The National Association of Realtors has agreed to a landmark settlement that would eliminate real estate brokers’ long-standing commissions, commonly of up to 6% of the purchase price.
Instead, home buyers and sellers would be able to negotiate fees with their agents upfront. If the $418 million legal agreement is approved by a federal court, consumer advocates predict the ranks of real estate agents will thin, further driving down commission prices.
“For years, anti-competitive rules in the real estate industry have financially harmed millions,” said Benjamin Brown, managing partner at the Cohen Milstein law firm and one of the settlement’s negotiators. “This settlement bring sweeping reforms that will help countless American families.”
The NAR acknowledged the pending settlement in a statement Friday and denied any wrongdoing.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” said Nykia Wright, interim CEO of NAR, whose previous chief stepped down late last year amid fallout from a federal lawsuit.
“It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” Wright said in the statement.
Currently, a home seller is essentially locked into paying a brokerage fee for listing their property on a multiple listing service, or MLS — usually 5% or 6% depending on their geographic area. Upon selling, half of the fee goes to a listing agent representing the seller, while the buyer’s agent gets the other half.
The practice — which has become standard in the real estate industry in recent decades — led to accusations that some buyers’ agents were steering prospects toward more expensive homes. In October, a federal jury found the NAR and some major brokerages liable for colluding to inflate commission fees, ordering the trade group to pay a historic $1.78 billion in damages.
“It’s a bribe,” Doug Miller, an attorney and longtime consumer advocate in the real estate industry, said of the commission-splitting arrangements. “You’re paying someone to negotiate against you. There’s no good reason for sellers to pay buyer-brokers.”
If the settlement is approved, brokerage commissions would be stripped from MLS sites and opened up to negotiation with sellers, among a series of other changes. Homebuyers, too, would be able to negotiate fees more easily if they choose to sign up with a broker — though experts say the new arrangement may incentivize more buyers to forgo brokers entirely.
The new brokerage-fee changes would begin to take effect within months of the settlement’s approval. A preliminary hearing to approve the deal is slated to take place in the coming weeks.
CORRECTION (March 15, 2023, 2:27 p.m. ET): A previous version of this article misstated when a federal jury found the NAR and some major brokerages liable for colluding to inflate commission fees. It was in October, not November.
Bengaluru: In a social media poll conducted by DH on Saturday, an overwhelming majority of nearly 200 respondents indicated that the ongoing water scarcity in Bengaluru is likely to impact their real estate investment decisions in the city, going ahead.
About 87 per cent of those polled said that the unprecedented water crisis has become a cause of concern for their property investment plans in the city, while nearly 61per cent are now evaluating investment options in other cities which don’t suffer from the same kind of issues. The poll was conducted on DH’s official X and LinkedIn accounts.
Months before summer sets in, an acute water shortage in the city has left residents scrambling for the crucial everyday resource amid dried up borewells, and costly private water tanker services. Those in the commercial sector, especially industries dependent on regular water supply for day-to-day operations such as textile and hospitality, are also bearing the brunt of the contingency.
The state government has blamed inadequate monsoon in the past couple of years, leading to reduced water levels in Cauvery river, the primary source for the city.
“Queries from prospective homebuyers regarding borewell depth at project sites have increased of late,” Shivam Pathak, a sales manager at Bengaluru-headquartered TG Developers, said. Enquiries and sales numbers tied to end user homes have however not witnessed a dip yet, he added.
“We do expect buyers to do more diligence on the hard infrastructure status of the projects where they plan to buy. This doesn’t include just water availability but also sewage treatment, EV charging points, solar or renewable energy, etc,” Sudhir Pai, chief executive of property search portal Magicbricks, seconded.
Around 59% of the poll respondents scheduled to move to the state capital for various reasons said that they have postponed their plans in light of the ongoing shortage. Meanwhile 63% are mulling a delay in renting or purchasing their next property in the city, per the poll.
This rising discontent rings alarm bells for the city’s real estate sector, which registered a nine-year high sales volume of residential units at 54,046 in 2023, according to a January 2024 report by property consultancy Knight Frank India.
