Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

 - Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

MLS Lawsuit Could Change the Real Estate Industry

MLS Lawsuit - Class Action Suit

In this post, we discuss a potentially “game-changing” lawsuit that could change the entire real estate market.

The real estate market could be facing big changes depending on the outcome of a class action lawsuit against the National Association of Realtors and the four biggest nationwide realtors.

 

About the Lawsuit

The defendants are being accused of violating federal antitrust law in a conspiracy to overcharge home sellers by requiring them to pay broker’s commissions to the agents who represent the buyers of their home.

The class action lawsuit is against RE/MAX, Keller Williams, Realogy, HomeServices of America, and the National Association of Realtors.

The suit has been filed in federal district court in Chicago and focuses on a rule it says has been imposed by the National Association of Realtors.

The rule requires brokers who list sellers’ properties on local MLS to include a “non-negotiable offer” of compensation to the buyer agents. That is, once a home seller agrees in a listing to a specific split of the commission, the buyers cannot later negotiate their agents’ split to a lower rate.

Home For SaleThe suit alleges that this requirement “saddle(s) home sellers with a cost that would be borne by the buyer in a competitive market,” where buyers pay directly for the services rendered by their agents.

In overseas markets where there is not a mandatory compensation rule for buyer agents, total commission costs tend to be lower.

On average, commission costs average 1%-3% percent lower in the United Kingdom, as opposed to the 5-6% that is commonplace in the United States.

 

The Allegation

The class action suit alleges that if home buyers in the United States could negotiate fees directly with the agents they choose to represent them, that fees would be more competitive and the costs lower.

Many U.S. home buyers are unaware of their agent’s commission split. The sellers will typically know what the percentage is because they agreed to it in their listing contract.

Real Estate red tape

Photo by Max Pixel

However, they may wonder: Why am I required to pay the fee of the buyer’s agent, who may be negotiating against my interests in the transaction?

Also, at a time when buyers often search for and find the house they want to buy online, shouldn’t compensation for a buyer’s agents be decreasing, rather than remain at the 2.5%-3% percent range?

The lawsuit states “Because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission. Absent this rule, buyer brokers would be paid by their clients and would compete to be retained by offering a lower commission.”

 

About the Defendants

The National Association of Realtors is the largest trade group in real estate with 1.3 million members.

The four realty companies named as defendants are RE/MAX Holdings Inc., Keller Williams Realty Inc., HomeServices of America Inc. and Realogy Holdings Corp.

Model Home TaxKeller Williams has approximately 180,000 agents in the U.S. and Canada. RE/MAX has 120,000 agents. Realogy includes among its brands Better Homes and Gardens, Century 21, Coldwell Banker Real Estate and ERA; HomeServices of America is a Berkshire Hathaway affiliate and includes Long and Foster Real Estate and Edina Realty.

NAR Vice President Mantill Williams called the suit “baseless” and said it “contains an abundance of false claims.”

“The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the home buying and selling process,” said Williams. “NAR looks forward to obtaining a similar precedent regarding this filing.”

Representatives of the four realty companies declined to comment.

Many Realtors say the suit could dismantle the compensation system as it now exists.

Anthony Lamacchia, broker-owner of Lamacchia Realty in Waltham, Massachusetts, says if the suit is successful “it would basically destroy buyer agency, which would not be in the best interests of buyers or sellers.”

He argues that even in an era where buyers find their homes online, the buyer agent still has important duties in handling contract negotiations, providing strategic advice and guiding clients through the process of closing.

Other brokers challenged allegations in the suit. Alexis Eldorrado, the managing broker of Eldorrado Chicago Real Estate, responded in regards to buyer agents refusing to show homes with low commission splits.

“In reality, if the buyers have found the place they want and are interested in seeing it, NAR’s code of ethics requires the agent to show it,” said Eldorrado.

 

About the Plaintiff

GavelThe plaintiff in the case is Christopher Moehrl.

