Grand Strand Real Estate News - July 2024

July 2024

Volume 2024 Issue 7

Dear Gene Carter Team,

Summary

There are some big changes in real estate law being implemented this week. First the market reports.

Oceanfront and Resort Condo Market Conditions

Overview: There’s been a slight uptick in oceanfront condo activity, at least if my listings are any indication - more showings but not many offers. I’m not sure that this is indicative of any trend. However, for the first time in well over a year, the number of active listings did not increase. 

Sellers: I’m sticking with the same advice I’ve been giving. If you want to cash out on the big price increases in 2021 in 2022, now is the time to do it. I don’t see any more upside for a long time and there is a real risk prices could decline. Also, we are at the end of the peak rental season. Please contact me if you want to discuss a property you own.

Buyers: You have far more choices than have been available in the past several years and there are some motivated sellers out there for the first time in several years. Contact Teressa or Kevin to help you find the perfect property for you.

The number of active oceanfront condo listings actually flattened out after increasing for 15 straight months (See chart in the newsletter). As of August 12th, there were 990 active listings, the same as in early June (mentioned in last month’s newsletter but not shown on the chart). The number of active condo listings off the beach also decreased for the first time in 15 months, to 1692 (compared with 1772 on June 12).

Month-to-month metrics for oceanfront condos (See chart in the newsletter). Once again, I think the two numbers that most accurately reflect current activity are the number of pending sales (which represent new contracts within the past 30 to 45 days) and the number of new listings in the month of May (roughly the same time period). There were 218 new listings and 153 pending sales. This ratio of new listings / closed sales has been pretty consistent in recent months. 

The average sale price, $319,021, was down 13.9% from May’s average. The overall number of sales remained relatively low (113).  

New Homes and Resales

Single Family Homes. As was the case in the May report (See chart in Newsletter), there were more closed resales than new construction closed sales, 518 vs. 448. Also, as in May, there were far more new resale listings than new construction listings, 675 vs. 529. Average and median closed sale prices were pretty similar for resales vs new construction with a median price for resales at $370,000 vs. $355,000 for new construction.

NAR Rule Changes

Significant changes in real estate commissions and agency agreements officially go into effect nationwide on August 17th, but our local Coastal Carolina Association of Realtors implemented the changes starting August 12. 

The National Association of Realtors (NAR) and a number of brokerages around the country (including RE/MAX) settled a class action lawsuit by agreeing to pay a large sum of money and to make several rule changes. The primary goals are to enhance transparency and consumer protection, particularly concerning the compensation of agents. The new policies will require members to disclose more information about commissions and fees and to provide clearer explanations of how commission structures work and the responsibilities of agents to their clients.

Other than some explanatory language added to most of the documents buyers and sellers sign, there are two big rule changes. 

• Commission information is no longer available through MLS (Multiple Listing Service). Sellers may still offer compensation to buyer’s agents (indirectly through the brokerages) but the commissions must be communicated in other ways (carefully constructed websites, emails, texts, phone calls, …).

• A buyer’s agent must obtain a signed written agreement before showing a property, either physically or virtually. The buyer and buyer’s agent must agree on exactly how much the buyer agent’s compensation will be instead of the agent being compensated according to the amount the listing states the seller will pay. 

In the newsletter, I discuss the different ways these changes will affect buyers, sellers, and real estate agents. It’s too difficult to summarize. Please take a few minutes to read the article.

Check out all our usual Grand Strand Market Reports, Sales and Listing Updates, my Best Buys, and new Beach Pro Team reviews.

Please Contact The Beach Pro Team If:

You are thinking of buying or selling an oceanfront or resort condo in our area

                                                                  Or

You are considering moving to our area or know someone else who is

                                                                   Or

You are an agent who has clients thinking of moving here or buying or selling in our area

                                                                   Or

You currently own a condo in our area and want a permanent home here

Greetings from The Grand Strand!

The summer is winding down. Kids are going back to school. My youngest son is going off to college. This is always a time of year for lots of changes. This week, there are also some big changes in real estate law. Commissions have always been negotiable, contrary to the belief of some, but the rules are about to change to make them even more negotiable. I’ll cover this in detail. In the meantime, here are the current market reports.

