1 big thing: NAR's Legal Labyrinth

The Department of Justice (DOJ) has re-opened its antitrust probe into the National Association of Realtors (NAR). This comes on the heels of NAR’s $418 settlement agreement in several antitrust lawsuits alleging a conspiracy in how buyer and seller agents’ fees are disclosed and paid.

At issue for the DOJ: Whether NAR’s rules for agent commissions violate antitrust laws and trigger inflated home prices.

Why it matters: Uncoupling buyer’s and seller’s agent commissions could lower the cost of selling — and therefore buying — homes by a lot. Such an outcome would also affect how agents are paid for their work.

  • The DOJ wants to make it illegal for a buyer’s and seller’s broker to discuss commission splitting at all.

  • Under the proposed NAR settlement, while they wouldn’t be allowed to disclose the commission splits up front on the MLS, they could still put them on their websites and business cards and at least tell each other what they would pay in a commission split.

DOJ concern over NAR practices has trod a long and winding road in the last two decades.

  • 2005: DOJ sues NAR, claiming anticompetitive practices

  • 2008-2018: NAR agrees to change some of its listings practices

  • 2019-2020: DOJ re-opens the investigation but soon settles, requiring only that NAR disclose more information about broker fees in sales listings

  • 2021-2024: DOJ re-reopens the investigation, requesting more information about broker commissions and real estate listing practices; NAR wins a federal court ruling to shut it down; DOJ appeals

  • April 5, 2024: The US Court of Appeals in DC overturns the lower court’s decision.

The result: The DOJ should soon receive previously undisclosed NAR documents, which could provoke further legal action or even new regulations.

DOJ’s international perspective: One factor that seems to have piqued DOJ’s interest in NAR is the fact that real estate commissions in the U.S. are higher than in other countries.

What’s next: The DOJ hopes its renewed investigative efforts will reduce the expenses associated with real estate transactions for homeowners and buyers.

Tough times for NAR: In addition to the March settlement and the re-opening of the DOJ inquiry, the powerful group has had a spate of recent harassment allegations and resignations to deal with.

  • Its reputation is fraying (to say the least), and the organization is on the ropes.

  • The fact that NAR failed to run the commission settlement by the DOJ first to ensure it would also satisfy the Department indicates that the Association is playing checkers in a Mahjong tournament.

The bottom line: The entire real estate industry needs to be poised to manage a potential paradigm shift. Whether NAR will lead in this brave new world remains to be seen.

2. Commercial Real Estate in Decline Is Bad News for Cities

Florida Land Trusts

Commercial property values are undergoing a sharp decline nationwide. For many cities, that’s forcing stressful cutbacks.

What’s happening: In cities like San Francisco and Chicago, commercial properties are sold for a fraction of their original purchase price.

  • This is because of lower property valuations, which, in turn, can lead to diminished tax collections and strained municipal budgets.

Why this matters: Reduced commercial tax revenue means cities can no longer afford to cover essential services (think transportation, education, healthcare) and infrastructure maintenance.

The “doom loop”: There are no easy answers here.

  • With property values and tax revenue falling, cities may need to increase taxes.

  • With increased taxes, more businesses and residents could decide to relocate — or fewer decide to move in.

  • With fewer resources, cities face tough choices about which essential services to continue offering.

  • More people will consider leaving when a city no longer offers nice parks, high-quality healthcare, or transportation.

The disinvestment trend: Federal aid and fiscal cushions municipalities have relied on in recent years are less available.

  • Some cities are trying to be proactive by postponing maintenance and public projects, but that’s just kicking the can down the road.

The long-term implications: Many cities could opt for significant urban restructuring to move forward. For their part, developers are rethinking their approach:

  • They’re considering new uses for vacant spaces and finding ways to boost value, converting under-used office buildings to residential or mixed-used units, for example.

  • They prioritize green building standards, which could attract new investors and tenants.

  • They’re thinking past commercial properties to alternative sectors like industrial real estate.

The bottom line: If commercial property values continue to sink, cities will face increasingly difficult choices. They’ll need creative solutions to thwart the downward spiral.

Trust This Podcast

This week, I sat down with CPA Asad Ahmad to discuss tax tactics and strategies for real estate professionals to save money. Be sure to catch it to hear Asad’s great advice.

