Recap of Michigan REALTORS® Live Stream on the Pending NAR Settlement, Recap of Traverse City Housing Policy Workshop, Quick Updates on Housing Issues Being Discussed Locally
We start off this week with a recap of last week's live stream presented by Michigan REALTORS about the pending NAR settlement. Second, we have a summary of the Traverse City Housing Policy Workshop including presentation slides that go in-depth on the cost of building in Traverse City and levels of housing affordability. And finally, well wrap up this week's GAD Top Three with summaries of some ongoing local government housing policy conversations across the 6-county region.
1. Recap of Michigan REALTORS Live Stream on the Pending NAR Settlement
This past Thursday, June 20th, Michigan REALTORS® held their live stream event The Conversation: Focus on the Future. In this event, they reviewed practice changes resulting from the settlement agreement, the pending settlement in relation to Michigan law, and where things stand with the U.S. Department of Justice. Below is my recap of the items that were discussed:
- As long as you remain a National Association of REALTORS member as of the date of the class notice (August 17th, 2024) you are covered and do not need to take any action as long as:
- You are an individual NAR or brokerage with 2022 total transaction volume for residential home sales below $2 billion.
- You comply with the settlement terms
- Under the terms of the settlement agreement, beginning August 17th:
- No offers of compensation will be on the MLS
- A written agreement will be required before touring a property with a buyer
- Buyer agency agreements must spell out exactly what a buyer will be paid. A specific amount or specific rate of compensation.
- Although compensation cannot be communicated on the MLS beginning August 17th, compensation can still be communicated by other means like text, calls, emails, QR codes on signage, and compensation for your listings on your website as long as your website does not aggregate MLS data for other listings compensation. Direct communication on compensation will likely be a norm.
- Compensation is allowed to be included in a purchase agreement, as long as it does not alter what was agreed to be paid in agency agreements.
- Beginning August 17th, in all likelihood the standards for procuring cause will lean very heavily on contracts between the buyer and buyer broker and with a cooperating broker.
- It is going to be very important to distinguish between consumer service (like touring or showing properties) and buyer agency. Agents will need to make it clear to consumers exactly what services are and are not being provided. Michigan REALTORS® is working to change Michigan Law to make these distinctions clear for consumers and to protect agents.
- At this time, beginning August 17th compensation will not be wrapped into loans.
- Concessions that have been authorized by the seller are allowed. Concessions cannot be used exclusively to pay buyer broker fees. Agents should make sure to empower buyers by letting them know that they can always ask for concessions.
- Written agreements need to be in place with a buyer before touring a property, in person or virtual, and before offering buyer brokerage services like writing an offer.
- This written agreement requirement does not have to be a full exclusive agency agreement. It can be for one tour of a property, specific to one property, etc. This is not going to be a one-size-fits-all for every client.
- This written agreement is very important because this is how payment will be enforced. It also provides a scope of your services and articulates your value proposition as an agent. These contracts are about meeting consumers where they are at.
- Every written agreement will need to state:
- That buyer broker commissions are not set by law and are always negotiable
- Specifically how much an agent will be paid for their services listed in the agreement
- MLSs will be the responsible party for violations of the settlement. Although MLSs are charged with enforcement, associations, and brokerages are charged with education.
- It is important to note that this current settlement is still pending final approval. If it looks like agents are trying to get around the rules, then the settlement could be canceled and the U.S. Department of Justice could step in with harsher guidelines.
To watch the replay of Michigan REALTORS The Conversation: Focus on the Future. Aspire North REALTORS Members will need to log into the Aspire North REALTORS Members Info Hub. For any questions related to this content you can call the Michigan REALTORS Legal Hotline at 800-522-2820, or email the Michigan REALTORS Legal Team: Becky Berke at bberke@mirealtors.com, or Brian Westrin at bwestrin@mirealtors.com
2. Recap of Traverse City Housing Policy Workshop
This past Tuesday, June 18th I attended the Traverse City Housing Policy Workshop led by Flywheel Community Development Services and the Michigan Association of Planning where they presented options that support effective housing strategies based on local and regional data. Here are my biggest takeaways from the event:
- The median rent in Traverse City is $2,204 based on Zillow monthly rental data, which Flywheel found to be the most accurate source for Traverse City rental data
- The median home monthly payment in Traverse City is $3,354 as of April 2024
- Grand Traverse County needs 11,000 new households (roughly 3,300 rentals and 7,700 houses for purchase), just to meet the demand of those in need of housing and those trying to break into the market.
- Housing is not just needed at the lower income scale. The number of high-income rental households ($100,000+) has doubled in Traverse City from 2010 to 2022 (93 to 273). Over the same timeframe, the number of high-income rental households ($100,000+) in Grand Traverse County has tripled (283 to 940)
- Based on Flywheel’s conversations with builders in the Traverse City region, the cost to build in Traverse City is $415 per square foot. In Grand Rapids, it costs $265 per square foot to build.
- Flywheel and the Michigan Association of Planners representative advocated for models of high-density housing development. They shared that based on peer-reviewed studies multi-family developments do not drive down home values. In short, density does not hurt property values, lack of demand does.
- Flywheel mentioned that 96% of housing is built by for-profit organizations, so communities cannot just work with nonprofit development organizations if they want to see significant development of housing in their area.
Below are some photos of the slides presented during the Traverse City Housing Policy Workshop.
