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.

Each week on The Download, Inman’s Christy Murdock takes a deeper look at the top-read stories of the week to give you what you’ll need to meet Monday head-on. This week: Industry analyst Ryan Tomasello, who predicted a 30 percent fall in commissions due to legal, economic and governmental challenges, prepares to take the stage at Inman Connect Las Vegas to discuss consolidation, disruption and innovation.

As a managing director at global wealth management and investment banking company Keefe, Bruyette & Woods, Ryan Tomasello leads the firm’s research coverage of fintech and real estate technology.

Tomasello and his firm first made waves back in October, releasing a report predicting the loss of a million Realtors and a 30 percent dip in commissions if the Department of Justice and buyer- and seller-initiated legal maneuvers resulted in a ban on cooperative compensation. That was before the Halloween verdict in the Sitzer | Burnett trial and the subsequent March settlement from the National Association of Realtors.

EXTRA: NAR to shed 1M members if shared commission banned, analysts say

This week, Tomasello will take the stage at Inman Connect Las Vegas to talk about industry consolidation, disruption and potential innovation. Matt Carter sat down with Tomasello for a pre-ICLV Q&A to learn more about what he calls a “watershed moment” for the real estate industry.

While Tomasello and his firm throw around some big numbers when predicting changes in the industry, he took pains to explain that those changes won’t be immediate.

“I think the key caveat there is that it’s likely to take time,” Tomasello said. “It’s not something that will happen overnight. As much debate as there’s been around how much commissions will decline, there’s an equal amount of debate around how long this impact will take to play out.”

Check out Carter’s interview with Tomasello and, if you’re in Vegas this week, don’t miss his Wednesday morning main stage appearance. Can’t make it in person? Grab your virtual ticket here for the livestream.

As always, we’re laser-focused on bringing you all of the information you need to navigate the new normal — without letting your business fall victim to any potential negative effects. This week, we’re sharing ideas to help you build and scale, embrace the potential of M&A, fine-tune your marketing and pivot to a seller focus.

In addition, in this week’s Pulse survey, we want to find out what questions still haven’t been answered adequately from your perspective. Your answers will help drive the content we provide in the weeks ahead.

As rules change, your best friend is an entrepreneurial mindset

Entrepreneurship isn’t just good for individual real estate pros, PR and marketing expert Molly McKinley writes. It’s good for organizations and for the industry as a whole.

EXTRA: Forget mega-agent recruiting. Recruit brokerages instead

As commission conversations change, become a seller specialist

Consumers expect specialization in every area of life, from doctors to hairdressers, coach Verl Workman writes. They should expect no less from their real estate expert when it’s time to sell.

EXTRA: Demystifying KPIs and essential marketing metrics

What unanswered NAR settlement question are you stressing? Pulse

Buyer agreements for open houses? Workarounds? Concessions? As agents race to comply with terms of the NAR settlement on Aug. 17, Inman wants to help answer your toughest questions.

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.

After holding steady for two weeks, mortgage rates look poised to resume a pullback from 2024 highs, after the Federal Reserve’s preferred measure of inflation fell for the third month in a row.

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The personal consumption expenditures (PCE) price index fell to 2.51 percent in June from a year ago, just half a percentage above the Fed’s 2 percent target, the Commerce Department’s Bureau of Economic Analysis reported Friday.

Core PCE, which excludes the cost of food and energy and can be a more reliable indicator of underlying inflation trends, was up 2.63 percent from a year ago, essentially flat from May.

PCE and Core PCE trending down

“We see a decent chance that core PCE hits 2 percent in the middle of next year, much sooner than the Fed’s forecast,” Pantheon Macroeconomics Chief Economist Ian Shepherdson said in a note to clients. Projections issued by Fed policymakers in June showed they didn’t expect inflation to hit 2 percent until 2026.

Ian Shepherdson

“If we’re right, the clear and obvious progress towards the target across [the second half of 2024], coupled with a loosening of the labor market, will push the Fed into easing much more quickly than their current forecasts,” Shepherdson predicted.

Pantheon Macroeconomics is predicting the Fed will cut short-term interest rates by 1.25 percentage points this year, starting with a 25 basis-point cut in September, followed by 50 basis-point reductions in November and December. A basis point is one-hundredth of a percentage point.

That would bring the federal funds rate to between 4 percent and 4.25 percent, down from the current target of 5.25 percent to 5.50 percent.

Futures markets tracked by the CME FedWatch Tool show investors aren’t anticipating the Fed will cut that drastically. As of Friday, futures markets investors put the odds that the Fed will cut rates by at least 75 basis points this year at 65 percent, and only about a 7 percent chance for deeper cuts.

The latest PCE data came on the heels of a surprisingly strong gross domestic product (GDP) report released Thursday. The advance estimate from the Bureau of Economic Analysis put second-quarter GDP growth at 2.8 percent, up from 1.4 percent in Q1.

