Recently, a jury in Missouri found the real estate industry guilty of artificially inflating housing prices by charging “traditional” commissions (5-6%), almost always paid by the sellers from the proceeds of the sale of their home. The practice of the sellers paying the commissions for both the buyers and sellers agent dates back to the 1800s and has generally been accepted that these commissions are “built-in” to the price of the house.
The plaintiff’s argument is that sellers were not given ample opportunity to negotiate buyers agent commissions, or whether they were willing to pay the buyers’ agents at all.
The reality is that commissions have always been negotiable. In Arizona, the commissions are clearly laid out in the listing contract signed by the sellers when they list their house. The rates for the total commissions paid and the amount to be paid to the buyer’s agent are purposely blank in the contract, as they are to be filled in upon agreement between the sellers and the seller’s agent. Additionally, the amount paid to the buyer’s agent is visible to the public in the MLS for all listings.
This case is being appealed, but others will likely follow in other states, which means the industry likely will see some changes in the next couple of years as to how real estate agents are compensated, and more importantly, by whom. One change we will most certainly see soon is the use of Buyer Broker Agreements. Like the listing contract which is a legal contract between the seller and the seller’s broker/agent to represent them in the sale of their home, the Buyer Broker Agreement will be a contract between the buyer and the buyer’s agent, spelling out among other things, how much the buyer’s agent will be compensated and by whom.
The risk of sellers not paying the buyers’ agents is that it could reduce the buying pool for their house as buyers are going to have to come up with additional cash to bring to closing to pay for their representation’s (agent’s) compensation. Additionally, if sellers decide to not compensate the buyer’s agents, are they going to lower their list price accordingly? If not, they are essentially artificially inflating house prices themselves. Ultimately, it is most likely that most sellers will continue to build full agent compensation into the price of their home because it takes two agents to sell a house – and selling is clearly the main objective of sellers.
It is estimated that it will take a couple of years before any of this is settled and both agents and consumers know what changes are required. The Kolb Team has built our business on best practices, honesty, and integrity, which is why we wanted to address this issue now. Our commitment to our clients is to remain focused on those principles and at the highest level. We appreciate your trust in allowing us to serve your real estate needs.
The Kolb Team
FIRPTA (Foreign Investment in Real Property Tax Act)
If you are from Canada, Mexico, or another country outside of the U.S.A. and own real estate in the U.S.A. – this is a must read!
FIRPTA is a complicated and technical act that applies to any non-U.S. citizen who disposes of property in the United States.
With travel and testing restrictions being imposed due to the COVID-19 pandemic, it’s important for you to be aware of FIRPTA. The tax applies to all properties sold for over $300,000. The tax is between 10-20% depending on circumstances.
Some exceptions do apply, and an attorney or accountant would be able to assist with answering questions and completing appropriate forms. For your information, IRS Form 8288-B is the application for either a reduced or waived amount of FIRPTA tax. Of course, if you plan to file, be aware that the title company must have proof of the necessary application paperwork having been sent to the IRS BEFORE close of escrow. They will need a copy of the 8288-B form AND a copy of delivery confirmation to the IRS (FedEx or UPS label). Therefore, it is essential that you do some pre-planning prior to listing your home for sale.
If a waiver is not requested, you will want a title company that works well with FIRPTA. Some title companies will offer to hold funds for 90 days - some will not. The advantage of using a title company that will hold the funds is that it gives you and your accountant time to calculate gains/losses and apply to the IRS to have the funds released to you if applicable. Otherwise, you will be filing a U.S. tax return for a refund of any monies owed to you.
Homes sold for less than $300,000 may have no withholding required under FIRPTA. If the sales price is $300,000 or less, the buyer signs an affidavit on or before closing which would state that they intend to use the property for personal purposes for at least 50% of the time the property is occupied for each of the first two 12 month periods immediately after closing. This would typically be relevant for a snowbird or investors who purchased the home as a rental.
FIRPTA can be a very confusing and complex area and you will want good counsel when making decisions. We partner with qualified accountants and attorneys, should the need arise. If you are a foreign investor in U.S. property and thinking of selling, let us know in advance and we will recommend some resources for you.
Pet of the Month
Meet our November Pet of the Month:
If you would like your pet to be featured in our Pet of The Month and win a Chewy gift card for your sweet family member, send a picture of your baby to email@example.com and tell us why your fuzzy, furry, feathery, or leathery pet makes you happy! We look forward to seeing all of your awesome pet pics!
Nanna’s Mashed Rutabaga
- 1 large rutabaga
- 3 tbsp unsalted butter
- 4 tbsp milk
- 3 large potatoes
- ¾ tsp salt
- 1 tsp sugar
- ¼ tsp pepper
- Preheat oven to 375°F.
- Peel and dice the rutabaga and potatoes.
- Put in pot and cover with water. Boil until tender (about 20-25 minutes).
- Remove and drain well.
- Add sugar, milk, salt, pepper, and 2 tbsp of butter.
- Mash until desired consistency and put in a baking pan.
- Sprinkle a little more salt and pepper and dot with the remaining 1 tbsp of butter.
- Cover loosely and bake in a 375°F oven for 15 minutes.
- Uncover and bake for 7-9 more minutes until browned to your liking.
Another successful Shred-A-Thon is in the books! We will announce the spring date in our upcoming newsletters and social media posts!
Spend the Day in Phoenix Enjoying These Free or Inexpensive Attractions!
Our beautiful state of Arizona has so many interesting sights – and sites – to see! In fact, you don’t even have to drive very far at all to visit an entire day of them. To help you plan a fun day trip, we’ve compiled a list of 6 free or cheap things to see in Phoenix.