“It (the DH poll result) is a reaction to the crisis and not emblematic of a longer term trend,” Pai said. Stating earlier instances of water shortage in the city, including during the Covid-19 pandemic, he highlighted the positive mid and long-term investment trends in Bengaluru for reassurance.
“The Bengaluru real estate market will not go down, the government will come up with appropriate solutions,” Pathak added. Property developers however have to ensure better utilisation of rainwater harvesting benefits beyond car wash and gardening purposes, he said, adding that they will also have to look at ground water recharging more seriously.
(Published 10 March 2024, 21:41 IST)
Republican presidential candidate and former U.S. President Donald Trump speaks during a Fox News town hall at the Greenville Convention Center in Greenville, South Carolina, on Feb. 20, 2024.
Justin Sullivan | Getty Images
Donald Trump is racing to stave off a pair of civil penalties totaling nearly $540 million, without having to first put up the full amounts in cash or bonds.
The former president’s lawyers claim that he would face “irreparable” harm if required to fully secure his judgments in order to keep them from coming due, and might even have to quickly sell off properties that can’t be rebought.
They also say Trump can’t simply post a cash deposit — at least not in his New York civil business fraud case, where he is facing $454 million in fines and interest alone.
“No one, including Jeff Bezos, Elon Musk and Donald Trump, has five hundred million laying around,” Trump’s attorney Chris Kise told an appeals court judge last week.
But legal experts say there’s another option that Trump’s lawyers haven’t mentioned in the court filings: Trump could offer up some of his properties as collateral to borrow what he needs — potentially from private equity sources.
There are “lots of private lenders out there in the debt markets and private equity markets that could lend” to Trump, said Columbia University law professor Eric Talley.
“In all cases, the loans would probably have to be secured with Trump properties, but if there is enough equity in some of them, he should be able to obtain secured credit, even on a compressed timeline,” Talley said.
In this courtroom sketch, former U.S. President Donald Trump looks on as his attorney Alina Habba delivers closing arguments during E. Jean Carroll’s second civil trial in which Carroll accused Trump of raping her decades ago, at Manhattan Federal Court in New York City on Jan. 26, 2024.
Jane Rosenberg | Reuters
The professor underscored the irony of Trump using his real estate to fight a lawsuit in which he was found liable for fraudulently inflating his property values for financial gain.
Any loans “would themselves involve making declarations of the value of the property — and that of course is what got him into this mess to begin with,” said Talley.
But accurately appraising the value of Trump’s assets is not a serious obstacle. As Trump’s lawyers noted during the fraud trial, the institutions that have lent him money already have conducted their own analyses of Trump’s finances, and did not rely solely on the claims at issue in his financial statements.
A more important factor could be whether Trump’s real estate assets are already mortgaged, said law professor John Coffee.
“He would have to come up with clean real estate property that is not already securing something that some other bank has a lien on,” Coffee said.
“Does he have that property? I can’t tell you.”
What Trump owns
As of late January, the Trump Organization comprised 415 entities, according to Barbara Jones, a retired federal judge tasked with monitoring the company’s finances.
Of those, Jones identified 70 operating entities that generate revenue. That includes long-term leases of buildings such as 40 Wall Street, commercial office space on 13 floors of the 58-story Trump Tower, plus the Trump National Doral Miami resort.
In New York City, the value of Trump’s real estate holdings totals $690 million, according to a September 2023 estimate by Forbes. Some of the most prominent buildings that bear Trump’s name in the city are largely owned by other entities.
New York Attorney General Letitia James, who brought the fraud case, said she would seize Trump’s real estate assets if he cannot pay his civil penalty.
“There’s absolutely no reason for the New York attorney general to be kind and gentle to him if he doesn’t post the bond,” Coffee said.
A view leading into Trump National Doral in Miami, Florida, on April 3, 2018.
Michele Eve Sandberg | AFP | Getty Images
Trump said in a deposition last year that he had “substantially in excess of $400 million in cash.” But his lawyers claimed last week that, if Trump is forced to secure the full $454 million penalty, “properties would likely need to be sold to raise capital under exigent circumstances.”
They instead offered to post a $100 million bond, but New York appeals court Judge Anil Singh rejected the proposal.