That rate of growth “was undeniably robust, easily beating both our own and the consensus forecasts,” economists at Pantheon said in their July 26 U.S. Economic Monitor. “Looking under the hood, however, we see good reasons to think this strength will be short-lived.”

The biggest driver of Q2 GDP was stronger than expected government spending, Pantheon economists said, which “looks unlikely to be repeated, given the pressure that much weaker revenue growth is putting on state and local government finances.”

Yields on 10-year Treasury notes, a barometer for mortgage rates, dropped 6 basis points Friday after the release of the June PCE price index. Treasury yields had climbed by about the same amount Thursday on the strong GDP report.

Rates for 30-year fixed-rate conforming mortgages averaged 6.77 percent Thursday, down half a percentage point from a 2024 high of 7.27 percent registered on April 25, according to rate lock data tracked by Optimal Blue.

A survey by Mortgage News Daily showed rates on 30-year fixed-rate mortgages were down 5 basis points Friday, back to about where they were a week ago.

Economists at Fannie Mae and the Mortgage Bankers Association (MBA) predict mortgage rates will continue to drop into the low sixes by the end of next year.

Mortgage rates projected to ease

Source: Fannie Mae and Mortgage Bankers Association forecasts, July 2024.  

The recent decline in mortgage rates hasn’t sparked a rush to buy homes, with a weekly MBA survey of lenders showing requests for purchase loans fell by a seasonally adjusted 4 percent during the week ending July 19 when compared to the week before, and was off 15 percent from a year ago.

A series of encouraging consumer price index (CPI) reports have also raised expectations that the Fed will ease, although Federal Reserve Chair Jerome Powell and other policymakers at the central bank have consistently warned that they won’t cut rates until they’re convinced inflation has truly been tamed.

That was the gist of remarks Fed Governor Christopher Waller made on July 17, following the release of a CPI report showing price appreciation cooled to 3 percent annually in June.

Christopher Waller

“On the one hand, it is essential that monetary policy get inflation down to a sustained level of 2 percent,” Waller said. “If we start to loosen policy too soon, and allow inflation to flare up again, we risk losing credibility with the public and allowing expectations of future inflation to become unanchored.”

The credibility the Fed has gained by keeping rates elevated “has helped inflation fall as quickly as it has in the past 18 months and squandering it would be a grave mistake,” Waller said. “Monthly PCE inflation has very recently been running near 2 percent at an annual rate, but I need to see a bit more evidence that this will be sustained.”

Waller also acknowledged that there’s also a risk that if the Fed waits too long to cut rates, that could contribute to “a significant economic slowdown or a recession, with unemployment rising notably.”

Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

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.

More than 10 million homesellers have been — or will be — inundated with notices that they might be entitled to receive payment from the proposed commission settlements by a handful of real estate brokerages.

JND Legal Administration, the company tapped by lawyers to oversee administrative tasks around the commission lawsuit known as Gibson, has sent more than 10 million postcard notices to potential class members, as well as more than 27 million email notifications, since March, according to additional legal documents JND provided to Inman.

JND is also running ad campaigns across print, TV and digital media to further reach consumers who might be able to file claims, according to the documents. The efforts highlight both the massive scope of the settlements, as well as highlight the fact that they are moving forward outside the courtroom.

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“If you sold a home and paid a commission to a real estate agent, then you may be part of class action settlements,” the notice states. Already, more than 700,000 of the postcards have been returned as undeliverable. 

Homesellers have until May 9, 2025, to submit a claim form by mail or on the website www.RealEstateCommissionLitigation.com. 

Alternatively, they have until Oct. 3 to ask not to be included in the settlements, or to object to them.

A final public hearing regarding the settlements by Compass, Real, Redfin, Realty One, @properties, Douglas Elliman, Engel & Volkers, HomeSmart and United Real Estate is scheduled for Oct. 31.

Not every brokerage listed in the Gibson suit has reached a settlement agreement, and the total settlement pool could grow in the weeks ahead. EXp Realty is the largest firm to not yet reach a settlement agreement.

Homesellers might be eligible if they listed their homes in the following areas and timeframes: 

• On an MLS in Alabama, Georgia, Indiana, Maine, Michigan, Minnesota, New Jersey, Pennsylvania, Tennessee, Vermont, Wisconsin, or Wyoming between Oct. 31, 2017 and July 23, 2024
• On an MLS in Nevada between Jan. 15, 2018 and July 23, 2024
• On an MLS in Arkansas, Kentucky, or Missouri between Oct. 31, 2018 and July 23, 2024
• On an MLS in California between Oct. 2, 2019 and Jul 23, 2024
• On an MLS anywhere in the United States, other than in the states listed above between Oct. 31, 2019 and July 23, 2024.

