Real Estate Revolution – How Bend and Eugene’s Markets Are Starting to Shift

Last Updated June 14, 2022

Voiceover: 0:04

The world is changing fast. And so are the local real estate markets. Don’t worry though, we’ve got you covered. Welcome to the Real Estate Revolution.

Kip Lohr: 0:13

Hello everybody. This is the Real Estate Revolution Podcast. I am Kim Lohr, your host with LOHR Real Estate, and once again we are in the LOHR Real Estate world headquarters video and podcast studio. This is the second week we’re trying to put this on video, so bear with us because it’s a lot harder than it looks, folks. In the studio today is Ryan Neal. Welcome Ryan Neal.

Ryan Neal: 0:37

Thank you, Kip Lohr. Great to be here again with you all.

Kip Lohr: 0:39

Yeah, so I’m excited about this week’s episode, because there has been some serious movement in the market just in the last week. And so today, we are going to be talking about the ramifications of some of the things that we’ve been talking about for weeks on this podcast that are kind of coming true, coming to fruition a lot sooner than we had anticipated. And so, let’s start with the numbers. And then we will move on to kind of like talking about how those numbers are actually making some meaningful changes for kind of the buyer seller dynamic right now.

Ryan Neal: 1:16

Sounds great. Yeah, so let’s dive right into the numbers. So as usual, we’re going to start out with a weekly update on mortgage rates, where those are at right now. So 30 year fixed mortgage rates for conventional financing – right now, we’re averaging locally around 5.375%, and translated into APR, which is inclusive of all the different fees that you end up paying which go along with a mortgage, that’s at 5.47%. So we’re up slightly over last week in terms of our 30 year fixed conventional mortgage rates.

Kip Lohr: 1:53

Yeah, it’s amazing. And, you know, in talking to lenders, both in the Eugene/Springfield area and the Bend/Redmond area, it is just, it’s getting harder and harder for buyers to get into the game with rates going up the way they are. But we’re also seeing some interesting, you know, differences in rates between conventional loans and some of the, you know, FHA and VA loans.

Ryan Neal: 2:19

Yeah, that’s correct. So, you know, looking at FHA and VA rates, these are actually dropping right now. So APR for both of those right now is averaging locally 5.075%. So that’s about a, you know, a 0.25% drop just in the past week, and we were talking with Brad Tawzer of Mortgage Express right before the show, asking him if he had any insight on, you know, this disparity that we’re seeing between 30 year fixed rates and these FHA, VA loans. And what he explained to us is that, in some ways, these FHA and VA loans are seen as less risky, because of the requirements, the private mortgage insurance connected with them, which, you know, results in extra fees that you’re going to be charged. So, you know, in reality, just looking at the rates, we can’t say that an FHA loan is going to be cheaper than a conventional loan, even though there’s this difference in rates because of that requirement for insurance.

Kip Lohr: 3:16

Yeah, that’s right. And so that’s the difficult part about this – it’s that, you know, these loans that require private mortgage insurance end up being on a monthly basis more expensive. And traditionally, we would see, particularly with, you know, an FHA loan, you’d have an ability to kind of buy your way out of mortgage insurance kind of once you set into that 20% equity position with your home. But we’re not seeing that right now. And so, the end result is, you may be paying a lower interest rate, but the APR, you know, when you factor in that private mortgage insurance, is probably a little bit higher anyway.

