the heart of the new practices is the issue of how to effectively communicate whether a seller may be willing to provide a concession to a buyer from which they can pay their agent’s compensation. While many MLSs have adopted a new field that allows for a Yes or No response to a seller’s willingness to provide a concession, it could also be used to signify willingness to provide credits towards closing costs or repairs, further confusing things.
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Another concern is centered around listing agents’ historical unwillingness to answer phones. This has long been a bone of contention as many — for reasons completely unknown — are unwilling to communicate in any effective manner.
I am tired of reading agent comments that state, “Due to the high volume of calls, please text instead of calling.” This dialogue, while potentially applicable back in the REO days from agents who had a huge number of listings, is found most often these days on listings by agents who sell virtually nothing and have a single listing that’s been on the market for months.
To be frank, I personally do not believe we are going to see any significant improvement in this area, so we need to develop systems that do not rely on communication from the listing agent. Additionally, I believe we are going to see a growing trend where sellers will not be willing to “tip their hand” by revealing up front what they might be willing to provide as a concession to a buyer’s agent.
There has also been a concern that buyer’s agents might not be willing to show homes where sellers have stated they are providing little or no compensation.
Our team has decided to combat this notion by providing full access to all listings and writing offers as requested, which includes a request for a concession to pay the buyer’s agent — regardless of whether the seller has indicated a willingness to do so or not. Based on any given seller’s response, the buyer then has a choice of proceeding, renegotiating or walking away, as does their agent.
Does this mean we may write more offers than before? Maybe. However, in my opinion, any agent not willing to write a significant number of offers should not be in this business to begin with. With the right systems in place, an offer can be written and packaged in a very short time.
With this in mind, here are key steps we are taking to facilitate the new processes:
1. Establish effective, mandatory buyer consultations
Now more than ever an upfront consultation is critical. With so many changes in effect, agents need the opportunity to go over all of the new rules so that their clients fully understand and are on board.
Since a buyer agreement is now required for every showing, this meeting should happen before looking at the first home. This meeting will be an opportunity for buyer agents to showcase their value proposition, make sure their client is fully qualified and explain the new rules in detail, beginning with the required buyer agreement.
2. Clarify the buyer agreement
There was a significant amount of concern prior to Aug. 17 from buyers who did not understand the need for a signed agreement with their agent that included a request for compensation.
Many buyers did not want to be on the hook for their agent’s commission, especially in higher end markets where the average list price is well over $1 million and buyers are already stretched to the outer boundaries of their financial capabilities to obtain a home. Adding the requirement to pay their agent’s compensation amounted, for many, to adding insult to injury.
Now that the deadline has passed, however, and buyers are discovering that a signed agreement is the new order of things, concern has shifted from needing to sign the document to being able to ensure they still have options and are not necessarily going to be forced to remain with one specific agent or pay them compensation. As a result, we have developed the following parameters:
We ask for exclusive representation
In our state, the agreement has two options: exclusive or non-exclusive. While all of these agreements have a stated time limit, the non-exclusive agreement can be canceled at will and, based on how it is written, end any further obligation. The exclusive agreement, on the other hand, can be canceled but has a 30-day cancellation period. As a result, there could be some pushback to obtaining an exclusive agreement.
To counteract this, we explain that we will be expending an extensive amount of time working on the buyer’s behalf and, as a result, we want that investment of time to be honored with an exclusive agreement. We have a comprehensive value proposition to back up our request for a commitment.
There will always be some buyers who may not agree with the idea of exclusivity, and at that point, a buyer’s agent needs to decide if they are willing to take the risk of working with this type of client.
The major pushback for most buyers comes from the 30-day cancellation period, and this can easily be overcome by writing exclusive agreements that have a limited time frame, such as seven days. In this case, once signed, a buyer is free after one week, with their only obligation being based on whether they end up buying any property shown by that agent to that point (depending on how the agreement is written).
If a buyer wishes to extend the agreement, rather than writing an entirely new agreement, a one-page modification of terms can be sent over by their agent to extend the contract.
For those buyers who are interested in a specific property only, then a short time frame specific to only one property, along with that specific property’s address, will be fine.
We specify our fee for representation
We know our value and, therefore, specify the fee structure that we charge for representing a client.
