Hello all,

Knowing there would be much on plate with industry changes combined with much that has been on plate, I took a regenerative hiatus with my youngest in Italy. I rightfully gained twenty pounds, but only actually put on five between the walking and fresh foods, of which we ate with shameless abundance.

My daughter found a love for figs and apricots while putting nightly Tiramisu's to the test to determine who had the best. This was a tasty, yet futile, effort as past four she couldn't remember those that preceded (about the same count for buyers before houses start to merge) We had a similar test with Cappuccinos. We are both now firmly addicted. I'm on quest for standout cappuccinos. Top spots, please let me know.

The bottle of wine pictured spent six months fermenting 52 meters under water after steel barrel fermenting for three months. The level of yum in that bottle was a highlight among others during our time in Portofino. Yes, that's seaweed and other remnants from the sea hanging off the bottle.

Sleeves up, let's hit it...

Dutchess County median price July 24 vs July 23 YOY increased by 9.5% from $420,000 to $460,000. Municipalities realized a vast swing in median sale prices from down 3.6 and 28.8% in Pine Plains and Northeast respectively to the Town of Fishkill just squeaking into the positive at .1% gain from $479,500 to $480,000 in median price to the sky rocket median price increase in Stanford by 78% from $387,500 to $690,000 and everywhere in between. Other than two municipalities (Pine Plains and Northeast) all other municipalities were up in median sale price year over year July 24 versus 23. The Village of Rhinebeck took the top spot with a median sale price July 2024 v. July 2023 YOY of $771,750. The Town of Rhinebeck took second place at $750,000 with Millbrook in third at $712,000.

Westchester is up 9.5% in median sale price to $925,000 (ouch the taxes), Putnam up 14.1% to $525,000 and Ulster County up 11.1% to $425,000 in median sale price. In an effort to keep this newsletter more condensed, I tend to focus numbers spotlight on Dutchess County. With focus in Dutchess and Ulster, I continue to represent (and have set record sales) throughout the region with original roots in Westchester and Putnam. If specifics are desired for your municipality or county, reach out.

Do what you can, with what you've got, where you are" 

Teddy Roosevelt with credit to Squire Bill Widener

A colleague reminded me of that quote as varied scenarios that could serve as unproductive distractions whizzed through my head with all that is going on. The real estate industry has been chiming along for over a century largely the same until now with real estate seeming to take center stage in the press and now on the campaign trail with Ms. Harris' announcement for down payment relief of up to $25,000 to qualifying buyers. With Harris first up, I fully expect this hairball to roll across party lines with each having their own "solution spin." Timing for election Fall is hard to beat with this one, have to say. I'd grab a popcorn, but we are talking about my industry, so spectator is not on tap.

Here's what is on tap, though:

• Is Government at Root?
• The Value Proposition
• Inventory and Mortgage Rates
• Compensation
• Settlement Letters
• Luxury

Is Government at Root?

Are increased housing costs really about commissions or is it largely about the government itself that, ironically, seems entirely focused on tying increased housing costs to commissions? The reality is, housing prices have been all about interest rates (tied to government), supply and demand. It has been quietly acknowledged in the sidelines that if there were any adjustment in commissions it would likely have marginal impact on housing prices.

I have been in conversations with a Steve Brobeck, Fellow at the Consumer Federation of America. ("CFA"). The CFA appears to be a very real voice in this process. I have found many articles in the press tend to mirror communications I've had with Brobeck with belief much of the content has been stemming him. I believe the CFA is closely tied to advisement on decisions and mandates being made.

Brobeck shared a "goal" percentage he would like to see buyer agent commissions. With his clear governmental ties, I found such stance unsettling in our free market country. He also cited the UK as a model of sorts, which I also found disturbing. I'm a global luxury specialist with colleagues throughout Europe who have not spoken favorably on the system. I scheduled an upcoming zoom interview with the head of international with the most prominent brokerage in the UK along with his counterpart that oversees a multitude of European countries for an in depth discussion on their system. It appears decisions are being made by the governmental "powers that be" based on limited studies rather than true industry knowledge or having the benefit of a person with working industry knowledge under advisement.

This is a complex industry. When the "powers that be" have made efforts to improve (the new property disclosure form and process released this past March as one example) they have missed the mark because of intricacies in our industry that can't be gleaned from a report. The few misses with property disclosure (timing to buyer and penalty for not doing) could have been caught quickly if they had "boots on ground" input prior to release. It's unfortunate as the impact could have been far more productive for the Governors efforts. That was a simple form and process change in comparison to what they are attempting now and they missed mark, which makes the magnitude of what they are embarking on now in what seems the same fashion that much more unsettling.