Unless a full appeals court reverses Singh’s decision, Trump has until March 25 to post an “undertaking” — cash or bonds — covering the entire penalty in order to stop it from taking effect during his appeal.
Trump has also asked a federal judge to delay another fast-approaching deadline to pay an $83.3 million penalty in E. Jean Carroll’s civil defamation case.
Carroll’s attorneys argued that Trump’s request “boils down to nothing more than ‘trust me.'”
Trump’s next move
If Trump does attempt to sell assets to meet his undertaking, he won’t have much time to get it done.
He would have to hire a broker to market his properties, and any deal would have to close to free up the cash to use toward a bond, said Neil Pedersen, owner of New York-based bond agency Pedersen & Sons.
“There could be opportunistic buyers approaching him as well,” Pedersen noted.
So far, Trump has given no indication that he is moving in that direction.
“There are no sales planned or contemplated,” Kise told CNBC in an email before Singh’s ruling. “So no appraisers hired, no steps taken, etc.”
The Trump Tower on 5th Avenue is pictured in the Manhattan borough of New York City on April 18, 2019.
Caitlin Ochs | Reuters
After Singh ordered Trump to pay the full penalty, Kise and Trump’s other attorneys did not reply to questions about whether they were now preparing to sell off properties.
Coffee said Trump “can very likely” get a loan to help him meet his undertaking. That’s in part because Singh temporarily halted another penalty that would bar Trump from applying for loans from New York registered lenders.
Moreover, said Coffee, Trump is well-known within New York financial circles, so he is “not going into a market with strangers.”
“The real problem is, can he give the banks enough collateral that they’re satisfied?”
Talley agreed. “There is a lot of ‘dry powder’ out there — not just with banks, but also in non-banks,” he said.
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Republican presidential candidate, former U.S. President Donald Trump speaks during a Fox News town hall at the Greenville Convention Center on February 20, 2024 in Greenville, South Carolina.
Justin Sullivan | Getty Images
They also say Trump can’t simply post a cash deposit — at least not in his New York civil business fraud case, where he is facing $454 million in fines and interest alone.
“No one, including Jeff Bezos, Elon Musk and Donald Trump, has five hundred million laying around,” Trump’s attorney Chris Kise told an appeals court judge last week.
But legal experts say there’s another option that Trump’s lawyers haven’t mentioned in the court filings: Trump could offer up some of his properties as collateral to borrow what he needs — potentially from private equity sources.
There are “lots of private lenders out there in the debt markets and private equity markets that could lend” to Trump, said Columbia University law professor Eric Talley.
“In all cases, the loans would probably have to be secured with Trump properties, but if there is enough equity in some of them, he should be able to obtain secured credit, even on a compressed timeline,” Talley said.
In this courtroom sketch, former U.S. President Donald Trump looks on as his attorney Alina Habba delivers closing arguments during E. Jean Carroll’s second civil trial in which Carroll accused Trump of raping her decades ago, at Manhattan Federal Court in New York City on Jan. 26, 2024.
Jane Rosenberg | Reuters
The professor underscored the irony of Trump using his real estate to fight a lawsuit in which he was found liable for fraudulently inflating his property values for financial gain.
Any loans “would themselves involve making declarations of the value of the property — and that of course is what got him into this mess to begin with,” said Talley.
But accurately appraising the value of Trump’s assets is not a serious obstacle. As Trump’s lawyers noted during the fraud trial, the institutions that have lent him money already have conducted their own analyses of Trump’s finances, and did not rely solely on the claims at issue in his financial statements.
A more important factor could be whether Trump’s real estate assets are already mortgaged, said law professor John Coffee.
“He would have to come up with clean real estate property that is not already securing something that some other bank has a lien on,” Coffee said.
“Does he have that property? I can’t tell you.”
As of late January, the Trump Organization comprised 415 entities, according to a retired federal judge tasked with monitoring the company’s finances.
Of those, Jones identified 70 operating entities that generate revenue. That includes long term leases of buildings like 40 Wall Street, commercial office space on 13 floors of the 58 story Trump Tower, and the Trump National Doral Miami resort.
View leading into Trump National Doral in Miami, Florida on April 3, 2018.