Listen in or watch on your favorite channel.

3. Catch up fast

Florida Land Trusts

  1. The American Land Title Association, representing hundreds of thousands of title insurance agencies and insurers, has sent a letter to FinCEN recommending changes to FinCEN’s proposed rule to require all entities and trusts to disclose their ultimate beneficial owners when they purchase U.S. real estate. ALTA

  2. Three strategies to mitigate risks in real estate investing. MPAMag

  3. FinCEN renewed the Geographic Targeting Order. If an LLC, corporation, partnership or other legal entity (not a trust) uses cash to purchase a residential property for $300,000.00 or more in Miami-Dade, Broward, Palm Beach, Hillsborough, Pasco, Pinellas, Manatee, Sarasota, Charlotte, Lee, or Collier Counties, then the closing agent is required to discover and disclose the names of the beneficial owners of the buyer to FinCEN. FinCEN

  4. Inflation is coming down in every sector except housing, and rents are the driving factor as those in the northeast and midwest refuse to come down. Bloomberg (gift link good for 7 days only)

  5. Seven reasons why the housing market hasn’t recovered from the pandemic. Bigger Pockets

4. Closing Thought

Florida Land Trusts
I've lost count of how many times this white orchid has bloomed since I shoved it into a ligustrum bush on the back patio. Photo: Joe Seagle

Rocks aren’t obstacles in the river of life. They’re rugged materials used to build a life.

Why it matters: Visualizing rocks in this way helps us get through the days and build our year.

In the Entrepreneurial Operating System’s lexicon, “rocks” are what most businesses would call “projects” or “quarterly goals.”

  • At each weekly, quarterly, and annual meeting, we come together as company leaders to identify, discuss, and solve issues.

  • Issues aren’t always bad. They’re just issues we’re facing that, if solved, would help the company achieve its mission and the owner’s vision.

  • The solution to many issues requires uncovering a rock or two that must be chipped away weekly over the next quarter.

I like to think that it also comes from the old story about the professor lecturing his students with a big jar of rocks, pebbles, sand, and water.

  • The rocks are the big things that matter in your business.

  • If you spend too much time on the sand and pebbles, you won’t have time for the rocks.

  • So we keep our rocks front and center before us, discussing them weekly at our meetings and holding each other accountable to ensure the person in charge of each rock will chip away at the stone until it’s completed.

When building a business, remember that the foundation must be durable. Rocks are a strong part of that foundation.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

  • Was this email forwarded to you? Subscribe here.

  • Have an idea or issue to share? Email us. 

  • Connect with us using your preferred social media and website links for MyLandTrustee and Aspire Legal Solutions.

  • Our mailing address: PO Box 547945, Orlando, FL 32854-7945

  • Our physical address: 1901 West Colonial Drive, First Floor, Orlando, FL 32804

Be on the lookout for our next issue! 👋

1 big thing: NAR's Legal Labyrinth

The Department of Justice (DOJ) has re-opened its antitrust probe into the National Association of Realtors (NAR). This comes on the heels of NAR’s $418 settlement agreement in several antitrust lawsuits alleging a conspiracy in how buyer and seller agents’ fees are disclosed and paid.

At issue for the DOJ: Whether NAR’s rules for agent commissions violate antitrust laws and trigger inflated home prices.

Why it matters: Uncoupling buyer’s and seller’s agent commissions could lower the cost of selling — and therefore buying — homes by a lot. Such an outcome would also affect how agents are paid for their work.

  • The DOJ wants to make it illegal for a buyer’s and seller’s broker to discuss commission splitting at all.

  • Under the proposed NAR settlement, while they wouldn’t be allowed to disclose the commission splits up front on the MLS, they could still put them on their websites and business cards and at least tell each other what they would pay in a commission split.

DOJ concern over NAR practices has trod a long and winding road in the last two decades.

  • 2005: DOJ sues NAR, claiming anticompetitive practices

  • 2008-2018: NAR agrees to change some of its listings practices

  • 2019-2020: DOJ re-opens the investigation but soon settles, requiring only that NAR disclose more information about broker fees in sales listings

  • 2021-2024: DOJ re-reopens the investigation, requesting more information about broker commissions and real estate listing practices; NAR wins a federal court ruling to shut it down; DOJ appeals

  • April 5, 2024: The US Court of Appeals in DC overturns the lower court’s decision.