Brobeck cited disparity in skills in the real estate industry, yet often same fee paid. I can't disagree. It is an unfortunate truth that our industry absorbs a bad rap caused by experiences with substandard agents. When a high caliber agent is in a deal with a substandard, the high caliber agent will most often do the work of both and shield their clients. Our job is to act in our clients highest and best interests. If that means doing the work for two and being paid the same fee as a numb nut in order to have a smooth sail for your client to closing table, then that is what the high caliber will do. This is why I like working in dual agency so much. It's not about the "double dip" of commissions. It's about having control of the schedule, access to both attorneys, all clients, the lender, etc..

Dual can be sticky if you don't know what you're doing, but if you do, it can be among the smoothest deals of the year. IMHO, the greater number of agents are not experience equipped or comfortable working in dual agency. Certain states won't allow it, but it does seem moving toward more dual agency deals with the listing agent handling both buyer and seller is also a goal within the CFA. I don't see blanket dual agency as a score for consumers.

I do believe underneath it all, they are trying to weed out low grade agents but it's not so easy to do. It can't be attached to time in business. I've worked with some freshly minted rookies that are energized and sponges to their mentors and I've worked with seasoned realtors that have been extremely challenging to work with and vice versa. There are also consistently stellar high caliber realtors in this business. Realtors that take their profession and clients seriously are worth their weight in gold. We counsel our clients through what is for most the singular largest investment. We are working in hundreds of thousands, if not millions, on a daily basis. High caliber realtors are trusted partners.

I am hopeful through these changes and heightened transparency the general pubic will become more educated on what to expect from a realtor. This could help alleviate a buyer pressing the "contact agent" button on Zillow to be aligned with a random realtor paying for leads or a seller having cousin Sallys second cousin list her house because she likes her but has no idea if her work and performance warrant the listing. These scenarios can be feeding grounds for bad experiences.

Could the industry be elevated by raising the bar of entry? Yes. With the whopping $8100 in yearly median income for agents with two years or less experience, how could the bar be heightened with any reality of attracting worthy professionals to this industry, though? On the National Association of Realtors ("NAR") website there is the stat noting median yearly income of $8100. The NAR website provides a link to a major continuing education company that realtors use, CE Shop. Ironically, on their site, again available directly through the NAR website, they cite $90,000 per year income for realtors while encouraging the person to take licensing classes as though that's what they will make out of the gate. Statistically, per NAR, it will take on average until year 16 to make $92,000, gross. Yet, through their very own website people are being deceived into thinking it's right away. Transparency needs to be addressed on many levels.

87% in the first two years fail

This is not the easy job some people may think it is coming in, which is why the failure rate is so staggering. I was in executive marketing and project management before transitioning into this industry. The thought process was to leverage my skills and background in real estate versus all the traveling I was doing for work so I could have time to raise our children. I was under the impression at the outset that I would have control of my scheudule. That's a very real rarity when first starting in this business. Schedule control comes as the realtor seasons. Thankfully, we also weren't reliant on my income as I made $11,000 in my first year while investing $30,000 in the business.

Many realtors live on an emotional and financial roller coaster. It is not uncommon to support a clients goals in both time and personal finance for several months before being paid. If the goal for CFA and the "powers that be" is as it appears, to elevate the industry by weeding out substandard agents, it is far more complicated than trying to change the commission structure, which likely will only change marginally, if at all. The reality is we can't work for free and while it may seem like big checks at closing, there are splits with brokerage, expenses and often many months to even years working for clients before closing.

Interest rates are anticipated to continue to drop with first quarter 2025 expected to be solid as reported by multiple lenders. That could tilt the supply and demand scale. Housing prices have been stabilizing since interest rates began their ascent in 2022. I have projected since 2022 that 2025 will be the year we break free from this inventory grip and stand by it. Let's see.

I project the initial biggest impact will be on buyers that are not in a position to afford commissions leery to commit to compensation percentage in a buyer agent agreement without knowing the percentage the seller is offering.

The Northwest MLS, a leading multiple listing service with over 30,000 member agents, began offering buyer compensation as an option to sellers in 2019. In most instances, sellers have continued to pay the "standard range" in buyer agent commissions. Although some could be affected by recent press, it is expected that most sellers will continue to offer buyer agent compensation in kind with Northwest MLS. Every listing that came through today went to great strides to clearly notate "buyer agent commission offered" with 2.5 or 3% in the historical range for buyer agent compensation. So far, all this hoopla is reading business as usual, which is exactly what my colleagues with Northwest MLS said happened there, as well. At the end of the day, sellers need buyers to sell.