In total, the brokerages listed above have agreed to pay over $110 million, collectively. The total is over $730 million when including settlements from the National Association of Realtors, HomeServices of America, Keller Williams and others. 

Plaintiffs’ attorneys are entitled to receive up to 33.3 percent of the total, plus out of pocket expenses incurred during the case.

Email Taylor Anderson

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.

EXp Realty has hired former USANA Health Sciences executive Donald Cherry as its new vice president of sustainability, according to an announcement on Friday. Cherry will spearhead efforts to improve the company’s ethical, social, environmental, cultural and economic impact on agents and consumers.

We are excited to welcome Donald to our team,” eXp Realty Chief HR Officer Renée Kaspar said in a written statement. “His wealth of experience and dedication to sustainability will play a key role in advancing our initiatives. Donald’s proven track record speaks volumes, and we trust he will guide us in creating a more sustainable future for eXp Realty.”

Donald Cherry | Credit: LinkedIn

Cherry spent 18 years with USANA, working his way up from a project specialist to the executive director of corporate sustainability, a role he held for almost four years. During his time as USANA’s executive director, the company was recognized as one of America’s Most Responsible Companies and one of America’s Greatest Workplaces for Diversity by Newsweek magazine.

The University of Utah and Northeastern University grad was also honored as one of Utah Business’s ‘Forty under 40’ for his work in the sustainability and diversity, equity and inclusion fields.

“I am excited to join eXp Realty and lead their sustainability efforts,” Cherry said. “I look forward to working with the team to create impactful sustainability initiatives that will contribute to the company’s growth and success.”

Cherry is eXp’s latest high-level hire this year.

The cloud-based brokerage also hired leading marketing strategist Wendy Forsythe and star broker Kendall Bonner in April and promoted former Chief Strategy Officer Leo Pareja the same month. The brokerage also promoted industry veteran and DOORA co-founder Troy Palmquist from director of growth to VP of growth and product marketing in June.

Email Marian McPherson

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.

Black homeowners have long struggled to experience the same gains as their white counterparts during the selling process. They grapple with slower home value growth, especially if they live in a majority-minority ZIP code. And when it’s time to sell, they disproportionately receive low-ball appraisals and buyer offers — two more roadblocks in Black Americans’ quest to build long-term wealth.

However, according to a University of Washington research team, Black homeowners have been able to experience better seller outcomes in the iBuyer sphere than in the open market.

What gives?

The Information School team zeroed in on Mecklenburg County, North Carolina, which has 1.1 million residents across six cities: Charlotte, Huntersville, Matthews, Cornelius, Pineville, and Mint Hill. Charlotte accounts for almost 900,000 of Mecklenburg’s 1.1 million residents and has a Black population of 35 percent. IBuyers achieved solid results in Charlotte, reaching 8 percent market share in 2021.

The team accessed 50,000 publicly available property transfer records from 2018 to 2023 for Mecklenburg County and then cross-referenced those records with North Carolina voter rolls, which provide racial data. From there, the team controlled for 50 factors, including home size and neighborhood crime rate, and found the offer gap between Black and white homeowners shrunk from $36,051 on the open market to $4,436 with iBuyers.

The gap shrunk due to the fact that iBuyers paid Black homeowners $4,376 more and white homeowners $27,239 less, on average.

“There’s very little reason for us to believe that there’s some purposeful intervention going on here,” senior author and associate professor Nic Weber said in a prepared statement. “iBuyers are paying Black homeowners a little bit more, but not significantly more. Rather, iBuyers don’t seem to be willing to pay white homeowners what they might be able to earn if they sold through a traditional broker.”

Although Black homeowners are getting better offers through iBuyers, UW’s team said iBuyers are contributing to trends that hurt Black homeowners and homebuyers in the long term. Institutional buyers have an outsized presence in the iBuyer space, with institutional ownership for white-owned homes increasing from 9 percent on the open market to 17 percent in the iBuyer market and 33 percent to 36 percent for Black-owned homes.

Institutional buyer activity is connected to higher housing costs and eviction rates, two factors that disproportionately impact the Black community.

“These real estate investment trusts tend to look for cheap homes that they can buy and convert to rentals so that they can profit over decades,” Weber said. “So this change in conversion rate from people to institutions is troubling because in the U.S., one of the substantial ways that people gain wealth and transfer it between generations is through homeownership.”

Added doctoral student Isaac Slaughter, “iBuyers are offering a service. They’re making the home sale process faster and simpler. While our analysis in Mecklenburg suggests iBuyers are extending some disadvantages that Black home sellers tend to face to white home sellers as well, we don’t know that people are experiencing these sales as generally harmful or whether they’re aware of the tradeoffs that are involved.”

The UW team plans to extend their research to Maricopa County, Arizona, and Orange County, Florida.

Email Marian McPherson