Michele Eve Sandberg | AFP | Getty Images
In New York City, the value of Trump’s real estate holdings totals $690 million, according to a September 2023 estimate by Forbes. And some of the most prominent buildings that bear Trump’s name in the city are largely owned by other entities.
New York Attorney General Letitia James, who brought the fraud case, said she would seize Trump’s real estate assets if he cannot pay his civil penalty.
“There’s absolutely no reason for the New York attorney general to be kind and gentle to him if he doesn’t post the bond,” Coffee said.
Trump said in a deposition last year that he had “substantially in excess of $400 million in cash.” But his lawyers claimed last week that, if Trump is forced to secure the full $454 million penalty, “properties would likely need to be sold to raise capital under exigent circumstances.”
They instead offered to post a $100 million bond, but New York appeals court Judge Anil Singh rejected the proposal.
Unless a full appeals court reverses Singh’s decision, Trump has until March 25 to post an “undertaking” — cash or bonds — covering the entire penalty in order to stop it from taking effect during his appeal.
Trump has also asked a federal judge to delay another fast-approaching deadline to pay an $83.3 million penalty in E. Jean Carroll’s civil defamation case.
Carroll’s attorneys argued that Trump’s request “boils down to nothing more than ‘trust me.'”
If Trump does attempt to sell assets to meet his undertaking, he won’t have much time to get it done.
He would have to hire a broker to market his properties, and any deal would have to close in order to free up the cash to use toward a bond, said Neil Pedersen, owner of New York-based bond agency Pedersen & Sons.
“There could be opportunistic buyers approaching him as well,” Pedersen noted.
So far, Trump has given no indication that he is moving in that direction.
“There are no sales planned or contemplated,” Kise told CNBC in an email before Singh’s ruling. “So no appraisers hired, no steps taken, etc.”
Trump Tower on 5th Avenue is pictured in the Manhattan borough of New York City, New York, U.S., April 18, 2019.
Caitlin Ochs | Reuters
After Singh ordered Trump to pay the full penalty, Kise and Trump’s other attorneys did not reply to questions about whether they were now preparing to sell off properties.
Coffee said that Trump “can very likely” get a loan to help him meet his undertaking. That’s in part because Singh temporarily halted another penalty that would bar Trump from applying for loans from New York registered lenders.
Moreover, said Coffee, Trump is well known within New York financial circles, so he “not going into a market with strangers.”
“The real problem is, can he gives the banks enough collateral that they’re satisfied?”
Talley agreed. “There is a lot of ‘dry powder’ out there, not just with banks but also in non-banks,” he said.
The real estate sector has been one of the most significant drivers of economic strength and growth in India. As per the latest data outlook real estate demand is estimated to be around 15-18 million sq. ft by the year 2025. Reportedly, as per the IBEF, luxury home sales in India have advanced by a 130% rate through mid-2023.
In FY23, the value of home sales in India’s residential property market rose to an all-time high of Rs 3.47 lakh crore (US$ 42 billion) which had a remarkable increase to the tune of around 48% over last year’s figures. The number of units sold also increased by 36% to 379,095.
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However, the real estate sector is likely to encounter substantial hurdles in the future as a result of rising property costs, rental rates, and loan payments. As inflation is projected to rise more in the coming years, there is growing concern about how it will impact the real estate industry in 2024.
Before getting into the 2024 predictions, it’s crucial to understand how inflation affects the Indian real estate market.
Inflation and Property Prices:
Inflation has an important influence on property prices. When inflation increases, it also raises the costs of building houses due to higher expenses for materials and labourers. Resulting in the overall cost of a property. Additionally, inflation can impact people’s desire to buy property, as they may choose to delay or avoid making large purchases when they are uncertain about the future. This may result in a reduction of the demand for properties, which can also further fluctuate property prices.
When we look ahead to 2024, the influence of inflation on property prices will depend on mixed factors. One crucial issue will be how the government controls inflation and maintains economic stability. If the government takes significant steps to curb inflation in the Union Budget 2024-25, property prices may stabilise. The middle-income category drives a huge portion of property demand, and inflation has a significant impact on their purchasing power. If inflation remains under control, there may be increased demand for properties, thus raising property prices. However, if inflation continues to rise, people may have less money to buy homes, resulting in a drop in demand. This could result in decreased property prices, providing an excellent chance for purchasers to invest in real estate.