Also expected are a percentage of sellers that forego buyer agent commissions thinking they could "pocket" the difference (rather than give back to buyers in reduced price as the Consumer Federation of America speculates) and rather find themselves over priced and not selling. I have moments of late night thoughts that post on social media. These moments often involve complete abandon from lighting consideration and rolling with the thought that's just burning to get out. My face looks like a lobster due to the lighting, but here is my current top concern for buyers and sellers with these changes.

The Value Proposition

Many real estate professionals are evaluating their career with core question revolving around value:

a) Do they bring a competitive value proposition to potential clients? If not, that will likely mean accepting discount level service fees or industry exit.

b) stay with the old commission sharing model or

c) lean in to the changes and find opportunities to enhance their role in real estate, whether continuing as realtors or leveraging the skills in another capacity within the industry. This comes down to the realtor, their background and skill set. I'm going with option C and hired a new coach.

This isn't just about value realtors provide to their clients. This is also about the value that realtor funded associations, MLS services and brokerages provide to realtors. Certain inadequacies that may have been accepted in the past will now likely be called to question. Realtors are stepping up with the first round of realtor initiated lawsuits suing an MLS for mandating membership to the National Association of Realtors.

Can realtors continue to be forced to fund an association if they no longer want to be a member? Time will tell. Will MLS services be called to task to provide accurate reporting and other services to their members if an issue? Realtors pay splits with their brokerage out of professional fees/commissions earned. Generally, they can be substantial if the agent is new in the business or has a low transaction volume. Is the brokerage providing services, training and support that aligns with needs and substantiates thousands in splits?

Inventory and Mortgage Rates

Mortgage rates, supply and demand are at heart for the rise in home prices throughout our region and country. Inventory (read: supply) has been correcting with latest increase for Dutchess County by 28% July, 2024 vs July 2023 YOY (HGAR/OneKey MLS reports "down 25%" for Dutchess County, but their numbers are inaccurate due to a data merge with the Dutchess system in February.).

Albeit inventory is on the rise, demand still exceeds supply across most price points. We are still in a sellers market, but calmer than it was. WIth inventory on the rise, more favorable mortgage rates could push additional sellers off the perch to introduce more inventory. This has the potential to better counter balance increased buyers anticipated from projected decreased rates expected in the months ahead.

The Consumer Price Index ("CPI") fell to 2.9% for the past 12 months ending in July, the slowest pace since March, 2021. According to Housing Wire, mortgage rates, which generally move in tandem with the 10-year treasury yield, are expected to drop even further in the coming months as the Federal Reserve is widely anticipating to cut rates by 25 to 50 basis points in September.

Don't get too jazzed just yet. To really see some motion, loan originators generally agree a "5" needs to get involved - meaning low to mid "5" in interest rates on a consistent basis. My bet is 2025 with many lenders concurring expectation is favorable for first quarter 2025. According to the Mortgage Bankers Association ("MBA") loan applications jumped 16% during the week ending August 9th. While still down 80% from peak in 2020, refinances are up 118% from one year ago, also according to the MBA.

The industry as a whole is under scrutiny from all sides. At the heart of it, realtors simply want to help their clients reach goals. I spoke with a new client last night that shared she wished it was just left be, but here we are.

There are two key points that I'm not averse to:

1). Listing agents would typically evenly split commission with the buyers agent. I've been in this business for over twenty years and it was an unwritten rule. No one messed with buyer compensation. Sellers need the buyers. That's how it always was. No one ever discussed it. It just was. While some things in our industry may seem a bit wonky to the outside world, we've been rolling along for over a hundred years without fanfare. We have had this under control on our own for the most part.

Since this whole lawsuit situation stirred up, I noticed certain listing agents and listing brokerages crossing the forbidden line and arbitrarily lowering buyer agent commissions. They were just being a little oinky in our area. In Massachsetts, parts of Long Island and other areas, it was getting really bad. With that being the case, I don't disagree with taking the power of decision with what a buyer agent will be paid away from the listing agent and listing brokerage as it was creating bad taste and even I was questioning why is it fair to take less when the tables are turned? I applaud the buyer compensation percentage decision moving fully into the sellers hands for this reason.

2). Historically, a highly seasoned agent that consistently performed for their clients could be paid the same fee percentage as a less skilled agent. I never loved that, but it did work itself out in that the more seasoned agent with solid reputation tends to get more business and therefore in the end, makes more. The reality is, agents overall don't make a killing. It's really the top tier of agents that make a truly comfortable living if dependent on single income.