The result: The DOJ should soon receive previously undisclosed NAR documents, which could provoke further legal action or even new regulations.

DOJ’s international perspective: One factor that seems to have piqued DOJ’s interest in NAR is the fact that real estate commissions in the U.S. are higher than in other countries.

What’s next: The DOJ hopes its renewed investigative efforts will reduce the expenses associated with real estate transactions for homeowners and buyers.

Tough times for NAR: In addition to the March settlement and the re-opening of the DOJ inquiry, the powerful group has had a spate of recent harassment allegations and resignations to deal with.

  • Its reputation is fraying (to say the least), and the organization is on the ropes.

  • The fact that NAR failed to run the commission settlement by the DOJ first to ensure it would also satisfy the Department indicates that the Association is playing checkers in a Mahjong tournament.

The bottom line: The entire real estate industry needs to be poised to manage a potential paradigm shift. Whether NAR will lead in this brave new world remains to be seen.

2. Commercial Real Estate in Decline Is Bad News for Cities

Florida Land Trusts

Commercial property values are undergoing a sharp decline nationwide. For many cities, that’s forcing stressful cutbacks.

What’s happening: In cities like San Francisco and Chicago, commercial properties are sold for a fraction of their original purchase price.

  • This is because of lower property valuations, which, in turn, can lead to diminished tax collections and strained municipal budgets.

Why this matters: Reduced commercial tax revenue means cities can no longer afford to cover essential services (think transportation, education, healthcare) and infrastructure maintenance.

The “doom loop”: There are no easy answers here.

  • With property values and tax revenue falling, cities may need to increase taxes.

  • With increased taxes, more businesses and residents could decide to relocate — or fewer decide to move in.

  • With fewer resources, cities face tough choices about which essential services to continue offering.

  • More people will consider leaving when a city no longer offers nice parks, high-quality healthcare, or transportation.

The disinvestment trend: Federal aid and fiscal cushions municipalities have relied on in recent years are less available.

  • Some cities are trying to be proactive by postponing maintenance and public projects, but that’s just kicking the can down the road.

The long-term implications: Many cities could opt for significant urban restructuring to move forward. For their part, developers are rethinking their approach:

  • They’re considering new uses for vacant spaces and finding ways to boost value, converting under-used office buildings to residential or mixed-used units, for example.

  • They prioritize green building standards, which could attract new investors and tenants.

  • They’re thinking past commercial properties to alternative sectors like industrial real estate.

The bottom line: If commercial property values continue to sink, cities will face increasingly difficult choices. They’ll need creative solutions to thwart the downward spiral.

Trust This Podcast

This week, I sat down with CPA Asad Ahmad to discuss tax tactics and strategies for real estate professionals to save money. Be sure to catch it to hear Asad’s great advice.

Listen in or watch on your favorite channel.

3. Catch up fast

Florida Land Trusts

  1. The American Land Title Association, representing hundreds of thousands of title insurance agencies and insurers, has sent a letter to FinCEN recommending changes to FinCEN’s proposed rule to require all entities and trusts to disclose their ultimate beneficial owners when they purchase U.S. real estate. ALTA

  2. Three strategies to mitigate risks in real estate investing. MPAMag

  3. FinCEN renewed the Geographic Targeting Order. If an LLC, corporation, partnership or other legal entity (not a trust) uses cash to purchase a residential property for $300,000.00 or more in Miami-Dade, Broward, Palm Beach, Hillsborough, Pasco, Pinellas, Manatee, Sarasota, Charlotte, Lee, or Collier Counties, then the closing agent is required to discover and disclose the names of the beneficial owners of the buyer to FinCEN. FinCEN

  4. Inflation is coming down in every sector except housing, and rents are the driving factor as those in the northeast and midwest refuse to come down. Bloomberg (gift link good for 7 days only)

  5. Seven reasons why the housing market hasn’t recovered from the pandemic. Bigger Pockets

4. Closing Thought

Florida Land Trusts
I've lost count of how many times this white orchid has bloomed since I shoved it into a ligustrum bush on the back patio. Photo: Joe Seagle

Rocks aren’t obstacles in the river of life. They’re rugged materials used to build a life.