Oceanfront and Resort Condo Conditions

Overview: There’s been a slight uptick in oceanfront condo activity, at least if my listings are any indication - more showings but not many offers. It should be noted that the listings that are being shown the most are extremely well-priced compared to their respective competing listings so buyers are definitely price-shopping. We’ve also been receiving more buyer leads. We often get more leads when I have a number of well-priced listings. In other words, I’m not sure that this is indicative of any trend. However, for the first time in well over a year, the number of active listings did not increase. 

Sellers: I’m sticking with the same advice I’ve been giving. If you want to cash out on the big price increases in 2021 in 2022, now is the time to do it. I don’t see any more upside for a long time and there is a real risk prices could decline. Also, we are at the end of the peak rental season. Please contact me if you want to discuss a property you own.

Buyers: You have far more choices than have been available in the past several years and there are some motivated sellers out there for the first time in several years. Contact Teressa or Kevin to help you find the perfect property for you.

As can be seen in the chart below, the number of active oceanfront condo listings actually flattened out after increasing for 15 straight months. As of August 12th, there were 990 active listings, the same as in early June (mentioned in last month’s newsletter but not shown on the chart). The number of active condo listings off the beach also decreased for the first time in 15 months, to 1692 (compared with 1772 on June 12).

The next chart shows month-to-month metrics for oceanfront condos. Once again, I think the two numbers that most accurately reflect current activity are the number of pending sales (which represent new contracts within the past 30 to 45 days) and the number of new listings in the month of May (roughly the same time period). There were 218 new listings and 153 pending sales. This ratio of new listings / closed sales has been pretty consistent in recent months. 

The average sale price, $319,021, was down 13.9% from May’s average. The overall number of sales remained relatively low (113).  

Tropical Storm Debby Shelf Cloud

New Homes and Resales

The chart below shows single-family home stats for July. As was the case in the May report, there were more closed resales than new construction closed sales, 518 vs. 448. Also, as in May, there were far more new resale listings than new construction listings, 675 vs. 529. Average and median closed sale prices were pretty similar for resales vs new construction with a median price for resales at $370,000 vs. $355,000 for new construction.

NAR Rule Changes

You’ve probably heard about upcoming changes in real estate commissions and agency agreements. These officially go into effect nationwide on August 17th but our local Coastal Carolina Association of Realtors implemented the changes starting August 12. Here’s the scoop.

The National Association of Realtors (NAR) and a number of brokerages around the country (including RE/MAX) settled a class action lawsuit by agreeing to pay a large sum of money and to make several rule changes. The primary goals are to enhance transparency and consumer protection, particularly concerning the compensation of agents. The new policies will require members to disclose more information about commissions and fees and to provide clearer explanations of how commission structures work and the responsibilities of agents to their clients.

OK, so how are these goals to be achieved? Other than some explanatory language added to most of the documents buyers and sellers sign, there are two big rule changes. 

• Commission information is no longer available through MLS (Multiple Listing Service). Sellers may still offer compensation to buyer’s agents (indirectly through the brokerages) but the commissions must be communicated in other ways (carefully constructed websites, emails, texts, phone calls, …).

• A buyer’s agent must obtain a signed written agreement before showing a property, either physically or virtually. This has been the rule in our area for a long time but it was generally not enforced so buyer agency agreements were often written up at the same time as the offer. This agreement must cover, along with the typical agent and buyer responsibilities, the compensation to be paid to the buyer’s agent in “a manner that is objectively ascertainable and not open-ended”. In other words, the buyer and buyer’s agent must agree on exactly how much the buyer agent’s compensation will be instead of the agent being compensated according to the amount the listing states the seller will pay. 

How Will a Buyer’s Experience Change?

Before you are shown any properties, either physically or virtually, the agent is required to obtain a signed agreement. I realize that some buyers will be reluctant to sign an agreement with an agent they may have had very little experience with but it is required by real estate law. If you try to get around this by finding an agent who doesn’t require any agreement to show you properties, you are choosing to work with an agent who is willingly breaking the law. I would not suggest this. Who knows what other laws the agent is willing to break.

Please be aware that the terms of the agreement are very flexible. For instance, it can be set up just for the specific properties you’re looking at that day, or a specific time period (maybe just that one day or week), etc. The agreement also does not need to be a buyer agency agreement. The potential buyer can choose to be a customer. 

