Plus, we bust myths about NAR settlement

What buyers want

With all the changes going on in our industry, it is becoming even more necessary for agents to demonstrate their value to potential clients. Of course, it helps to know exactly what those clients are looking for!

Well, we’ve got some good help. Scroll down to today’s second story. There’s great info from the NAR’s Generational Trends Report which tells us the main things that clients need from their agents, and the demographics of typical buyers. The more we know about our clients, the more we can be of service to them.

Yesterday’s open table discussion put on by our friends at Estate Media addressed this issue head-on. Josh, Aaron, Brendan, and Ranyi were firing on all cylinders. It was a great event from start to finish. Watch it here.

Now let’s get into this edition of The Blueprint!

– James and David

Newly-listed homes on the rise

In March, newly-listed homes increased by 11.6% year-over-year in the 50 largest metros, according to The inventory of newly-listed homes increased most in the West (21.3% YOY) and South (15.6%). Here are other key numbers from March:

  • Homes actively for sale were up 23.5%, marking the fifth straight month of growth.

  • The total number of unsold homes, including homes that are under contract, increased 16.5% YOY. 

  • The median price of homes for sale remained relatively stable compared with the same time last year, increasing by only 0.2%.

  • Homes spent 50 days on the market, which is two days shorter than last year, and 12 days shorter than before the COVID-19 pandemic.

  • Price reductions rose to 15% last month, up 2.2% compared to a year ago. That's the highest level in five years.

Our take

Although this spring has been difficult for buyers, this report shows there are signs of hope. Take a look at that last bullet. Price reductions are on the rise. More homes actively for sale means that sellers are getting competitive. If you have buyers on the fence, this is good data to get them moving.

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A look at the typical homebuyer

Millennials have overtaken baby boomers to become the largest group of home buyers, making up 38% of the overall share of homebuyers, followed by Gen X (24%). That’s according to the newly-released Generational Trends Report from NAR which tracked data between July 2022 and June 2023. Here are the other key takeaways:

  • First-time homebuyers made up 32% of all buyers 

  • 27% of homebuyers aged 25-33 didn't know whether their agent received a percentage of the sales price or a flat fee

  • Among all buyers surveyed, the above figure was 19%, and 11% of buyers simply didn't know how their agent was compensated at all.

  • Here are the top 5 things people want from agents:

    • Help buyers understand the process (61%)

    • Point out unnoticed features/faults with a property (58%)

    • Negotiate better sales contract terms (46%)

    • Provided a better list of service providers (e.g., home inspector) (46%)

    • Negotiate a better price (33%)

Our take

This report is packed with so many insights that we couldn’t list them all. It’s an excellent resource to understand the psychology of clients. Use it to craft your pitch explaining what you bring to the table as an agent. Most buyers and sellers are in the dark about the homebuying process. Agents who show how they can add value will be a prized commodity, so if you’re looking for where to hone your skills, that Top 5 list is a good starting point.

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Markets with the most million-dollar cities

Zillow reports that there are currently a record 550 U.S. cities where the typical home value is $1 million or more, up from 491 a year ago. To no surprise, California is the state with the most million-dollar cities at 210 (up from 198 in February 2023), followed by New York and New Jersey. Only three states saw an annual decline: Florida, Texas, and Delaware.

In terms of metros, here are the areas with the most million-dollar cities:

Our take

With inventory still too low to meet demand, today’s tight housing market keeps home prices rising. But as we told you up top, there is good news for buyers. New listings are rising and sellers are starting to make more moves. Zillow’s analysis suggests we may see a second wave of buyer demand in the summer months if mortgage rates come down later this year. If that happens, mortgage payments on these pricier homes could come down as well. But that’s as long as low inventory doesn’t keep driving those prices up. We’ll see

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The news that just missed the cut

Foundation Plans

Advice from James and David to win the day

Our partners at Estate Media put on a great event yesterday in Bel Air. If you couldn’t attend, we strongly encourage you to watch the replay (start at the 15:30 mark). Today we’d like to continue the discussion by clearing up some misconceptions we’ve seen on social media:

NAR settlement DOES NOT force agents to reduce their compensation – Realtors can still set their prices and services. Negotiation has always been the norm in our industry. The settlement doesn’t impose any limits on what realtors can charge or the services they offer. Sellers have a variety of options, and fees are determined through negotiation. As our second story up top shows, most sellers and buyers were genuinely unaware that fees were negotiable before Sitzer/Burnett. Honestly, most people don’t know much about the homebuying process. Agents can be of real service here by educating them.

NAR settlement DOES NOT prevent sellers from paying a commission to a buyer’s agent –  Sellers have the choice to offer a commission to a buyer's agent. It’s a key element for successful property sales. This practice incentivizes buyer's agents, leading to increased exposure and selling prospects for sellers. Even before the Sitzer/Burnett case, the Northwest MLS in the Seattle area dropped the norm of broker commission sharing as a default. Instead, listings state that, when offered, compensation to the buyer broker will come from the seller directly. These adjustments have had minimal impact on the market. Essentially, it's business as usual, as the cooperative compensation model continues to be effective.

NAR settlement DOES NOT prevent buyers from asking for concessions from sellers to pay buyer agent fees – As it has always been the case, sellers may choose not to pay buyer agent compensation, but nothing in the settlement prevents them from paying the buyer broker using the cooperative compensation model. Buyers may request concessions or include contingencies for compensation, and sellers can display what commissions they’re willing to pay on the website of their listing agents. All that the settlement requires is that the buyer agent’s compensation is not listed in its own separate field in the MLS AND that buyer agents now must sign an agency agreement with their clients before they show a property. 

We’ll be saying more about the settlement with each edition, but in the meantime watch this if you haven’t already. 

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Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Source: Mortgage News Daily

That’s it for this edition of the Blueprint!

Remember: each day is a gift and a new opportunity to lead the life you want and to become the person you want to be. The mistakes and missteps you’ve made in the past don’t define you. Live as intentionally as you can and be ruthlessly focused on the goals you’ve set out to achieve. You can do it!

Have a fantastic weekend, and we’ll see you back here on Tuesday! 

– James and David