But Really, How Do Realtors Get Paid?

You may have heard about recent developments in the class action lawsuit against the National Association of Realtors (NAR) and some of the nation's top real estate firms in the news lately. Though both suits were filed months ago, last week, one of the largest brokerage firms in the nation* submitted a proposal to settle their part of the pending class action lawsuits for $83.5 million and a promise to change their practices around Buyer Agency. A judge will review the offer in mid-October. The "promise to change their practices" details have not been publicly announced yet, but I predict this will have a domino effect, creating industry-wide change. 

The fundamental argument in both class action lawsuits is that NAR and the top brokerage firms collude to keep commissions unnegotiable for the consumer. The plaintiffs (the parties suing) are claiming that by requiring sellers to pay the buyer's agent if they want their home listed in the Multiple Listing System (the database we all use to advertise our homes for sale to other agents and the public), Realtors are violating the Sherman Anti-Trust act and causing real estate commissions to be higher than they should be. The plaintiff also alleges that having a seller pay the buyer's agent's commission prevents consumers from negotiating that fee with their buyer's agent. Note that this arrangement also ensures that realtors of all caliber and experience make the same amount of money on the sale of any given house. 

I stand by what I wrote about these lawsuits in September 2019. 
"I have long felt that how we get paid could be more transparent. I'm in favor of anything that unbundles the costs and clarifies how we get paid. By unbundling, I mean that there should be a way for sellers to pay Realtors to list their property and for buyers to pay Realtors to help them buy a property. Separating these costs is difficult in practice because many buyers don't have the cash to pay their broker, so the cost of the broker gets bundled with the price of the property. Allowing buyers to finance the cost of being represented by a broker is one possible way to address this issue."

Several things are wrong with how we are paid as agents. For starters, we are only paid if a sale closes, which could encourage Realtors to fixate on the transaction closing rather than what is good for the client. Neither of the current lawsuits would, on the surface, change that. However, they will likely lead to a system where Buyers pay for their Realtor rather than having that cost included in the Seller's Realtor commission and later split between the seller and buyer agents. That seems reasonable on the face of it, but–as I mentioned previously–would require lenders to get on board and allow those fees to be part of the loan, as most buyers don't have the cash available to pay their Realtors at the closing of the transaction.  

So, just like in every other corner of the world, change is in the air for the Real Estate industry. These lawsuits and settlements are not affecting how I do business other than motivating me to continue educating clients about how we are paid, making sure they know what their costs will be and what benefits there are to having representation. I do think these changes may make it hard for newer, less experienced agents to sell their services should the cost of Buyer Agent representation be de-coupled from the listing fee. But as in any market, unbundling the cost of goods can help consumers make better decisions and save money. Let's hope that's the net result of all this uproar.

*Anywhere Real Estate Inc. (parent company of Sotheby's International Realty, Coldwell Banker, Century 21, Better Homes and Gardens Real Estate, ERA, and Corcoran brands with about 195,000 real estate agents combined)

If you have questions about Realtor compensation (current or future), I'd love to talk>> 

Good News, Near And Far

We are all beginning to grapple with the uncomfortable realities of our changing climate. Many of us feel overwhelmed by bleak predictions and statistics, but others respond with adaptive creativity. Take this small town in Oregon actively strategizing to protect itself from future wildfires.

Farther afield, President Joe Biden signed a proclamation to establish a National Monument honoring Emmet Till and his mother, Mamie Till-Mobley. The monument will span three sites across Illinois and Mississippi. Biden's declaration includes funds for the National Park Service to support and expand work by local communities and organizations to preserve and interpret the story of Emmett Till and Mamie Till-Mobley. Learn more here.

If you're craving more positive news from around the globe, check out Reasons to Be Cheerful>>

Urban Gleaners: Meeting People's Needs, No Questions Asked

In the days of yore, gleaning referred to gathering leftover grains and produce after harvest. The good news: we have an ample food supply in the U.S. The bad news: much of that food goes to waste (40%), and 1 in 5 Oregonians struggle with food insecurity. Portland non-profit Urban Gleaners is committed to reducing food waste and the stigma around food insecurity.  

They collect and redistribute over 80,000 pounds of food every month–prepared, packaged, and fresh produce. The food they pick up from local restaurants, catering companies, large food service venues, grocery stores, and local farms is redirected to schools, other non-profits, and their Free Food Markets at locations around the Portland Metro area. Anyone is welcome to shop at Urban Gleaners' markets; no qualifying questions asked or paperwork required! 