Ryan Neal: 3:59

Yeah. So that’s just a quick update on what’s happening now with mortgage rates. And of course, that’s having a big impact on the market. You know, so, Kip mentioned that we’re going to go into a bit more detail about what we’re seeing happening in our local Bend, Eugene, Redmond, and Springfield markets. But, you know, just to go into what we saw last week, I think we’ll start with Bend. So in Bend, what we’re starting to see is this huge disparity between listing activity on one hand and buyer activity on the other hand, as measured by pending sales. And again, like we were talking about last week, we don’t ever want to put too much stock into what we’re seeing on a week by week basis, because there’s a smaller sample size, and it’s natural to see a bit of give and take, you know, just in terms of what our weekly numbers are showing. But last week, you know, it was kind of a definitive signal that something is shifting in Bend’s market. We have some anecdotal experience to back that up in terms of working with our clients, but anyway, so in Bend last week, there were 90 listings, and there were just 53 pending sales. So that’s as big of a disparity as we’ve seen during the last two years. Because basically, you know, we’ve had extremely low inventory in all of our local markets. And in Bend, it’s been, it’s quite unusual, basically, to see that much more seller activity compared to buyer activity. So, you know, to put these numbers a bit into context, I think we’ll – well, we’re going to go more into the context later, I think we’ll save that for our main discussion, but you know, there’s definitely something to see here. But – there’s kind of a but here – there were 44 sales that happened in the last week, and these had a whopping median of $912,500, which is way higher than anything we’ve seen in Bend. And the median sale price is basically the middle number – so there’s an equal number of sales happening below that $912,500, and there’s an equal number of sales happening above it. So I think an explanation for this is that, you know, properties that are selling in the past week, they were kind of being listed right at the beginning of the spring buying season, when the weather did start to turn in Bend, the temperature started to be less cold, more sunshine. And what it seems like happened was that there was kind of a rush on these higher end homes. You know, people were waiting, you know, to purchase, waiting to list those homes, and all this activity was happening, you know, at that particular point in time. And this, you know, this $912,500 number is a reflection of that. It’s not a reflection of prices drastically increasing in Bend across the

Kip Lohr: 6:45

Yeah, that’s right. And, you know, really, for folks market. that are looking at these numbers on a week to week basis basis with us, it is difficult to find a through line, unless you kind of watch it week to week and start seeing, you know, the line go up or down. And so I agree with you 100%. I think we had a lot of pent up angst on the buyer side. You know, there was just nothing to purchase in the winter, at any price point for that matter. But as we saw, you know, the spring kind of pop open, I think you’re right- I think the first wave of properties that were coming up in Bend were definitely in that higher end range.

Ryan Neal: 7:29

Yeah. So you know, we look at the pending sales right now, those had a median list price of $715,000. So that number, which is going to be reflected in the sales, you know, the sales figures in the future – it’s nowhere near that. So you know, I think since then we’ve seen more activity, we’ve seen activity spread out across all these different segments of Ben’s market. So, you know, things are averaging out and really, and we’ll go into this further later. But really, what we’ve seen in Bend is that prices are flattening out, that they kind of reached a peak, there’s a kind of inflection point in February where we saw quite a significant increase, but since then, they’ve kind of been flattening out. So, inventory, like I mentioned in Bend is a little bit higher than what we saw last year. We now have 266 active properties, which is quite a significant increase, you know, compared to what we were seeing in the winter. So buyers, you know, particularly at certain price points – and we’ll go into that later too – are seeing just more choices, less competition than even just one or two months ago. So in Redmond, you know, activity is basically kind of staying along the lines of what we were seeing last month, where what we’ve really seen for a number of weeks now is that lower end properties in Redmond are getting bought up pretty fast. And this is kind of going along with the trend of just prices increasing significantly in Bend, people turning to Redmond instead.

Kip Lohr: 9:00

People having to migrate from out of the Bend area.

Ryan Neal: 9:03

So right now, Redmond’s inventory is increasing slightly too. We have 105 active properties in Redmond, and these have a median ask price of $639,000.

Kip Lohr: 9:13

In Redmond?

Ryan Neal: 9:13

Redmond, yeah. So, you know, compare that to the pending sales activity, where actually, last week we had a median of just $469,900 for pending sales.

Kip Lohr: 9:25

Yeah, the tricky thing about that number ,though, is that we know that the pending sales as far as their list price are going to sell for significantly more than what the list price is. At least for this round of pending sales.

Ryan Neal: 9:41

They could be. So what we’re seeing in Redmond, you know, with the sales that happened last week, is that they’re going for 99.4% of the list price.

Kip Lohr: 9:48

Wow.

Ryan Neal: 9:49

In Bend, they were 2% above list price. But in Redmond, actually sellers are already starting to make some concessions.