Why it matters: Visualizing rocks in this way helps us get through the days and build our year.

In the Entrepreneurial Operating System’s lexicon, “rocks” are what most businesses would call “projects” or “quarterly goals.”

  • At each weekly, quarterly, and annual meeting, we come together as company leaders to identify, discuss, and solve issues.

  • Issues aren’t always bad. They’re just issues we’re facing that, if solved, would help the company achieve its mission and the owner’s vision.

  • The solution to many issues requires uncovering a rock or two that must be chipped away weekly over the next quarter.

I like to think that it also comes from the old story about the professor lecturing his students with a big jar of rocks, pebbles, sand, and water.

  • The rocks are the big things that matter in your business.

  • If you spend too much time on the sand and pebbles, you won’t have time for the rocks.

  • So we keep our rocks front and center before us, discussing them weekly at our meetings and holding each other accountable to ensure the person in charge of each rock will chip away at the stone until it’s completed.

When building a business, remember that the foundation must be durable. Rocks are a strong part of that foundation.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

  • Was this email forwarded to you? Subscribe here.

  • Have an idea or issue to share? Email us. 

  • Connect with us using your preferred social media and website links for MyLandTrustee and Aspire Legal Solutions.

  • Our mailing address: PO Box 547945, Orlando, FL 32854-7945

  • Our physical address: 1901 West Colonial Drive, First Floor, Orlando, FL 32804

Be on the lookout for our next issue! 👋

Title

👋 Happy Friday! Today is National 🍿Popcorn Day. I swore off popcorn in my mid-teens (you know, the “braces” years) and never really got back into it. But, hey, to each their own!

1 big thing: Teachers’ housing: a canary in a coal mine?

Teachers in many parts of the U.S. can’t afford housing near their schools, so some school districts are helping out. Workers in other industries have yet to see similar relief.

Why it matters: Municipalities nationwide struggle to provide affordable housing for their workforce, including essential workers. Some school districts have landed on a solution, but it’s not clear whether the model will translate to other professions.

Teachers do hard, important work. But in many places, they can’t afford housing.

  • In Colorado, teachers average $63,000 a year. This doesn’t go far in a state where the average single-family home costs $528,000 and rents often run north of $1,700 a month.

  • Florida has the lowest average adjusted salary for K-12 public teachers in the country for the 2021–22 school year at $50,508, while the average single-family home costs $409,243, and rents are the same as Colorado’s

School districts are stepping in: In Aspen, where the median home price is $843,000, the school district rents $50 million worth of residential properties to teachers at below-market rates.

  • Aspen has lost almost $5 million since the program began, but supporters say it’s worth it to attract and retain high-caliber educators.

  • In Texas, two school districts have initiated a similar program.

Great, but: First responders, healthcare workers, administrative staff, and others also struggle to find housing as prices soar.

  • They don’t have well-resourced, public service-oriented employers like a school district to help out.

  • Unsustainable commutes to jobs in expensive markets mean critical jobs go unfilled.

Housing solutions for lower-income workers remain elusive.

  • Government-backed affordable housing programs, supported by private philanthropy, offer some relief but they’re not keeping up.

  • Decreasing interest rates and new construction aren’t making a difference.

The bottom line: School districts may be able to help their teachers, but the model isn’t going to fit other industries in the same predicament. Civic and business leaders must find creative solutions to retain key workers.

2. Housing Market Predictions for 2024

Declining mortgage rates could jolt the market out of its 2023 slumber, but experts are cautious.

Good news on interest rates: With rates for 30-year fixed mortgages averaging 6.6% and trending downward, buyers are perking up. There’s even a scenario where rates could drop below 5% this year.

Yes, but: While lower rates mean buyers get more house for their buck, more buyer activity isn’t necessarily going to mean lower home prices or more home sales.

  • It’s all about supply and demand: The housing shortage is real—and ongoing.

  • Despite an increase in single-family home starts last year, we’ll need “years of accelerated new home construction to narrow the supply shortage gap from more than a decade of underbuilding,” says Odeta Kushi, an economist at First American.

  • The number of multifamily rental units under construction overshadows the slight uptick in single-family construction.