While this is fully negotiable, we explain that if they negotiate our fee downward, then if any given seller is willing to provide compensation higher than the amount specified in our buyer-broker agreement, that money is simply left on the table and does not benefit anyone.
Put another way, the amount of concession specified is an assurance that we can accept that amount if written into an offer and accepted by a seller, not an automatic guarantee that the buyer will be required to pay that amount.
To clarify, for those buyers concerned about the amount they might need to pay us out of pocket, we explain that they will have the right to walk away from any transaction where the concession offered by the seller does not meet the amount specified in their agreement.
Lastly, we also advise them that, as a last resort, we can renegotiate the fee we would accept should circumstances warrant. In this way, buyers who cannot or will not provide compensation can feel protected and assured that, regardless of the amount specified in the agreement, they will not be compelled to continue with a transaction if their compensation requests are not agreed upon by a seller.
One final fact is that a buyer’s agent also has the right to bow out of any transaction where the compensation request in the purchase agreement is refused by a seller or reduced lower than the buyer’s agent is willing to accept.
3. Establish effective communication protocols
Since attorneys are making it clear they’ll be watching for potential violations, especially around perceived steering, it behooves buyer agents to keep comprehensive records of their interactions with their buyers.
Going forward, our team members will be asking that all requests to show properties be in writing in an email. Once we have received the requests, our agents will check to see if any sellers are willing to provide a concession and then, in a return email, communicate any garnered information back to the buyers. At this point, the buyers will then have the choice as to whether they wish to visit any given property. The choice will be entirely theirs.
Truth is, even if a seller does not provide any clarification as to a concession for the buyer’s agent, there is nothing stopping a buyer from writing an offer that includes a request for compensation for their agent. In fact, I believe going forward, we’re going to see less communication from sellers as to what they may be willing to offer and more of a reliance on the requests for compensation written into any given purchase agreement.
In this new world, why would any seller communicate what they’re willing to offer instead of waiting to see what a buyer asks for — especially if there is an anticipation of multiple offers, which might drive the amount being requested in a downward direction?
With this in mind, there is absolutely no reason a buyer’s agent should “steer their client“ or refuse to show any given property to any specific buyer — unless perhaps the property in question does not meet the buyer’s stated criteria for price, condition, amenities, etc.
Even in these cases, after clarification provided by the agent, the buyer should make the decision to pass, not the agent. Our recommendation is that all these details be in emails so there is a clear audit trail should the need arise to present one and so that any appearance of “inappropriate steering” can be avoided.
4. Write effective offers
Going forward, we will be gathering as much information as possible from any listing our buyer desires to write on and then will submit offers with a request for a concession to the buyer to cover their obligation to pay their agent’s compensation. We will do this regardless of whether the seller is offering a concession or not. After counseling the buyers based on any information available, we will then write the offer based on the buyer’s requested parameters.
5. Increase negotiation skills
I believe we are going to see an increased need for negotiation skills from buyer agents, especially centered around their compensation.
If agents simply accept lower compensation with little or no pushback, then as an industry, we will have earned the right to expect lower compensation going forward. We will need to negotiate during our initial buyer consultation, when writing offers, when responding to any counteroffers, during escrow as items arise from inspections, and so on.
For many, this will mean training to improve basic skills. Since a significant percentage of agents advertise the fact that they are awesome negotiators, regardless of whether or not they have actually taken any negotiation-specific training, it is time to put their money where their mouth is.
The new reality is here. Rather than complain that it may take a lot of extra work to get to the same place, it is time to skill up and face the new opportunities that lie ahead. Not all buyer agents are going to figure out how to work effectively going forward, and when they leave the industry, there will be more buyers for the rest of us to serve. Just make sure you sharpen your sword now so you will end up in the group that is staying.
Author’s note: The views expressed in this article belong to the author and not KW Advisors, its affiliates or employees.
Carl Medford is the CEO of The Medford Team.
by Amy Corr | Aug 27, 2024 | Industry, News Feed
With confusion around the new commission rules, compliance expert Summer Goralik unpacks whether listing agents should verify signed buyer-broker agreements before showing a property.
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There’s a lot of confusion around the particulars of the National Association of Realtors (NAR) commission lawsuit settlement and the resulting business practice changes. Compliance expert Summer Goralik is here to help clear up some of the looming questions so that we can move forward together as an industry.