Kip Lohr: 9:57

Okay, go Redmond

Ryan Neal: 9:59

So, you know, just some interesting stuff. So moving on to Eugene and Springfield, it’s actually a very similar dynamic that we’re seeing in Eugene, where we had 78 listings the past week and just 44 pending sales. So starting to see inventory increases. There are now 135 active properties in Eugene – which is hardly anything. Let’s face it, inventory is still extremely low in Eugene. But this is more, definitely than what we had in the winter. And it’s slightly more than what we saw last year this time of year. So, for sale prices, you know, we’re actually seeing again – in Eugene, we’re seeing more activity at the lower end of the market than at the higher end of the market. Pending sales are going at a median of $430,000. And you know, that will probably be a little bit higher than that when it comes to the actual sale price. But, you know, basically what’s happening is there’s more – there’s just more action in the lower end of the market. And right now, the active inventory in Eugene has a median of $485,000. So that number keeps increasing.

Kip Lohr: 11:07

Yeah, that’s right.

Ryan Neal: 11:08

So what we’re seeing is that these homes at the higher end of Eugene’s market -they’re sitting on the market a little longer. You know, people are still desperate to grab the sub- $400,000 homes, not just in Eugene, but they’re going to Springfield, you know, of course to to find those. So in Springfield, the active inventory in Springfield – there’s 47 active homes for sale, and these have a median sale price of $475,000, barely below Eugene. And this is unprecedented, you know. As long as the numbers have been being tracked, Springfield has lagged significantly behind Eugene, but that gap is just closing. And part of the reason is just that people are buying up these lower end homes in Springfield. Because it’s – you know, it’s harder to find them in Eugene. People decide, hey, I can pay a bit less for a home in Springfield. So that’s –

Kip Lohr: 12:02

Or at least the thought is they could.

Ryan Neal: 12:05

You know, it doesn’t always work out that way, but that’s the thought.

Kip Lohr: 12:08

Yeah, well, I find it just amazing how close the median home price between Eugene and Springfield is right now. And when you factor in, you know, less than half of the inventory, you know, you would imagine that Springfield is going to become even less affordable over the next few weeks.

Ryan Neal: 12:31

Yeah, that’s – it’s quite possible, likely. So we’ll be watching the market as we always do.

Kip Lohr: 12:40

Well, good. So like Ryan was saying, we’re going to take a break here. But when we come back, we’re going to actually dive into some of what – you know, on a week to week basis, it’s hard to find a meaningful trend line. But we’re seeing an inflection point now. And in both the Eugene/Springfield and Bend/Redmond areas, we are seeing a significant shift. And we’re going to talk about that when we get back. Welcome back to The Real Estate Revolution Podcast. I am Kip Lohr, your host with LOHR Real Estate. And we are back with the main part of our show today. And we we have some important stuff to talk about. Do you agree?

Ryan Neal: 13:27

I agree. You know, like we mentioned earlier in the show, we’re really – we’re coming to a kind of inflection point where we’re starting to see a definitive shift. And of course, if you’re thinking of buying or selling in our local markets, then this is going to affect you. This is important news. And I think that we’re going to spend a bit of time a bit more time than usual just chewing on the numbers and exactly what they mean.

Kip Lohr: 13:55

Yeah. And I think that for me, as we’re seeing the shift happen, it’s just happening. It’s not that it was like, you didn’t see it coming. What I’m surprised about is that we’re seeing it happen so rapidly. You know, the interest rates – we talked about a few months ago that we anticipated rates to go up this summer, maybe by the end of the summer. Maybe by the end of the year, we’d be in the fives, and it took a month, a month and a half to get, you know, to the mid fives. And so in talking to the lenders that we work with in both communities, I think the consensus is is that what’s going on in the world right now creates a lot of instability and unpredictability. And so, trying to find any sort of baseline to say, well, you know, we’ve seen this in the past and so we can expect things to settle down – I think we can’t say that right now. And so, as far as interest rates going up, we’ve experienced them going up a lot quicker than we thought. And we had talked about the repercussions of interest rates going up. We talked about how as interest rates go up, we’re gonna see buyers be priced out of the market. And we have seen that. And I think the thing that has been astonishing to me is that my anticipation of how quickly that would affect the numbers, how quickly that would affect the way buyers and sellers have to interact with each other has just happened so quickly.