He sold a home in 2017 using a RE/MAX broker to list the property while the buyer was represented by Keller Williams.

Moehrl paid a total commission of 6 percent. Almost half of that, 2.7 percent, went to the buyer’s agent.

If the case is certified as a class action, the potential number of sellers affected would be massive.

It would include sellers who have paid a broker commission during the past four years in connection with a home listed by an MLS in these metropolitan areas: Washington D.C.; Baltimore; Cleveland; Dallas; Denver; Detroit; Houston; Las Vegas; Miami; Philadelphia; Phoenix; Salt Lake City; Richmond, Virginia; Tampa, Orlando, Sarasota and Ft. Myers, Florida; Charlotte and Raleigh, North Carolina; Austin and San Antonio, Texas; Columbus, Ohio; and Colorado Springs, Colorado.

 

The entire real estate industry will have an interest in the outcome of this case.

 

Sources:

Class action suit could change real-estate commissions – Chicago Tribune

A new class action lawsuit could upend the real estate business as we know it – The Real Deal

What the bombshell buyer-side lawsuit means for Realtors – Inman

 

Law Offices of Lora Matthews Fausett, P.C.

If you require a real estate attorney in Naperville to represent you with any issues related to buying a home or property there, the Law Offices of Lora Matthews Fausett, P.C. are well trained to handle matters relating to buying and selling, short salescommercial leases, as well as foreclosure defense and many others.

 

For Information Call 630-858-0090


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


Is Tax Code Uncertainty Affecting the Illinois Real Estate Market?

Home For Sale

In this post, we discuss theories offered by real estate agents as to why homes in Illinois are taking longer to sell in 2019 than last year. 

Homes in Illinois are taking longer to sell in 2019. Some real estate agents are offering possible reasons as to why this is.

 

Why are Illinois homes taking longer to sell?

Some real estate agents have a theory as to why it’s taken longer for homes to sell over the winter and spring.

Many agenst are saying the real estate slowdown is a response to buyer uncertainty about how recent tax code changes will affect what people can afford.

“There were huge changes, and people aren’t sure what it means for them until they file this year,” said Greer Haseman, an @properties agent based out of Oak Park, Illinois.

The slowdown has been noticable in Oak Park. In the first months of 2018, Oak Park homse sold in 92 days on average. In the same months of 2019 that average has jumped to 120 days.

Buyers “don’t want to plan what to spend until they know all the implications (of the revisions) on their family’s finances,” Haseman said.

 

Uncertainty is slowing the Illinois real estate market

Open House signThis question over tax code changes has added another uncertainty to the housing market in the Chicagoland region.

Another major factor is property taxes. Illinois already has the second highest property taxes in the nation. With the state economy facing serious debt and cities and counties facing budget shortfalls, fears about increased property taxes are definitely a concern.

Many economists are also concerned about the possibility of another recession. Some are projecting it could happen and that is probably keeping some buyers on the sidelines.

The uncertainty over how the new tax code will alter home budgets, “is limited to this winter,” said Jordan Chalmers, a Baird & Warner agent based out of Lincoln Park. “But it’s uncertainty, and any market dislikes uncertainty.”

 

The people most unlikely to hold off on buying a new home because of market uncertainty are upper income buyers. They are the most likely buyers to be impacted by the recent $10,000 limit on state and local taxes that can be claimed for a deduction.

 

Affects of uncertaintly not the same in all areas

Home for saleIn Lake County, Will County, and the city of Chicago, the average time a home is on the market has been longer in the first two months of 2019 than during the same period in 2018.

Only in DuPage County has the average time on market actually been shorter than last year.

The increases in market times may not always be huge, but the housing market in the Chicago area has not been as strong in other parts of the country. There is less room in this delicate market than in other places, and any swing in sale times or prices is felt more strongly here.

Recent increases in the number of homes for sale in some areas have left less-competitive houses to remain on the market longer.