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Rental Rates and Inflation:
In the 2024 real estate forecast, inflation’s impact on rental prices is another key factor to consider. When the cost of living rises, landlords may be forced to raise rents to pay their costs. This makes it difficult for tenants, particularly middle-class families, to afford rental flats.
Furthermore, inflation can boost the cost of maintenance and utilities, which can be passed on to tenants in the form of higher rents. As rental rates rise, landlords may have trouble finding tenants, resulting in decreased demand for rental units.
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Inflation affects rental property investors in both positive and negative ways. On the one hand, they can increase earnings by raising rental rates. However, tenants may struggle to afford the increasing prices, resulting in abandoned rental units.
Loan EMIs and Inflation:
Inflation has a significant impact on the real estate market, increasing the cost of loan repayments. Borrowing money is often more expensive during periods of inflation. This may be a severe concern not just for current homeowners, but also for potential homebuyers because increased EMIs make it more difficult to repay loans or gain mortgage approval. If loan payments rise, consumers may find it more difficult to repay their loans or receive them in the first place. This could also affect the real estate business, as developers and builders may struggle to sell their properties, resulting in fewer new development projects.
Inflationary pressures in the real estate market are expected to influence all sectors, including residential, commercial, and retail. However, certain segments may experience a greater influence than others. For example, premium houses and prime business sites may see a greater price increase, but inexpensive housing and commercial spaces in the suburbs may see a mild increase. This can shift the current prices, especially in suburbs that are closer to tier 2 cities and restabilize the market
The real estate industry in India is likely to grow dramatically in the next few years, but inflation remains a concern. As we predict for 2024, inflation will have a variety of effects on the real estate market, depending on government policies, demand and supply, and overall economic stability. Inflation can raise property prices, rent rates, and loan payments, but the government can make policies to limit the effects. As a buyer or investor, one must stay current on economic trends to make informed real estate investment decisions in the years ahead.
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- If you sold a home in 2023, part of your profit could be subject to capital gains taxes.
- Single homeowners can shield up to $250,000 of home sales profit from capital gains taxes and married couples filing jointly can exclude up to $500,000, provided they meet IRS rules.
- You can also increase the home’s “basis,” or purchase price, by tacking on the cost of certain improvements.
Witthaya Prasongsin | Moment | Getty Images
Despite a slump in U.S. home sales, many homeowners made a profit selling property in 2023. Those gains could trigger a tax bill this season, depending on the size of the windfall, experts say.
In 2023, home sellers made a $121,000 profit on the typical median-priced single-family home, according to ATTOM, a nationwide property database. That’s down from $122,600 in 2022.
But sometimes profits exceed the IRS limits for tax-free gains and “it’s a shock” for sellers, said certified public accountant Miklos Ringbauer, founder of MiklosCPA in Los Angeles.
Still, “the tax laws were written to encourage homeownership,” and many sellers qualify for a tax break, Ringbauer said.
Single homeowners can shield up to $250,000 of home sales profit from capital gains taxes and married couples filing jointly can exclude up to $500,000, provided they meet IRS eligibility.
If you’ve owned the property for more than one year, profits above $250,000 and $500,000 are subject to long-term capital gains taxes, levied at 0%, 15% or 20%, depending on your 2023 taxable income. (You calculate “taxable income” by subtracting the greater of the standard or itemized deductions from your adjusted gross income.)
There are strict rules to qualify for the $250,000 or $500,000 capital gains exclusions, Ringbauer warned.
The “ownership test” says you must own the home for at least two of the past five years before your home sale — but that’s only required for one spouse if you’re married and filing jointly.
There’s also a “residence test,” which requires the home to be your primary residence for any 24 months of the five years before sale, with some exceptions. (The 24 months of residence can fall anywhere within the five year period, and it doesn’t have to be a single block of time.)
Both spouses must meet the residence requirement for the full exclusion.
A partial exclusion may also be possible if you sold your home because of a workplace location change, for health reasons or for “unforeseeable events,” according to the IRS.