Ryan Neal: 15:35

Yeah, it’s happened quickly, but at the same time, I’d like to throw a word of caution in there – you know, not to think that, hey, the sky is falling. You know, for our listeners out here, that’s not what we’re trying to communicate – that, you know, all of a sudden, things have just flipped 180 degrees, because we look at prices, for example. You know, prices are not even dropping yet, not in any of our local markets.

Kip Lohr: 16:01

I mean, and that’s something that we have predicted that I’m going to stand by. I don’t think we’re going to see prices go down in either of our markets, you know, the Eugene/Springfield area or the Bend/Redmond areas this year, or next year for that matter. We’re not talking about the bottom falling out and seeing the real estate market behave in the same way that it did, you know, during the Great Recession, when the market kind of crashed, because we’re not seeing a crash in the financial markets. The profound change that I think we’re seeing – and I’m, you know, surprised at how quickly it’s happening – is that we have gotten so used – I mean, would you say in the last two years solid, maybe even three years, it has been solidly a seller’s market, and buyers have had to, you know, get squished into shapes that they never thought they’d be willing to get squished into to be able to get into a home? And I think really what we’re seeing right now, is a shift in that dynamic. Mostly, you agree?

Ryan Neal: 17:06

It’s a shift, definitely. And when we’re talking about seller’s markets, we’ve been in a seller’s – we, you know, our local markets of Eugene/Springfield, Bend/Redmond have been seller’s markets for, you know, at least since around 2016/2017. And the needle pretty definitively shifted toward sellers having the advantage. And, as you know, what we really mean when we say a “seller’s market” is that the amount of inventory is such that, you know, buyers are going to be in competition, you know, for the limited amounts of inventory that are available. So when the inventory has been limited in our local markets, but it’s just been a matter of degrees, and particularly following – or I mean, because we’re still in the middle of it – but, you know, when the pandemic started, you know, that needle really started to shift even further toward buyers just having none of the power, having to really fight for increasingly limited inventory. And that trend has been continuing. And it really, it really hit this bottom point in our local markets in the mid to late winter. You know, late last year, early this year, our markets had lower inventory than they ever had before. But the shift that we’re talking about is that we are starting to see more inventory come onto the market. So we are starting to see a bit less competition. But when we say a bit less competition, it’s a bit less. It’s still relative. We’re definitively are still definitively in seller’s markets in our, our local local markets.

Kip Lohr: 18:36

Right, but even so, as we’ve talked about, before, last year, this time of year, we were seeing a lot of irrational buyer activity where we would see buyers making $50,000, $75,000, $100,000, even more than that offers above list price, and days on the market were three, four or five. If you were on the market for more than a week or 10 days, then there was something significantly wrong going on. And we saw some of that right at the you know, right at the beginning of this year, kind of rolling into what we had anticipated, you know, spring being a really, really hot market and the buyer activity driving more of this kind of irrational buyer activity. And it just feels like the brakes hit a week ago. I mean, anecdotally speaking, you know, we work with both buyers and sellers. And when you’re working with a seller, you can expect – or we’ve been able to expect up until recently, you know, our property is going off the market in a week, and buyers putting in multiple offers ,and buyers willing to pay, you know, an obscene amount of money above list price. And then, well, something changed.

Ryan Neal: 20:02

Something changed. And it’s it’s been shifting, you know, slowly but surely where, you know, we can talk about – you can talk about the trends that we’re seeing in the market in terms of numbers. But there’s also a kind of more intuitive level where the kind of temperature or the market or the mood of the market starts to shift. And, you know, that’s something that we can actually feel right now. It’s interesting.

Kip Lohr: 20:25

I agree with that. And I think that’s – you know, for us, we’re out running around with buyers a lot. And we work with sellers, and to see this kind of confluence where we’re starting to see, it’s not – we’re not implying that buyers are going to now take the power away from sellers. But I think what we’re talking about here is when when you get down to the negotiation as a buyer, or you get ready to list your home as a seller, the landscape has shifted, and so the assumptions need to change on both sides of the equation. And the strategies for buyers and sellers need to change. And if they don’t, they’re gonna get left behind.