This week’s question
As a listing agent, are we required to ask the buyer’s agent showing our listings if they have a signed buyer-broker agreement before showing the property?
Compliance expert answer
This question highlights the complexities and nuances introduced by the recent National Association of Realtors’ (NAR) proposed settlement. Significant changes in the real estate industry include the removal of offers of compensation from the Multiple Listing Service (MLS) and the requirement that buyer agents now have a written representation agreement in place with their clients before showing properties.
Whereas the broad strokes of these changes may be becoming clearer, their practical implications are still unfolding, leaving some gray areas in the interpretation and enforcement of these new rules. For this reason, this settlement is raising new questions and concerns, especially regarding the day-to-day logistics for agents and brokers.
Traditionally, when addressing compliance questions, licensed professionals have relied on resources such as real estate law, state department of real estate websites, advisories, and government enforcement actions for guidance. Although some core issues from the recent litigation, like the negotiability of real estate commissions, agency and the disclosure of compensation, are rooted in established law, the new requirements introduced by the NAR settlement are more practice-oriented. As a result, the familiar resources that agents and brokers typically turn to for assistance and direction may be less applicable at this time.
To address the many questions currently emerging in the industry, it is essential to consult the settlement agreement itself, as well as the antitrust commission suits, examine the NAR’s FAQs available on their website, and seek training and support from state and local associations and MLSs.
According to NAR’s FAQs, the responsibility for ensuring that a buyer representation agreement is in place lies primarily with the buyer’s broker and the MLS. The FAQs do not explicitly require listing brokers to confirm whether buyer brokers have a signed buyer agreement before a showing.
In California, for instance, the California Regional MLS (CRMLS) has responded to the settlement with Rule 9.1, which governs “selling procedures.” While this rule clearly outlines the buyer broker’s obligations with respect to representation agreements, it does not impose any additional requirements on a listing broker to verify the presence of such agreements. In fact, the rule explicitly states, “Nothing in this policy shall impose any restriction or requirement upon the Listing Broker.”
Though it is advisable to review the specific rules of your local MLS — since these can vary — it appears that, at least in California, listing brokers are not obligated to confirm the existence of a signed buyer agreement. That said, some brokers may choose to implement internal policies requiring their listing agents to inquire about buyer agents’ compliance with these requirements as part of their due diligence process. This could include adding a step to their listing checklist to ensure that all parties are acting in accordance with the new rules.
It’s worth noting, still, that if not mandated by MLS policy or regulated by law, any inquiry or request for proof of a buyer agreement by a listing agent might not always be well-received or even acknowledged by a buyer’s agent. Nevertheless, if a listing agent suspects that a buyer’s agent is not complying with the new requirements, they may choose to report the issue to the relevant MLS or their local or state association.
In summary, while there is no formal requirement for listing agents to verify the existence of a signed buyer agreement, some licensed practitioners may adopt this practice as a precautionary measure. As the industry adapts to these changes, peer enforcement is likely to become more common, as accountability among NAR members and MLS participants will be increasingly expected.
Editor’s note: Licensed real estate agents should always check with their responsible brokers for guidance, direction and policy regarding the new practice changes, and licensed real estate brokers would be wise to consult with a licensed attorney for legal clarification and support.
The opinions, suggestions or recommendations contained in this discussion are based on Summer Goralik’s experience working for, and knowledge of the laws enforced by, the California Department of Real Estate and must not be considered legal advice or relied upon as legal advice. You should consult with your brokerage, and/or appropriate legal counsel in your jurisdiction, for further clarification.
Summer Goralik is a real estate compliance consultant and former CA DRE Investigator in Huntington Beach, California. Connect with her on LinkedIn.
by Jill Butler | Aug 27, 2024 | Industry, News Feed
Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.
In just a few short weeks, real estate’s ultimate Lone Star state gathering — Inman Connect Austin — will touch down at Brazos Hall in Texas on Oct. 9.
Inman Connect Austin will bring together the brightest minds in the industry — leaders, innovators and top agents — for a one-of-a-kind, supercharged event.
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This is more than just another conference — it’s your chance to gain critical insights, forge powerful connections and equip yourself with strategies that will ensure your business thrives in today’s fast-evolving market.
Here’s a look at some of the key speakers who will be sharing their expertise, helping you stay ahead of the curve and offering you the tools you need to excel.