Nobody likes to blame the weather but a long, tough winter definitely didn’t help things either.

Hopefully anyone who was waiting for better weather will start their house hunting soon.

 

Law Offices of Lora Matthews Fausett, P.C.

If you require a real estate attorney in Naperville to represent you with any issues related to buying a home or property there, the Law Offices of Lora Matthews Fausett, P.C. are well trained to handle matters relating to buying and selling, short salescommercial leases, as well as foreclosure defense and many others.

 

For Information Call 630-858-0090


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


Illinois Ranked 41st Most Affected by Government Shutdown

Photo by Max Pixel

A new analysis of the 35-day partial government shutdown shows that Illinois ranked number 41 among the 50 states and the District of Columbia on how it was affected by the shutdown.

According to an analysis by WalletHub.com on how the states were affected by the federal government shutdown, Illinois ranked Number 41.

The study gave Illinois a score of 24.76 out of 100.

The factors that the analysis was based on were: share of federal jobs, federal contract money per capita, share of families receiving food stamps funds, real estate as a percentage of the state economy (since mortgage processing hinges on federal agency staffs) and residents’ access to national parks.

The study found that “blue states” were slightly more affected by the shutdown than “red states” were.

The average ranking for “blue-leaning” states was 24.81, while the average for “red-leaning” states was to 26.83.

The federal shutdown that recently ended January 25th set the record for the longest government shutdown.

 

Which Jurisdictions Were Most Affected by the Shutdown?

Rank (1 = Most Affected) State / Territory Total Score
1 District of Columbia 78.59
2 New Mexico 65.95
3 Maryland 65.70
4 Hawaii 62.91
5 Alaska 61.08
6 Virginia 56.61
7 West Virginia 46.25
8 Mississippi 45.56
9 Alabama 43.46
10 Arizona 40.73
11 Rhode Island 37.74
12 Montana 37.28
13 Maine 36.57
14 Florida 36.25
15 Oregon 36.08
16 Oklahoma 35.87
17 Kentucky 35.81
18 Washington 35.71
19 Georgia 35.50
20 Wyoming 33.01
21 South Carolina 32.88
22 South Dakota 32.62
23 Tennessee 32.55
24 Louisiana 32.36
25 Idaho 32.20
26 Missouri 32.15
27 Vermont 30.46
28 Texas 29.59
29 Utah 29.05
30 Connecticut 29.00
31 Colorado 28.42
32 Nevada 28.35
33 Pennsylvania 27.20
34 Massachusetts 27.09
35 New York 27.08
36 Delaware 26.98
37 California 26.65
38 North Carolina 26.64
39 Arkansas 25.82
40 Michigan 24.96
41 Illinois 24.76
42 Ohio 24.66
43 North Dakota 23.69
44 New Jersey 19.30
45 Kansas 18.84
46 Wisconsin 17.56
47 Indiana 17.02
48 Iowa 16.49
49 Nebraska 16.40
50 New Hampshire 15.59
51 Minnesota 10.54

Source: WalletHub.com 

 


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


 

The Law Offices of Lora Fausett P.C. provides real estate law services including loan modificationsbuying and selling assistanceshort sales and deeds in lieumortgage foreclosure defense, and more.

Located in Glen Ellyn, Illinois and serving clients in DuPageCookKane, Will, and Kendall Counties.

For Information Call 630-858-0090


 

How the Government Shutdown Affects Real Estate and Mortgages

Photo by Max Pixel

In this post, we discuss how the government shutdown is affecting real estate transactions and mortgages.

The U.S. government shutdown is affecting more than just federal employees.

The shutdown is also affecting some homebuyers, lenders and real estate agents, who are seeing their closings delayed.

If the government shutdown turns out to be a long one, it could damage the housing market, which in some parts of Illinois is still struggling to gain momentum.

According to Lawrence Yun, chief economist with the National Association of Realtors, the shutdown is already causing uncertainty and hurting consumer confidence.