Ryan Neal: 21:11

That’s completely correct. I mean, we’ve been in a market where expectations for sellers have just kind of been – they’ve gotten inflated and deservedly so, you know, the kind of things that sellers could get away with, and the market that we’ve been in for the past two years, are pretty incredible. If you look at it from an objective perspective, it’s pretty incredible. And the kinds of compromises that buyers have to make, I mean, just the degree to which it has become so common to waive the inspection contingency, it’s just amazing to me, because as a buyer, it’s just very difficult to imagine a situation where it, you know, it’s really in your best interest to waive your ability to perform an inspection and know what you’re purchasing.

Kip Lohr: 21:52

Yeah, and in the willingness to not only take on the financial shifts of coming in significantly above this price and having to have extra cash to do – not necessarily an appraisal waiver, but you know, we quite often write offers where we’re creating a gap between the the appraisal and what the offer amount is, as far as a buyer’s willingness to come in with additional cash. And so, there’s all of these hoops that buyers are having to jump through, where it’s not just financial, it’s also, you know, a potential liability, where they’re taking on a home where they’re willing to kind of roll the dice that there’s not something major wrong with the home. And hopefully, we’re seeing a little bit of a shift in that dynamic.

Ryan Neal: 22:47

Yeah, and I mean, really, that dynamic is not good for sellers in the sense that, you know, you have a buyer go into contract who has waived the inspection contingency, they waive the appraisal contingency. But when we look at the practical reality of it, you know, there are just situations where a buyer is not going to be able to perform. And as a seller, that’s putting you in an awkward position. Maybe you have a backup offer. But you know, maybe your backup offer has found another property in the meanwhile, and it’s just – you don’t want to have to go on back on the market. And, you know, here you are having accepted an offer which at the end of the day was unrealistic. And you’re having to scramble to get back on the market and explain to other potential buyers what happened, and there’s kind of blood in the water.

Kip Lohr: 23:27

Yeah, that’s right. So we’ve been dancing around this shift that we’re feeling. And part of it is a feeling in our gut, which is not very scientific. But there are some numbers that we can lean into right now that are definitely kind of validating the feeling that the wind has shifted, the temperature of the wind has shifted.

Ryan Neal: 23:48

Yeah, so we talked about how, you know, we don’t want to put too much stock into the weekly numbers. But once we start to get into the more monthly kind of figures than these are a bit more trustworthy in terms of being able to communicate trends that are happening in the market. So what we’re seeing right now in Bend is that compared to, you know, this time of year in 2021, buyer activity is down about 15%, year over year, whereas listing activity, it’s about on par,down just a little bit, you know, one or 2 percent. So really, inventory – it’s actually slightly higher, it’s 10% more than it was a year ago. So buyers have 10% more properties to choose from, but there are 15% less people actually buying. So what that’s indicating is that there is a significant shift that’s happening.

Kip Lohr: 24:35

Yeah, and to try to pin down exactly what’s causing that – I mean, it’s just speculation at this point. Could it be interest rates that are driving, you know, the first time homebuyers out of the market? I think there’s a little bit of that going on. You know, Bend’s a little tougher market to be having that be an explanation in and of itself. And I think also, one of the things that I had anticipated which I’m not seeing is that sellers aren’t becoming reluctant to put their houses on the market, because they don’t want to be in the market with higher interest rates. If you’re sitting on a well, low 3% interest rate, and you’re looking at a five and a half percent range straight right now, there’s not a whole lot of incentive to get out in the market and sell your house, even though you know you have an immense amount of equity in that property. But what we are seeing is actually an increase year over year with inventory in Bend in particular, but also in Eugene. It’s counterintuitive. And on top of that, you’re seeing buyers maybe taking a beat, you know, and maybe waiting to kind of see whether this wind is really shifting -and it is shifting. So what does that mean, for both buyers and sellers in our markets right now?

Ryan Neal: 26:01

I mean, it’s, it’s interesting – when we look at sellers, you know, they’re sitting on a low interest rate right now, they purchased their home, and they might be tempted to trade up, you know, if the market conditions were more favorable, but they’re really not right now. And I mean, that’s been the case for all sorts of different reasons. You know, we’ve had sellers who might be inclined to move not putting their homes on the market, because, you know – I mean, a really big reason has been that they just couldn’t find a replacement property because they can’t what they were looking for. So you know that, but I totally agree that interest rates are only adding more, you know, they’re only exacerbating that trend, that people who would otherwise be inclined in different market conditions just aren’t putting their homes on the market. But you know, we are seeing inventory increase. So sellers, clearly, they are putting their homes on the market. And we are seeing just in the past week or two, this big spike in terms of listening activity. So, you know – it’s really speculation at this point, what exactly is happening there? But do you maybe have any ideas?

