Aloha all and welcome back to the Island Land Company’s blog for August. This month I think the topic quite literally was laid out in front of me. That topic being the new changes (put into place August 7th) and revisions that have been issued by a settlement between the Department of Justice and the National Association of Realtors. I am not going to get into the specifics per say in this article but rather my goal is to try and explain the new revisions in a digestible fashion for the masses to understand.
One of the main trickle downs behind the changes, there will no longer be a Cooperating Broker’s Commission percentage put onto the Multiple Listing Service (MLS) listing. In the days prior, an agent could see the percentage in which they would receive if their buyer clients were to buy the property at hand. Now personally I don’t think it wise to even check this percentage until the very end of a transaction. Reason being that there are so many twists and turns in which a deal can go, and if my main driver for keeping a deal alive was the dollar amount at the end of the road then that’s just bad business in my opinion. Yes, making money is nice, but the job of any Realtor worth their salt is to represent the BEST interest of their clients. Sometimes the best interest is walking away from a property because the timing or the place just is not the right fit.
Another by-product of the settlement is that buyers who elect to have agent representation must also now sign a buyers representation agreement with the agent whom they would like to shop for homes with. It is speculated that more buyers will self represent in buying homes, but I think time will tell a different story. In Hawaii in particular the market is so much different than most. From a bird's eye view, potentially one is buying a high dollar value property (average property price in Kona was $1.1M last quarter), on an island with 5 volcanoes, potential tsunami and flood zones scattered about the island, and I could keep going but this is not meant to scare you from buying… on the flip side Hawaii is also one of the most breathtaking, beautiful, and tranquil places on earth. Anyways, with there being such variables in the Hawaii market I think folks will ultimately find it wise to seek representation.
As I was on a walk the other day, which I must say is great for my thinking and creative process, I was trying to think of a way to best explain in a broad sense how a real estate professional may be in a buyer's best interest. It was at that moment that a carpenter truck drove by…. Light Bulb. Now try and follow me on this one, while it is not the exact same, the two crafts do have similarities. When remodeling your kitchen would you rather trust a licensed, experienced, and connected craftsman to do the work. Or would you rather go to Youtube University and then give it a try yourself? I would most likely elect to hire the finished carpenter, pay them to do it right and do it once. Now this answer will be different for different folks, and that's the beauty of the world.
Take that same concept into a real estate transaction, while a real estate professional is not building a home with their hands, what we do build is a timeline. A timeline that balances and constructs monies, interests, and assents. If one of those gets out of balance the buyer could be in a world of hurt financially.
In this blog I wanted to keep it brief, but if you do have any further questions over the results of the settlement please reach out to any of us here at Island Land. Mr. Rapoza put it best when he said this is a change in the real estate world now, but in a year's time.. or less.. This will just be the new norm. Ultimately I do think the changes will help agents, buyers, and sellers alike in distinguishing who has their best interests in mind and who has a dollar amount in the forefront of their mind.
Written by Nate Konecky R-S