“For ordinary Americans, the shutdown adds to economic uncertainty about their future,” said Lawrence Yun. “Buying a home is a high-anxiety transaction, and by adding another complexity to it with possible delays in [the transaction], it hurts the economy and hurts consumers.”

Below is a list of how a continued government shutdown could impact your real estate transaction.

 

Real Estate Transactions Impacted by Shutdown:

  • FHA loans could be delayed
  • USDA loans will not be processed
  • Delays in IRS transcript and Social Security reporting

 

Real Estate Transactions Not Affected by Shutdown:

  • Fannie Mae
  • Freddie Mac
  • VA Loans
  • Flood Insurance

 

First Time Home Buyer Mortgage WorkshopFHA Loans

Loans insured by the Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) are typically not impacted by government shutdowns.

However, with less staff working at the FHA, some borrowers may see a closing delay due to the increased backlog.

 

USDA Loans

The USDA will not issue new Direct Loans or Guaranteed Loans.

Scheduled closings of Direct Loans have been canceled and unless your guarantee was previously issued for a Guaranteed Loan, those may not be closed, depending on your lender.

Check with your lender if you are getting a USDA loan or planned to use the USDA program to buy your home.

You may have to delay your home purchase until the shutdown is resolved.

 

Veteran Homeowner ExemptionVA Loans

VA staffers who approve the VA loans are paid through borrowing fees and are not impacted by the shutdown.

 

Social Security Reporting

To process a mortgage application, lenders will verify that your Social Security number is valid with the Social Security Administration.

Because of the delays expected in processing these requests, government-sponsored agencies have relaxed their rules to allow lenders to submit these reports prior to loan delivery rather than earlier in the loan process.

If your Social Security number cannot be validated prior to this time, however, your loan may be denied.

 

mortgage applicationIRS Transcripts

Lenders usually have borrowers sign an IRS request for a transcript of tax return (Form 4506-T) at or before closing.

The IRS is not processing new requests for transcripts during the shutdown.

Lenders are not required to have the transcripts at closing and, in many cases, can add the transcripts to your loan file after closing.

 

Federal Flood Insurance

New legislation was passed in December 2018 in order to extend the National Flood Insurance Program (NFIP) through May 31.

FEMA, which oversees the NFIP, is still selling and approving new policies.

 

Property Tax Assessment - CalculatorFannie Mae and Freddie Mac

The shutdown does not impact loan processing at Fannie Mae and Freddie Mac because they are not funded by the government.

However, the issue is that verification of employment is a key requirement to get a loan from these agencies.

If you are a federal worker or contractor, your lender may not be able to get a verbal verification of employment from your government employer prior to loan delivery.

This could cause your loan approval to be denied or delayed because your employment and ability to repay have not been fully vetted.

 

Article Source: How the government shutdown is disrupting mortgage, real estate transactions – BankRate.com


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


 

The Law Offices of Lora Fausett P.C. provides real estate law services including loan modificationsbuying and selling assistanceshort sales and deeds in lieumortgage foreclosure defense, and more.

Located in Glen Ellyn, Illinois and serving clients in DuPageCookKane, Will, and Kendall Counties.

For Information Call 630-858-0090


Real Estate Technology – What Lies Ahead?

real estate technology

Photo via Max Pixel

In this post, we review eight real estate technologies that have the potential for changing the industry in 2019 and the upcoming years.

There is no doubt that the real estate industry looks much different than it did ten years ago.

Ten years ago the industry was already different than it was ten years before that.

The real estate market keeps evolving. Tastes change, the economy fluctuates, laws change, and most of all, new real estate technologies are continuing to change it further.

Forbes magazine recently ran a story about developing real estate technologies and what is ahead for the industry.

We will examine what Forbes considers to be the biggest changes that technology will make on the market so that you can understand and begin to prepare and adapt.

