Retirement is a time for relaxation, adventure, and enjoying the things you love. As you imagine this exciting new chapter in your life, it's important to think about whether your current home still fits your needs.

If it's too big, too costly, or just not convenient anymore, downsizing might help you make the most of your retirement years. To find out if a smaller, more manageable home might be the perfect fit for your new lifestyle, ask yourself these questions:

• Do the original reasons I bought my current house still stand, or have my needs changed since then?
• Do I really need and want the space I have right now, or could somewhere smaller be a better fit?
• What are my housing expenses right now, and how much do I want to try to save by downsizing?

If you answered yes to any of these, consider the benefits that come with downsizing.

The Benefits of Moving into a Smaller Home

There are many reasons why you should downsize. Here are just a few from Bankrate:

 

Your Equity Can Help Make Downsizing Possible

If those perks sound like something you’d want, you may already have what you need to make it happen. A recent article from Seniors Guide shares:

“And at a time when homeowners age 62 and older have more than $12 trillion in home equity, downsizing makes sense . . .”

If you’ve been in your house for a while, odds are you’re one of those homeowners who’s built up a considerable amount of equity. And that equity is something you can use to help you buy a home that better fits your needs today. Greg McBride, Chief Financial Analyst at Bankrate, explains:

“Downsizing can mean taking that equity when the home is sold and using it to pay cash or make a large down payment on a lower-priced home, reducing your monthly living expenses.”

When you’re ready to use all that equity to fuel your next move, I will be your guide through every step of the process. That includes setting the right price for your current house when you sell, finding the home that best fits your evolving needs.

If you're starting your retirement journey and thinking about downsizing, let's talk. 

Joe

You may have seen the news stories about the recent proposed settlement from the National Association of REALTORS® (NAR).

Unfortunately, there has been a lot of misinformation in the click-bait headlines.

The proposed lawsuit settlement included two changes to business practices:

1. Removal of the offer of Buyer Agent Compensation in NAR-owned MLSs. 
   
   Sellers may still offer buyer agent compensation, without it being published in MLS. I will encourage (but not require) my sellers to continue to offer buyer agent compensation for several reasons, however, I have reasonable concerns that the removal of advertised notice of compensation could be a step away from consumer transparency and have the opposite effect of what was intended.
    
2. Buyer Agents will also need to have signed agreements, just like how Listing Agents have to have Listing Agreements.

The changes will take place in mid-July of 2024, assuming this proposed settlement is approved,

WILL THIS LOWER HOUSING COSTS?

No. Home prices are determined by supply and demand. Nothing in this settlement addresses the lack of supply or the high levels of demand. It seems obvious that in a particularly high-demand/low-supply market like Boston, prices will still be increasing.

There is no seller that is going to subtract the price of a buyer-agent out of their asking price. In most negotiations, the buyer agent fee will not even be part of the conversation.

Right now, I generally charge a 5% fee (split with the buying agent) for my listing agency services. I generally give the seller a break and charge 4% for a transaction with no buyer agent. If this pans out the way it looks like, I will continue to charge 4% for a transaction of that nature. Not only does it require more time energy and skill to keep a transaction with unguided buyers on the rails (The listing agent cannot legally provide advice), but it opens both the seller and the listing agent to more liability.

Further, at this time, buyer agent compensation is baked into the purchase price, and is therefore financeable. There will need to be significant change in the mortgage industry for this to continue to be the case. I have concern that this change will only benefit cash and institutional buyers and harm the lower income and middle-income buyers, the groups that the DOJ purports to help. These are the buyers that particularly need the benefit of a fiduciary agent and can least afford to pay them.

WHAT IF I HAVE AN EXISTING CONTRACT?

Nothing is likely to change before the July target date. However, we are awaiting the final details of the settlement as approved by the court.

Our current understanding is that the only change to an existing contract is that no offer of buyer compensation from the list agent or seller can be published in the MLS and agents working with buyers will need to have written contracts to represent.

WHAT CONSUMER PROTECTIONS ARE IN BUYER REPRESENTATION?

A Buyer Agent has the responsibility of being an exclusive Fiduciary. Fiduciary duties are all the duties that a real estate agent or broker is legally beholden to when working with a client. These duties, which are in the client's best interest, are: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. See more about buyer agency fiduciary obligations.

DOES A BUYER IN THE MARKET NEED BUYER REPRESENTATION?

A buyer does not have to use a Buyer Agent. However, in a low inventory “seller's market”, it is difficult to compete against other buyers who are getting expert advice on offer market conditions, property condition, offer strategies, negotiation, due diligence, and transaction management. See more about buyer agency.

WHAT CAN THE LISTING AGENT NOT DO FOR THE BUYER?

• Offer strategies that have your interests in mind

• Recommend Home Inspectors, attorneys, and other vendors (Under Massachusetts law, only a Buyer’s Agent exclusively representing the Buyer can recommend a Home Inspector)

• Act as your exclusive Fiduciary

• Provide comprehensive Market Analysis interpretation for pricing

• Advocate for you

WHAT ARE THE RISKS WITH A BUYER NOT HAVING A REPRESENTATIVE?

• Not learning about off-market opportunities

• Not being informed and educated about the market or the properties.

• Not having a well-prepared, competitive offer in a multiple offer situation

• Not getting a house

• See more detail on buyer-representation

WILL BUYER AGENCY GO AWAY?

No. Buyer Agency is the way that buyers get expert guidance — from preparation and search, to offer strategy and negotiation, due diligence, transaction management and so much in between. A home represents an important investment — one that continues to be at the heart of financial wellness for most Americans.

My priority as well as Gibson Sotheby's International Realty’s is to focus our resources on those we serve. To my clients, thank you for the privilege of representing your interests and providing outstanding service as you navigate one of life’s most important and complex transactions. I will continue to communicate with you as we understand more about their settlement and the ongoing industry dynamics. Please don’t hesitate to reach out to me with questions.

Best,
Joe Wolvek