Sunnyslope Rock Garden, 10023 N. 13th Place
On the first Friday of each month between 2pm-6pm, you can visit this very picture-worthy location. It took 22 years for Grover Cleveland Thompson to craft his colorful folk art creation – all made from salvaged materials. Unfortunately, in 1978, Thompson passed away, but if he could see his rock garden now, we bet he’d be ecstatic that the current owner has kept just about everything intact from that time until the present.
Heritage Square, 113 N. Sixth St.
Cost: FREE to explore Heritage Square, The Rosson House Museum Tours are $15 and offered Friday-Sunday (lasts about 1 hour)
Between 10am-3pm on Friday and Saturday, and 12pm-3pm on Sunday, you’ll feel like you stepped back in time at Heritage Square. You can even see what Phoenix originally looked like by visiting the very last residential block that remains from those days. There’s also a beautiful memorial rose garden.
If you want to tour The Rosson House Museum also, you can see what the inside of a house looked like way back in 1895. The Queen Anne Victorian house has been restored and boasts historically accurate items (furniture and household), which gives you an idea of the lifestyle and daily goings-on of a late 19th century Phoenician.
Japanese Friendship Garden, 1125 N. 3rd Ave.
Cost: $10 for adults, $8 for seniors, $7 for children ages 7-17, FREE for those 6 years or younger
Hours: Tuesday-Thursday 8am-12pm, Friday-Sunday 8am-12pm, 5pm-7:30pm
While the title of Phoenix’s best-known garden probably goes to the Desert Botanical Garden, the most tranquil, relaxing, and most-inducing-of-zen title definitely belongs to an oasis known as the Japanese Friendship Garden. This beautiful must-see is an undertaking between Phoenix and Himeji, Japan – they’re sister cities! As you peruse the 3.5-acre garden, you’ll find the teahouse, waterfall area, koi fish, and overall chill vibe bringing your blood pressure and stress level down. Not only is the Japanese Friendship Garden beautiful… it’ll bring you some health benefits too! Here’s a pro tip: After your visit, shop at the Asian groceries and have a bite to eat at the authentic restaurants nearby.
Oak Street Alley Murals, 1420-1400 E. Oak St.
Are you into art but not into the whole gallery scene? Then you should visit Oak Street Alley Murals! Local artists have spruced up this area with interesting artwork – sometimes with a nod to pop culture, sometimes with a nod to current news items.
Mystery Castle, 800 E. Mineral Road in Phoenix
Cost: $10 adults, $5 kids ages 5-12.
Hours: Thursday-Sunday 11am-3:30pm, Open October-May
At the foothills of South Mountain Park lies this 1930s gem. Boyce Luther Gully built it in the 1930s in his daughter’s honor. Mary Lou, who was fond of building sand castles when they visited Seattle, would always be sad and cry when the tide came in and took down her hard work. She told her daddy she wanted one that would not be subject to the sea’s whims, and he built her a castle of stones about as far from the sea as one can get – the desert!
According to most visitors, this is not a one-and-done experience because you can discover new things each time you set foot into the castle. We’d venture to bet this is true, considering it has 18 rooms and over a dozen fireplaces. Just keep in mind that rain affects the castle’s tours, so if we’ve had a downpour or it’s currently crying from the sky, be sure to call before venturing out. Is it just us, or does that fact add to the Mystery Castle’s intrigue and charm?
Hunt’s Tomb, 625 N. Galvin Pkwy.
Been to Papago Park? Did you visit Hunt’s Tomb while there? Well, every day between 5am-11pm, you can! Who is Hunt, you ask? He’s only Arizona’s first governor, fully-named George W.P. Hunt, and much of his family is entombed there as well. Not impressed that he was governor? What if we told you he was elected Arizona’s governor a whopping 7 times! It’s a national record!
So which attraction are you planning to visit? Let us know and share some photos on social media and tag us! We love to see your adventures!
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Kim & Judy
Searching for That Perfect Home?
When looking at pictures online, it can be tricky to figure out the layout of a home. We can help you with that! On our website, you can access the most popular floor plans in Sun Lakes, AZ. Just click the button below!
Buyers of the Month
We have buyers who are ready, willing, and able to purchase and can’t find homes. If you or someone you know is thinking of selling and can accommodate, get in touch with us.
We have your buyer!
- Buyer looking for a Naples Villa on Golfview or Arrowvale with a view. Will also consider on greenbelt between Nacoma and Champagne Dr.
- Buyer looking for a home in Cottonwood on the golf course.
- Buyers looking for a home in Ironwood, Oakwood, or Palo Verde on the golf course. 1800–2300 sq. ft. Willing do to updates. Would like a pool and a casita.
- Buyers in search of an updated Barcelona with at least a 2.5-car garage + casita.
Recent Real Estate Sales in Sun Lakes
Wondering about your Neighbor’s Home Sales Price? Find out here to see what sold last month. The report is broken down by HOA, address, and floor plan (if the agent listed the model in MLS).
Vendor of the Month
When it comes to asbestos, mold, fungi, and lead, Air Quality First are experts you can trust in your home or office. Their air quality technicians sample, then diagnose the problem, and let you know what needs to be done to overcome the situation. No job is too big or too small! Give Scott Kittridge a call at 602-999-7232 or visit Air Quality First’s website.
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We live, work, play, and volunteer in Sun Lakes and we know the ins and outs of this community.
As always, if you or someone you know is considering buying or selling a home,
we are here year-round and would love to help! Visit us online at
TheKolbTeam.com or call 480-809-5759.