 

Biggest Real Estate Technology Trends

  • Amazon-Like Closings
  • Streamlined Processes
  • Transactions Without Middle Men
  • Realtors As Consultants
  • Growing Digital Endorsements For Residential Loans
  • DocuSign, Google Maps And VR Technology
  • Improving Access To Facts
  • More Efficient Investment Cycles

 

Amazon-Like Closings

Using real estate technology on smartphoneReal estate buyers now have access to most of the same tools that realtors have. This is creating more and more transparency in the buying process.

New technologies will continue to minimize the paperwork, maybe eventually to the point where closings take place online in an “Amazon-like” vehicle for real estate.

Landlords will be able to use many tools including unlocking doors to even conducting the entire rental process online.

People will still want to visit a property in person though, so realtors will play a role similar to car dealers do today.

Prediction by Holly Williams, MQ Ventures, LLC

 

Streamlined Processes

The buying and selling process has changed for the better because of tech advancements over the past ten years.

Today buyers and sellers can use search engines, comparison databases, virtual home tours, and 3D floor plans for information gathering and education.

We can assume that the purchasing process can benefit from new technologies as well.

“I envision the process of purchasing to benefit greatly — tech advancements can streamline the process and memorialize it in a more efficient manner than currently occurs municipality to municipality, state to state, to a more formal and standardized system.”  Prediction by Stephen Kliegerman, Halstead Property Development Marketing

 

Transactions Without Middle Men

Real Estate red tape

Photo by Max Pixel

Blockchain looks to be the biggest technological disruption to real estate processes.

This could allow for real estate transaction without all of the middlemen that are typically involved in a property closing. This major change still could be decades away. – Prediction by Meg Aubale Epstein, Ca South Development.com

 

Realtors As Consultants

The industry has begun to change faster than many real estate agents have come to realize.

It is more important than ever for real estate professionals to provide real value.

“Technology will likely thin the overcrowded market of part-time real estate agents while those who are experienced, knowledgeable and dedicated will maintain a space from transactions built from solid relationships. I believe at some point real estate agents will offer more of a consultative approach to the transaction.” – Sheryl Houck, eXp Realty, LLC

 

Growing Digital Endorsements For Residential Loans

Illinois home with tax lien“I expect that more and more residential loan closings and their associated security instruments will be endorsed digitally. However, I don’t think it’s as likely to see commercial transactions follow suit as quickly.” – Brad Moree, Moree Law, PLLC

 

DocuSign, Google Maps And VR Technology

We are already seeing wide adoption of DocuSign within the real estate industry, which has helped speed up the signing process.

Newer technologies such as Google Maps, drone videos and Virtual Reality are already helping with properties that are geographically too far to visit, which has cut down on time and expenses.

We will continue to see wider and regular usage, as well as other emerging technologies to help with property buying, selling and management without having to physically travel to a location. – Prediction by Robin Bhalla, The Festival Companies

 

Improving Access To Facts

Home lending days“The main goal of technology should be to help agents and consumers make more informed decisions more efficiently. Interpreting this information and the soft skills required to make deals happen in a shifting market will still be the value-add that agents bring. Technology will help us with the facts and stats, but can’t account for the emotional side of deal-making and marketing in a shifting market.” – Kofi Nartey, The Nartey Group – Compass

 

More Efficient Investment Cycles

“I believe that technology will insert efficiencies into the entire investing lifecycle. From deal sourcing to underwriting, managing assets and even disposition, big data and machine learning can transform the speed and accuracy of real estate transactions and have a significant impact on investors’ bottom line.” – Guy Zipori, Skyline AI

 

The predictions in this blog post are based upon an article that appeared on Forbes.comfi in November 2018. 

 


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


 

The Law Offices of Lora Fausett P.C. provides real estate law services including loan modificationsbuying and selling legal assistanceshort sales and deeds in lieumortgage foreclosure defense, and more.

Located in Glen Ellyn, Illinois and serving clients in DuPageCookKane, Will, and Kendall Counties.

For Information Call 630-858-0090