In most cases, you should probably choose agency representation but it’s up to you as the buyer. Here is a link to the standard Agency Disclosure describing the different types of representation. This did not change. As an agent in our office stated, the difference between being a customer and being a client is this. If you are a customer, the agent is working with you. If you are a client, the agent is working for you. 

Personally, I would rather have my agent working for me, trying to find me the best deal, negotiating the best price and terms, etc. With customer service, an agent will take you to showings and they can provide market info and even prepare offers but other services are limited. When you’re submitting an offer, the agent is just going to be a scribe, not allowed to provide guidance about offer price, negotiating tactics - you get the idea. By the way, if you feel that you truly do not need any assistance finding the right property or negotiating an offer, you can hire an agent as a transaction broker in which the agent assists and facilitates your purchase but does not provide client/agent services.

One important condition that is mandatory for any buyer agreement you sign is that the compensation must be set in a very specific, unambiguous way. It can be paid as a flat amount, as a percentage of the selling price, or as a percentage of another calculated amount. This last method will generally only come into play with new construction homes. For instance, an agreement with this option chosen would typically specify that the compensation will be calculated based on a percentage of either the base price or the final price with any upgrades or additions. Compensation can also be paid as a retainer fee or an administrative fee. 

As part of the agreement, you, the buyer, will be asked to choose how the agent is to be paid. Here are the choices. 

1. “Brokerage Fee will come solely from the Buyer.” 
2. “Brokerage Fee will come from the Buyer, less the amount Broker receives from Seller or Listing Broker.”
3. Seller or Listing Broker pays Brokerage Fee and Buyer has No Obligation to Pay

Choice (A) is pretty self-explanatory but not many buyers in our market are accustomed to paying buyer’s agents. 

Choice (B) means that, in many cases the seller will be paying most or all of the commission - which is similar to what has traditionally been done in our market. The obvious difference is that your agreed-upon buyer’s agent compensation amount may be different from the compensation being offered by the seller. If it’s less, you, the buyer, will need to pay the difference. It could possibly be negotiated with the seller to cover the other side but there are no guarantees of course. If the seller's compensation is higher, either the buyer agency agreement can be revised to the higher amount (with your written agreement) or the listing agent or seller would keep the overage rather than paying it. 

Choice C means the buyer’s agent is working for free. The only time this would probably be chosen is in a situation in which the buyer's agent is helping a friend or relative purchase of property.

Buyer’s agents are strictly prohibited from “steering” clients or customers to listings based on commissions. However, they will let you know how much, if any, compensation is being offered for each of the listings you want to see. If the offered compensation is not enough to cover the amount owed the buyer’s agent then you, the buyer, will be responsible for paying your agent per the agreement. You, the buyer, can also choose whether or not you want to see listings that don’t offer sufficient compensation to cover the amount owed to your agent. As mentioned, it may be possible to negotiate this compensation into the offer but you need to be aware that, if not, you will be responsible for paying. Please note that the agreement between buyer and agent can be revised, with the written consent of both parties, at any time.

“Full Rainbow Over the Ocean Courtesy of Debby”

How Will a Seller’s Experience Change?

The typical seller’s experience will change far less than the buyer’s. The only significant changes to the listing agreement are the addition of the extra method of calculating a commission percentage (per some designated formula for a base price or a final price for a new construction home) and a place for a seller to choose whether to advertise a willingness to offer concessions. Note that a seller can also choose to not pay a co-broke commission.

This last choice brings up a good question. If buyers are being required to sign an agreement saying they will pay a certain amount of compensation to the buyer’s agent regardless of whether or not the seller is paying sufficient buyer compensation to cover it, why not choose to not pay a commission to a buyer’s agent or maybe just pay a very low one? That has always been an option. Contrary to some people’s belief, commissions have always been negotiable. A seller has always had the option to pay as much or as little commission as they want. However, a seller should carefully consider the consequences of this decision. 

Remember that the potential buyers considering whether to look at or make an offer on your listing will know the amount of commission you are offering because their agent will tell them. As previously mentioned, buyer's agents are strictly prohibited from steering their clients away from low or no-commission listings. For instance, they can’t intentionally leave them off a list of properties matching their buyers' criteria. However, they can and should educate their clients as to the amounts of commissions being offered.