Generally, you can’t get the tax break if you received the exclusion for the sale of another home within two years of your closing date.
If your capital gain exceeds the IRS exclusions, it’s possible to reduce your profits by increasing your home’s original purchase price or “basis,” according to certified financial planner Assunta McLane, managing director of Summit Place Financial Advisors in Summit, New Jersey.
You can increase your home’s basis by adding certain improvements you’ve made to the property to “prolong its useful life,” according to the IRS.
For example, you could tack on the cost of home additions, updated systems, landscaping or new appliances. But the cost of repairs and maintenance generally don’t count.
Of course, you’ll need detailed records to show proof of capital improvements, because “estimates don’t work when it comes to an audit,” Ringbauer said.
After a home sale, the IRS receives a copy of Form 1099-S, which shows your closing date and gross proceeds. But you need paperwork to prove any changes to your home’s basis.
Failing to keep home improvement records throughout ownership is a “common mistake,” McLane said.
Hong Kong, a British colony from the 1840s to 1997, grew into an international finance center just off the coast of mainland China.
Anthony Kwan | Bloomberg | Getty Images
Asia-Pacific markets were mostly higher Friday, with China stocks rising for the ninth straight session as investors digested property prices data.
The CSI 300 index ended 0.09% higher at 3,489.74, extending its winning streak for nine days in a row. Hong Kong’s Hang Seng index was 0.13% lower in volatile trading.
Data showed sales prices of newly built commercial housing in first-tier cities fell 0.3% month-over-month in January, with declines narrowing by 0.1 percentage points from the previous month.
At the end of last year, the country’s troubled property market clocked its worst declines in new home prices in nearly nine years.
South Korea’s Kospi ended 0.13% higher at 2,667.70, while the smaller-cap Kosdaq closed 0.18% lower at 868.57.
In Australia, the S&P/ASX 200 closed 0.43% higher at 7,643.60.
Japan stocks were closed for trading on Friday for the Emperor’s Birthday holiday. Japan markets led gains in the previous session, with the Nikkei 225 closing at a new all-time high of 39,098.68, surpassing the previous record of 38,915.87 set in 1989.
Wall Street’s main indexes surged on Thursday, with the S&P 500 hitting a record high after chip giant Nvidia posted quarterly results that far exceeded estimates, boosting the tech sector.
The benchmark index gained 2.11% to close at 5,087.03, its best day since January 2023. The Nasdaq Composite jumped 2.96%, recording its best day since February 2023, while the Dow Jones Industrial Average gained 1.18%, to close above 39,000 for the first time and at a new high of 39,069.11.
— CNBC’s Pia Singh and Yun Li contributed to this report.
British house prices fell by 1.4 per cent on an annual basis in December, after a revised 2.3 per cent decrease in November.
London was the region with the biggest annual decrease with prices in the capital falling by 4.8 per cent, the Office for National Statistics (ONS) said on Wednesday.
“Our initial estimate of UK house prices shows another annual fall in December, however the pace of decrease has slowed since the previous month,” said Aimee North, head of housing market indices at the ONS.
Wednesday’s data contrasted with some other measures of Britain’s housing market which showed house prices rose in January as demand picked up after mortgage rates fell.
Other reports on the data indicated UK house prices rose for the first time in four months at the end of last year.
The average price of a home rose to £284,691 (€333,813) in December, a 0.1 per cent rise compared to the previous month.
The figures suggest the housing market may be past the worst after a marked cooling in mortgage rates in recent months. More forward-looking industry data from lenders Halifax and Nationwide Building Society have already pointed to prices rebounding.
The ONS said prices fell 1.4 per cent in the 12 months to December, with the market defying predictions of a slump triggered by 14 back-to-back interest-rate rises by the Bank of England. It was still the worst year for the property market since 2008 when the financial crisis triggered a 15 per cent decline.
“December saw demand pick up as mortgage rates decreased and 2024 has started with a tsunami of enthusiasm and enquiries from potential homebuyers,” said Stephen Perkins, managing director at broker Yellow Brick Mortgages.
“Though this data shows prices are down on an annual basis, it paints a picture of how the market was several months previously, and the picture now is really quite different.” – Reuters, Bloomberg