The median gross income for an agent during the first two years is $8100 per year, per the National Association of Realtors. Fast forward sixteen years and the average income for a realtor is in the $90K range before taxes and expenses. That's nothing to write home about. All this talk about how much realtors make on each sale doesn't consider the months, to at times years, a realtor could spend supporting client goals without being paid a dime for time or expenses. It also doesn't account for the clients that decide not to buy or sell, splits given to brokerages and myriad expenses realtors absorb on supporting clients goals, marketing, education, etc. Many realtors struggle to get by. I've had my own struggles. When I first came to Dutchess five years ago, I clawed my way with many sacrifices to establish my business in this new locale. I do not disagree that the industry has room for improvement, but I do think the picture often painted in the press and otherwise is not fair or accurate.

Realtors come from different backgrounds and skill sets. Realtors will likely have varied compensation models in the days ahead. This is all still being worked through, but I expect standard commission amounts to still be the norm, particularly for higher caliber agents, while some may offer varied levels of service dependent on skills, level of representation and marketing collateral. There will likely be others that are less skilled that offer discounted rates. There will be a need for this variation as I do believe there will be certain buyers that either won't be able to offer higher level services or need them.

Here is my two minute take on the days ahead when it comes to value and compensation.

Settlement Letters

There is a degree of confusion and uncertainty in the real estate industry right now. Systems are being updated, documents revised and new ones created as brokerages and MLS' prepared for mandated changes that went into effect on August 17th. There is distraction in the industry in the moment, which feds this cautionary note.  I will continue to address different aspects of industry changes in social media as well as in The Brick.

At this time, information on how and if settlements will be distributed, eligibility for settlements, etc. is not readily available within realtor circles.  There are just so many other issues and documents circulating in the moment. I have reached out to the Consumer Federation of America as this organization seems actively involved in varied facets of this transition to see if they can share insight on eligibility and other details. I am actively working to get to the bottom of it to share more concise information. I'm thankful my client raised this with me when she received.

I am hopeful all third parties processing settlements will become public knowledge so we can post company names which should put an end to any scam potential in this arena. Maybe I'm just being paranoid, but with bank information requested for processing I am trying to find out more.

Please feel free to contact me with any questions you have on this or otherwise. What I don't know, I will work to find out. Should there be question on sensitive information requested or answers that cannot be fully resolved through realtor channels, it could prove prudent to speak with a real estate specific attorney. 

Certain information is unfortunately not at optimal disposal in the moment, but we are working to get out what we know as timely as possible. 

See More on Settlements in this One Minute Video

Party Over

I noticed a single family house rental in a coveted municipality in Dutchess that rented for $5300 in 2020. Even in 2020, the house was not a $5300 rental, IMHO. They went on the market again in 2023 attempting to get the same price. That sit on the market has made clear - the party is over. For over a year this vacant rental continues to sit on the market, but now just below $4000.

My advice - cut the carrying costs and accept that $3,300-3600 is still a premium for what it is and call it a day. Some owners just cannot let go of what was so they sit - both rentals and resales. Price reductions have become pervasive in my emails and I regularly sell listings that expired with other realtors.

If you want to sell, the best way to do it is to get on and off the shelf. This means get listing, beautiful photos and have the marketing, advertising, etc.. going full steam by the time the listing hits the MLS service. Listings should hit the MLS with a POW. That is how every one of my listings hits the market.

Let's be real...

If you were asked whether you would prefer to spend less on a product or service would you say "yes?" Would you prefer to pay less for your attorney, accountant or haircut? There's always the option to find a lower price point for the product or service, but then the level of service or quality of product expected is generally lowered, yes?

I have conflicting thoughts on this as I agree in principle that less skilled should be paid less, However, I also see the reality that it will be nearly impossible for freshly minted real estate professionals to sustain long enough to reach skilled level considering current median income for two years or less is $8100 per year before taxes and expenses. There are myriad skills that feed into being successful in this business.

Enjoy the remains of summer! Fall Market is just around the corner. I expect a bump in September with the market slowing down as we get into October due to the election. If you are interested in selling, I would be happy to share customized recommendations specific to your home to prepare for sale, develop your pricing and marketing strategy and get you on the market!

With the exception of my Willow Lake estate listing which took 60 days to multiple offer, all other listings for the past four years have gone from listed to contract within 30 days. I have not had one listing expire throughout this nutty. I consistently deliver for my clients.

I would be interested in hearing your thoughts. Should you have any questions or if you are interested in buying or selling, call me.

Best,

Sandi

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Dutchess County

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Willow Lake - Luxury

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