  • Caveat: Logan Mohtashami, economist at HousingWire, sees large multifamily projects slowing down due to high labor costs and thinks builders will focus on lower-intensity projects like single-family homes.

Some markets are better than others. For new builds, look to the Sun Belt, the cheapest part of the country for residential construction.

  • Reliably affordable markets in the midwest and northeast are also promising.

  • Danielle Hale, chief economist for Realtor.com, even thinks the Southern California market could bounce back.

“Cash is king”: Jeff Checko of RE/MAX Advantage sees everything coming up roses for investors. “Now is one of those ‘cash is king’ times that you should be absolutely taking advantage of,” he says, “maybe even bulk purchases from builders that are really willing to just get out with their behind.”

We live in interesting times.

  • It’s an election year. Wars rage.

  • The climate continues to set new records.

  • Pandemics are real.

What’s in store for the housing market—for any market—in 2024? The consensus of all the prognostications appears to be:

  • The end of rising interest rates combined with high labor costs and a poor buyer-to-inventory ratio is likely to keep home prices more or less steady.

  • Any event coming out of left field could rock them up or down.

  • “For 2024, I want to stress that the economic data can turn on a dime—both positive and negative—in ways that weren’t the case in the previous decade,” Mohtashami warns.

The bottom line: Buyers can expect lower mortgage payments but not lower prices.

  • Sellers are likely to see demand continue to rise.

  • Industry professionals will need to keep a finger in the wind all year, adjusting on the fly to whatever new realities come our way.

3. Catch up fast

  1. More 24-year-old Gen Z’s owned homes than their predecessors in earlier generations. National Mortgage Professional

  2. The race to refinance is on as mortgage rates fall. Newsweek

  3. Lower mortgage rates are shaking up these markets. Bigger Pockets

  4. Long-distance movers chased lower housing prices from one metro to another, and Orlando was one of the top five receiving them. Zillow

  5. 46 NYC office buildings could convert to residential with assistance from the City’s new “Office Conversion Accelerator.” Axios

  6. Nearly 9 in 10 homeowners have mortgage rates below 6%. The Hill

  7. The 10 most-affordable markets to invest in during 2024 (spoiler alert: none are in Florida). Bigger Pockets

4. Pic of the day

Edward and Rufous expected Philip to have a treat when they came back inside, but -- alas -- he was empty-handed. Photo: Marie Seagle (AKA "Nana")

The “visionary” of a business sits as the top of the accountability chart and is often one of the founders.

They must embody the company’s mission and values, come up with big ideas, keep an eye on the distant (but not too distant) horizon, strategize about directions to take the company, attract talent, lead, mentor leaders, innovate, cultivate big relationships, and build a legacy.

Innovating is one of the toughest tasks I have to do as the visionary of our companies.

  • Being a lawyer-technician, it’s easy to fall into grinding away at technical work for clients.

  • You get sucked into working in the business so much that you don’t have time to work on the business.

You have to make space for yourself to get clarity and focus so you can kickstart those parts of your brain that go dormant when you’re in your auto-pilot mode of doing the technical work each day.

  • Meditation works.

  • Journaling works.

  • Sitting in a hotel lobby (or anywhere else) and writing down every. single. detail. you. see. hear. smell. and feel. for an hour or two will stimulate creativity.

Working with a coach, or anyone else who is willing to tell you about yourself, helps organize your thoughts and focus your energy on what’s important.

Learning to be a better leader will build more leaders in your organization. Those leaders will bring their ideas and innovations to the table because you’ve empowered and encouraged them to do so.

But most importantly, you have to put your ego away.

  • The pride of your ego will tell you that only you can have a great idea because you’re the founder-visionary.

  • You made the choices that put the company where it is today, and pride can stop you from admitting you made mistakes and changing course.

  • You have to know everything, so you can’t open yourself up to coaching or learning anything new about leadership.

The bottom line: One of our core values is to “be humble,” and — like all the core values — it applies to everyone in the company because humility keeps pride and your ego in check. Ultimately, that helps you be an innovative leader.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

Be on the lookout for our next issue! 👋

  • Our mailing address: PO Box 547945, Orlando, FL 32854-7945

  • Our physical address: 1901 West Colonial Drive, Orlando, FL 32804

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