Support Urban Gleaners>>

Learn about other gleaning organizations across Oregon and the country>>

RMLS Market Action Report

In the category of "head scratching at the new normal," the median price of a home this June of $559,000 has almost recovered back to its June 2022 high of $570,000...and that is with interest rates double what they were back then. As lenders compete to devise new ways to entice buyers back into the market and buyers continue deciding that they want to buy homes, regardless of the interest rate environment, we continue to see well-priced homes in the Portland market get snapped up. It is, however, more important than ever for sellers to price their homes appropriately and at a price that compels action, as folks want to feel like the value is there.  

For a deeper dive into the national market and its trends, check out this chart from our favorite data site FRED, comparing what three indexes show as the direction of home pricing. All three indexes use slightly different methodologies, so this combined chart gives you a good sense of the aggregate. If you want to know if prices are going up or down nationwide, this chart is one to watch. As always, if you are curious to know how your house has fared, feel free to give us a call!

View the most recent market action report here>>

When The Outdoors Finds Its Way In

We cap our chimneys, secure mesh coverings over gable vents, and seal up any and all potential points of entry to crawl spaces high and low. These efforts are not in vain, but they're not bulletproof either. Many homeowners are familiar with the dread experienced upon hearing the squealing, chirping, padding, rustling, or scratching of a non-domesticated animal.

In the past few months, one client reported that a family of Vaux Swifts is living in their chimney this summer, another has been dealing with a family of skunks that settled in beneath her garden shed, and yet another reached out in a panic with a squirrel "somewhere in the house." These things happen, and when they do, it's wonderful to know who to call.

Of course, you can always call us, but we are not licensed to do anything with wildlife unless they're in the market to buy property. Thankfully, we can direct you to a few helpful resources in and around Portland.

Chirping in your chimney? The Audubon Society is here to answer your questions and offer support should you encounter Swifts or other non-predatory birds in distress. Start here: Vaux Swifts in Chimney FAQs

Critters creeping overhead or underfoot? Oregon State Department of Wildlife and Fisheries has a comprehensive list of licensed wildlife rehabilitators. These folks are familiar with state and federal regulations, including endangered, protected, and invasive species. 

Prevention (and Post-prevention) Services: Whether you're getting ahead of a problem or square in the middle of one, this Portland-based company has gotten great reviews from our clients on both fronts. Pests & Pollinator Integrated Pest Management>>

Photo by Richard Sagredo on Unsplash

Portland City Charter

Oregon is a special place for many reasons. The one we will focus on today does not make the top ten lists of reasons to move here, but sometimes we wonder if it should! In Oregon, incorporated cities and counties are allowed to create and amend their own charters–the document that outlines a local government's systems and structures–without state approval, so long as the charter does not conflict with the state constitution. This arrangement means that Oregon residents have considerable power in shaping the places where they live and vote. In fact, the only thing that can change a city or county charter is a vote of the people, which is what happened in Portland's November 2022 election. Voters approved Measure 26-228(which proposed three amendments to our city charter) with approximately 57 percent of the vote. 

There is an excellent overview of how the City Charter review and amendment process works and how it came to be this way in Oregon here. One critical development in this process came in 2005 when the City Council convened a Charter Commission tasked with reviewing the city's charter and making recommendations for amendments to put before voters. One of those amendments (later approved by voters) stipulated that there would be a regularly scheduled review of the charter by a commission of volunteers no less than once a decade. Beginning in December of 2020, the most recent of these charter reviews was conducted over 18 months. 

The Charter Commission (a diverse group of twenty volunteers) proposed three amendments to Portland's City Charter. Because over 75% of the Commission's members approved the proposed amendments, they went directly to voters in the November 2022 election rather than to Portland's City Council for approval. 

With voter approval of Measure 26-228, the City of Portland is making three connected changes:

1. Allow voters to rank candidates in order of preference using ranked-choice voting.

2. Establish four geographic districts, with three city council members elected to represent each district – expanding the city council to a total of 12 members.  

3. Establish a city council that focuses on setting policy and engaging with the community, transitioning day-to-day oversight of bureaus to a mayor elected citywide and a professional city administrator.

It's a lot of change! And naturally, there has been some debate about and resistance to these changes. Though we cannot predict how these changes will change the City of Portland, we can assure you that Portlanders will continue to have ample opportunities to participate in shaping it. The charter reform process is evidence of that!

We encourage you to engage in this process and encourage others to learn about it, too, so we can continue to exercise and amplify voter empowerment!

Check out the detailed timeline of the entire transition plan>> 

Stay in the loop by signing up for updates from the city here>>