Kumara Wilcoxon
Global Real Estate Advisor, Sotheby’s International Realty
Kumara Wilcoxon | Sotheby’s Realty
With over 20 years of experience, Wilcoxon has become synonymous with luxury real estate in Austin.
As the top agent for Sotheby’s International Realty worldwide, Wilcoxon’s influence and expertise are unmatched. Her deep understanding of the luxury market, coupled with her dedication to her clients, offers invaluable insights for breaking into or advancing in high-end real estate.
With more than $2.5 billion in sales, Wilcoxon embodies success and strategic thinking.
At Inman Connect Austin, you’ll gain a better understanding of the intricacies of the luxury market from one of the best in the industry.
Sarah Liu
Partner, Real Estate Technology Investment Team, Fifth Wall
Sarah Liu | Fifth Wall
Liu, a partner on the Real Estate Technology Investment team at Fifth Wall, is at the forefront of tech innovation.
At Fifth Wall, the largest asset manager focused on the built world, her expertise centers on identifying and investing in cutting-edge technology currently transforming the real estate landscape.
Liu’s work spans finance, insurance, construction and real estate, making her insights invaluable to understanding how technology can future-proof business.
Liu’s expertise in tech investment offers a unique perspective on the tools and innovations driving the industry forward. You’ll learn from a leader who is shaping the future of real estate technology.
Cord Shiflet
Realtor, Moreland Properties
Cord Shiflet | Moreland Properties
For 15 years, Shiflet has been recognized as the No. 1 individual agent in Austin by the Austin Business Journal. His reputation for professionalism, trust and hard work has made him a cornerstone of the Austin real estate market.
Shiflet’s approach and ability to understand the needs of each client make him a standout in a crowded market. His experience with Austin’s top-tier clients and properties provides invaluable lessons on personal branding.
As a Connect Austin speaker and one of the city’s most successful agents, Shiflet will share insights that have kept him at the top of his game for over a decade.
Ryan Rodenbeck
Broker-owner, Spyglass Realty
Rodenbeck is a visionary in the real estate industry, transforming his solo agent operation into a thriving brokerage with over 100 agents.
Ryan Rodenbeck | Spyglass Realty
Rodenbeck’s expertise in agent productivity, recruitment, technology and automation has made him a sought-after speaker and advisor. His focus on leveraging technology to scale operations is relevant in today’s market, where adaptability and innovation are key to staying competitive.
Attendees at Inman Connect Austin will gain insights into the systems Rodenbeck has implemented to drive growth at his brokerage, providing actionable takeaways that can be applied to any real estate business.
Catherine Lee
President of New Development, Texas, Douglas Elliman
Catherine Lee | Douglas Elliman
Lee is a powerhouse in Texas real estate, leading Douglas Elliman’s expansion across the state.
With deep expertise in new development marketing and traditional real estate sales, Lee’s strategic vision has been key to the success of numerous high-end projects.
Her journey from managing large-scale franchises to leading one of the state’s top real estate firms offers invaluable lessons for anyone looking to expand their business.
Be part of the future this fall
This may be Inman’s first event in Texas, but it’s not our first rodeo. Inman has been bringing together tens of thousands of real estate professionals for decades to provide dedicated time and space for the industry to connect, learn and grow.
Inman Connect Austin is a powerhouse experience designed to deliver maximum value and propel your career forward.
These speakers, each a leader in their field, will provide you with the knowledge and strategies needed to navigate today’s market and come out ahead. Whether you’re seeking to break into luxury real estate, harness the power of technology or stay ahead of the competition, Inman Connect Austin is the place to be.
This is merely a glimpse of who you’ll meet at Inman Connect Austin. Get ready to be inspired by the expert lineup. Register now. We’ll see you in Austin!
Industry incumbent Anywhere has moved away from being a big cash generator, likely a result of the challenging market; its business model is less resilient.
Meanwhile, eXp Realty has grown its cash generation abilities during the same period of time – and in the same market conditions.
Adding real estate portals from around the world — Germany’s Scout24, the U.K.’s Rightmove, and Australia’s REA Group — reveals just how profitable those businesses are.
Considering market size, as measured by population, when comparing real estate portals reveals a thought-provoking data point.
REA Group is world-class in its ability to monetize its market – with an operating cash flow per capita 16x higher than Zillow.