Kip Lohr: 27:01

Well, I, I think the main takeaway that I’d like to talk about is less about the ideas that I have and more about the uncertainty that we have moving forward. And the prognostications that you see nationally, and then even the ones that we can provide you as being local, on the ground troops that are, you know, trudging through the trenches of these markets – I am feeling less certainty about being able to get a thumb or a finger on the pulse of what’s going on right now. And I think, probably, for me, the word of the day is being cautious about, you know, jumping on one theory or another, and being able to kind of look at this current market with a lot of skepticism. And so what it really means I think, is both buyers and sellers have to be more in tune with what their plan is and executing a plan based on the circumstances that are on the ground right here. And right now, rather than trying to make decisions based on what they think the landscape could look like by midsummer, or fall, or by the end of the year, or by next year, I think that there are too many factors going on in the world right now to be able to have any sort of reliable finger on the pulse, or, you know, magic eight ball that we can look at where we can say, okay, it’s likely to head this way or likely to head that way. And so, maybe waiting is a good plan, or maybe pulling the trigger right now is a good plan. And so it’s – I think really, people have to get in tune with, really weigh what it is that they really want to be doing right now. And they really have to rely on what they have right in front of their face, right?

Ryan Neal: 29:06

That’s really true. And I’ve mentioned this before, that we’re not fortune tellers. That’s really not what we’re aiming to do. I mean, we are a little more bold than maybe some other folks out there in our willingness to actually make predictions. But really, what we’re doing is just calling it like we see it, where we’re looking, okay, we’re saying this is what – you know, this is what the numbers are showing. And this is what this could mean moving forward. But, you know, it is so important to clarify what you’re clarifying, which is that the decision to purchase a home or to sell your home is really such a personal matter. And of course, you want to be informed by the dynamics of our markets, by, you know, the different factors which could influence your bottom line, and making that decision but at the same time, you know, to really understand what the right decision is – you know, it’s a really personal process that you have to go through.

Kip Lohr: 30:04

You can’t operate out of fear. I think that, you know, the FOMO – fear of missing out – a lot of buyers have operated under that type of fear. And sellers are holding onto their properties, fearing that if they sell them right now, then a year from now, they’re going to be worth $100,000 more, and they’ve missed out on that opportunity. And so, that’s another – I guess that’s a fear of missing out as well. And so I think the uncertainty that we’re seeing, well, I think really in our prognostication – I’m just amazed at how quickly some of the things that we’ve anticipated happening have come to fruition, they’re just happening quicker than I had anticipated. And so to be able to look at what next year is going to look like, for me, the constant that I can feel like we can lean into is that we’re not going to see prices go down within the next year or two. I am willing to stand on that pretty firmly. But as far as how that informs your decision today, I think you’ve got to be looking at what interest rates are today, what equity you have built up in your property today, and whether or not, you know, the need of making a move either to purchase or sell is appropriate for your you and your family. Right here and right now.

Ryan Neal: 31:35

Yeah, and that’s the exploration that we try to go into with our clients. It’s this personal process. It’s a matter of us getting to know you and having you ask yourself, you know, the questions that you need to ask in order to really start to discern what the right path is forward for you and your family.

Kip Lohr: 32:00

Well, I think that’s it for this week’s show, other than we are going to go come back with the final segment of Kip’s Tips. And I want to thank you for being in the studio today and getting us through some of these numbers. Any final thoughts or words before we take a break?

