Where did June go? What happened?! We're not even two weeks into the official season of Summer, yet it still feels like it's fleeting. With all this recent rain, even more reason to make the most of it. It's pretty cool that nothing is on fire around here and our town run is flowing over 2K cfs in July. And you know Summer is off to a good start when Durango brings back the kind of fireworks that blow up instead of the ones that make pictures and spell words! Sounds like they'll be fired off from the base of Smelter mountain this year, so plan your views accordingly. All Summer events are kicking off, so blow up those arm floaties, stock up on limes and grab your favorite coozie!
Let's talk about this new market we're getting into. A new market? Oh yeah, it's looking like it. From the above data, what do you see? I'll tell you what I see. I see a healthy sales price appreciation barely holding on thanks to April's sales. I see inventory levels continuing to rise while sales are continuing to fall. Interest rates still suck, but life happens, and sometimes folks just need to buy or sell. These are some basic observations, but still worth acknowledging when you take a look at the graph below.
 
I've talked about months supply of inventory before, so hopefully this graph tells a clear story. It's broken down into the 3 different areas my MLS identifies. (When I post about Durango, it's a combination of all three). You can see everyone unloading their condos up in the resort area [around Purgatory], the market is flooded with them, probably because insurance costs cranked up the HOAs. Tamarron's HOA went up something like 40% from last year due to insurance alone. Looking at condos alone up there, 11.6 months of inventory! Holy moley, haven't' seen that much condo inventory up there since summer of 2016.

I wonder if there's a chance median sales prices in Durango might actually decline this year. I wouldn't bet on it yet, but we saw a couple properties sell last Fall at record high prices. Between the motivation of some Sellers (see above) along with the inventory we're seeing, factored against unmotivated and reluctant Buyers, I think there's a chance to see listings positioned more competitively in the market. But, I'm hesitant to push that narrative due to demand. There's still simply Buyer demand, and it remains pent up due to high rates and low inventory. Either demand is going to catch up to inventory, or inventory is going to catch up to prices. Either way, right now doesn't seem like a great time for a Seller to push the market in pricing. And maybe right now it might be a good time for buyers to start throwing some lower offers out; especially if it's cash.

On another note, all the lawsuit and settlement stuff takes effect August 17th! Here we gooooooo! Based on my experience practicing in Colorado, I really don't see how the changes are going to benefit anyone. They essentially add extra paperwork, and extra language on that paperwork, while muddying the waters by reducing the visibility of Buyer's Agent's commissions. This isn't a fix, this isn't a silver bullet. Properties will continue to sell for market value influenced by [local] market conditions. Even if buyer's Agent commissions were to completely go away, that's not going to make homes significantly affordable.
The timing is interesting, as our market is currently shifting towards a Buyer's market and Sellers will need to find way to incentivize Buyers to bring strong offers, which means continuing to pay a competitive rate to the Buyers' agents. Not a good time to make potential buyers come out of pocket to pay their agent when inventory is up and sales are down.

As far as the changes go, we're down to 2 significant ones. Copied and pasted from NAR:
  1. Beginning August 17, 2024, an MLS Participant “working with” a buyer will be required to enter into a written agreement with the buyer prior to touring a home, including both in-person and live virtual tours. (Anyone who has worked with me knows I avoid beating people over the head with paperwork until absolutely necessary, gotta test drive the car before you buy it. No longer.)
    1. Specify and conspicuously disclose the amount or rate of any compensation the MLS Participant will receive from any source, or how this amount will be determined;
    2. The amount of compensation must be objectively ascertainable and may not be open-ended (e.g., “buyer broker compensation shall be whatever amount the seller is offering to the buyer”);
    3. Include a statement that MLS Participants may not receive compensation from any source that exceeds the amount or rate agreed to with the buyer; (Meaning we would potentially have to amend our agreement if the Seller is offering more than my original rate. Remember, as of now, what the Seller is offering to the Buyer's agent has already been worked out and agreed to between the Seller and the listing agent, and the listing agent has already agreed to how much of their fee they're going to "share" with the Buyer's agent. So if the Seller is offering more than what I originally asked for, it's not like the difference is automatically going into the Buyer's pocket. Most likely the difference is going in the Listing Agent's pocket, because it's less than they agreed to share.)
    4. Disclose in conspicuous language that broker commissions are not set by law and are fully negotiable; and
    5. Include any provisions required by law
  2. NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS.
    • There will continue to be many ways in which buyer brokers could be compensated, including through offers of compensation communicated off MLS — as we have long believed that it is in the interests of the sellers, buyers, and their brokers to make offers of compensation — but using the MLS to communicate offers of compensation would no longer be an option.
    • The types of compensation available for buyer brokers would continue to take multiple forms, depending on broker-consumer negotiations, including but not limited to:
    • Fixed-fee commission paid directly by consumers
    • Portion of the listing broker’s compensation
Some MLS are adding a Seller Concession field, which can be used to pay a Buyer's Agent- if the lender allows it. Speaking of MLS, if you consider NAR's definition of MLS to be "An MLS is a private offer of cooperation and compensation by listing brokers to other real estate brokers.", it makes you wonder what the future of MLSs looks like. Does this just empower Zillow and other third parties even more? (Did you know that Zillow owns the #1 showing software, Showingtime, used by agents in this market? They also own a popular contract software, Dotloop, and recently purchased a popular CRM, Follow Up Boss. Zillow is also a real estate brokerage, and I've noticed at least one listing in Durango co-listed by a Zillow broker this year. I don't know what the next move is, but when has consolidation ever been good for the consumer?) 

At the end of the day, Buyer's agents getting paid shouldn't really change, it's just going to be more of a hassle to get there. As a Seller, you might be thinking you can save a few bucks on not paying a Buyer's agent's commission, and that's totally fine! Then what happens when you become a Buyer, and need to pay your agent out of pocket? Or maybe you want to write an offer on your next property without a Buyer's agent? Totally fine too! Do you think listing agents will charge more, for bearing the burden of being the sole realtor carrying a transaction with an unrepresented Buyer? There's a good chance that some realtors are going to come out of this making more than they were before!