It may change in the coming months and years but, as of now, buyers in our area are not accustomed to paying buyer agents. There is a very real chance that potential buyers will not look at listings or make offers as often on properties offering low or no commissions. If they do make offers, the buyer's compensation may be factored into the purchase price they are willing to pay. In some cases, buyers may simply not have enough money to pay a buyer's agent after their down payment and closing costs.

The takeaway is that the seller has the choice of how much, if any, compensation to offer a buyer's agent, but they should discuss this with their listing agent to see if they think it may affect the property’s marketability.

How Will This Affect Agents?

I’ll keep this brief, but suffice it to say that these changes make the processes of showing and selling real estate far more cumbersome for agents. First, a buyers' agent must obtain the written agreement I talked about earlier for every person they tour properties before they show them the first house or condo. Also, to find out the commission amount for any listing, we must now reach out to the listing agent according to some rigidly enforced rules to verify the compensation. This must be done for every listing we’re going to show prior to touring the property (unless the buyer is willing to pay the buyer’s agent the full amount of the agreed-upon compensation and doesn’t care if the seller or cooperating brokerage contributes). 

Real estate agents work hard for you, whether you are a buyer or seller. Teressa and Kevin give it their all to find the absolute best properties for their buyer’s needs. Now setting up showings has become exponentially more difficult and a new parameter (the buyer agency compensation decision) has entered the picture. Then they use their negotiation skills to get their clients the best prices and terms. At that point, the job is just beginning. A lot goes on behind the scenes in the weeks or months leading up to closing. 

I have brought this up in previous newsletters but I think it’s a good time to restate it. I did some research a while back and carefully tracked 10 of my team’s closings. From the moment an offer was submitted until the closing (not counting showings emails, phone calls, etc. prior to the offer), my team was involved in an average of between 150 and 200 contacts for each deal. Over 260 for one troublesome sale. Those contacts include phone calls, texts, emails, and personal contacts. There are lenders, appraisers, inspectors, repairmen, other agents, closing attorneys, and a host of other people in addition to the buyers and sellers themselves involved in any given sale. 

Also, please remember that only a small fraction of the customers we work with end up selling or purchasing through us. In most cases, particularly for buyer’s agents, they spend many hours showing properties, sending information, and performing all the other tasks that precede any offer only to be paid nothing.

As for listings, the rule changes have not affected that side of the transaction as much as the buyer side although it has still made it more complex. We must now use various (strictly enforced) means to convey buyer commission amounts since they cannot be posted in MLS. We’re using a new form called a Compensation Agreement. My team sends it to every agent who requests a showing for any of my listings. Not all listing agents are doing this but I think it serves my client’s interests to do so since it gives the buyer’s agents peace of mind about the exact compensation.

Sorry for the long explanation but this is actually condensed down from about 20 hours of classes I’ve attended over the past two months regarding these changes. We will all get through it and you can be assured that the Beach Pro Team will always be at the forefront of any changes that benefit our clients and customers. 

Rainbow Over the Ocean June 27 2024

That’s all for now.

Check out all our usual Grand Strand Market Reports, Sales and Listing Updates, and new Beach Pro Team reviews.

Please Contact The Beach Pro Team If:

You are thinking of buying or selling an oceanfront or resort condo in our area

                                                                  Or

You are considering moving to our area or know someone else who is

                                                                   Or

You are an agent who has clients thinking of moving here or buying or selling in our area

                                                                   Or

You currently own a condo in our area and want a permanent home here

Here is a new review published on Google. 

• My wife and I signed up with Gene Carter to sell our Condo recognizing that the market for Condo sales is very slow during this difficult period with many condos already up for sale. Gene was up front with us regarding the lackluster sales of condos. To our surprise he had an offer in short order. He was diligent in keeping us informed during the entire process and got us a fair price given the market. I would recommend Gene Carter for those considering selling their property.Frank. Holiday Inn Pavilion. Myrtle Beach.

We just started collecting Google reviews. At this time we have over 20 Google Five Star reviews and over 150 Zillow Five Star reviews which can be seen on our website Beach Pro Team reviews. 

Grand Strand Market Report - June 2024

OF/OV Homes Brochures:    Link to Listings 

OF/OV Homes Spreadsheet:   Link to Spreadsheet