Ryan Neal: 32:19

Yeah, well, I mean, just just put a little bit of context behind, you know, this statement that we don’t really see prices going down. That’s really not what we’re seeing right now. So over the past month, the median sale price in Bend has been $770,000. So it’s a little bit lower than the peak that we saw in February. But, you know, really, the prices aren’t budging. And in Eugene, they’re actually on a steady upward trend, where in the past 30 days, we’ve seen a median sale price of $475,000. And in Springfield – Springfield’s market is super hot, super active right now in terms of buying activity. We aren’t actually seeing any less buying activity in Springfield than we saw a year ago. And there’s less listing activity, so more competition. So really, you know, when we talk about a shift happening, it’s just important to put into context where –

Kip Lohr: 33:10

It’s local. Yeah, I think the takeaway is that we’re continuing to see

Ryan Neal: 33:12

It’s local. And it’s also a kind of shift that’s happening at the periphery of things, where the kind of general picture isn’t shifting all that much. But we’re prices go up, and we’re going to continue to see prices go up. starting – you know, we’re starting to see something happening. So it’s our duty to report that to you as we see it. But you know, not to not to kind of blow that up too much, I think. But when you talk about them on a year over year basis – like Bend was 25% year over year, correct? It was 26% through 2021.

Kip Lohr: 33:55

to see the beginning of that process.

Ryan Neal: 33:58

Definitely.

Kip Lohr: 33:58

All right. Well, we’ll be right back with our latest episode of Kip’s Tips. Welcome back to The Real Estate Revolution podcast. We are in the home stretch. I am Kip LOHR, your host with LOHR Real Estate. I have Ryan Neal in the studio with me as always, and we are on to Kip’s Tips. And for this week, our tip is going to be for sellers, and we’re going to talk about – well it’s an unpopular subject in our industry for real estate agents to talk about fees, negotiating your commission with your listing agent. And first of all, I want to say there’s a lot of misunderstanding about how real estate commissions work. So I’m gonna give you a quick little primer on that. And then the takeaway is going to be, you can negotiate fees. And it’s not a bad thing.

Ryan Neal: 35:11

It shouldn’t have to be a scary thing.

Kip Lohr: 35:13

And so essentially, we have buyers’ agents and sellers’ agents. We have agency. It wasn’t always this way in our industry. We used to actually all be working for the seller. Sellers would hire a real estate agent, and buyers’ agents were sub agents for the seller. And so when there was a commission being paid, the seller was paying a commission to the agents that were working for their best interest, which happened to be both the agent working for the seller directly, and the agents that were working with buyers, bringing them to purchase their home. And so laws changed. I’m not going to go into the details of that other than to say that we now live in a world where there are buyers’ agents that have a fiduciary obligation to the best interest of buyers. And it’s the same thing for sellers. And the fee structure has not changed, however. So a listing agent, an agent working for the seller, is going to sign a contract with the seller to sell their home. And they’re then going to agree to pay a fee to a an agent that brings a buyer. And a lot of sellers don’t understand the exchange that happens. And so when that exchange happens, it’s, “Oh, you got to incentivize having a buyer’s agent bring you the buyer.” And maybe back in the old days before the internet, we kind of controlled the flow of information. Buyers didn’t know that your house was available unless an agent knew that your house was available and brought them to your house. So today, we live in a world where the real estate commission is something that has always been something that you can negotiate. And I would say for sellers these days, don’t be afraid to ask your agent to negotiate this fees. What do you think of that?

Ryan Neal: 37:19

Yeah, I think that, you know, certainly discussion about fees should happen. It isn’t just to be taken for granted that 6% is the only way that it is, because it’s not and you know, particularly in our current markets, we’re really seeing a broader spectrum, I think of you know, commission splits on properties, than, you know, we may have seen, you know, not not too long ago, actually.

Kip Lohr: 37:43

Yeah, and as we see the market getting tighter and the margins getting thinner and thinner, especially from a buyer side where, you know, it’s getting harder and harder from an affordability standpoint, I think it’s it’s time to pull that band aid off and make the recommendation for sellers – feel free to negotiate fees with your agent. Well, that’s it for this week. Thanks again, Ryan for being in the studio with me and next week we’ll have another great show for you. And in the meantime, have a great week.

Ryan Neal: 38:16

Thanks everyone.

Voiceover: 38:23

Thank you for joining the revolution. We are over and out until next week, when we’ll continue to fill you in on all that matters most in our local Bend and Eugene real estate sees. See you next time on The Real Estate Revolution.