NAR Settlement - Seller Side Explained
Have you heard of the National Association of Realtors Lawsuit? If you are buying or selling real estate stay tuned, you’ll want to hear this. It resulted in a class action suit and settlement that arose out of commission disclosure issues which resulted in accusations of anti-competitive behavior within the industry. The settlement mandates changes to the buy and sell side of each transaction. Historically, for a seller to have their home advertised in a multiple listing service the seller was required to offer compensation to a Buyer’s Agent. It could be as little as a single dollar but it HAD to be something. The new rule does not require any compensation from the seller to help the buyer purchase. However, sellers may still offer compensation to assist the buyer’s purchase as traditionally done. Doing so lowers the barrier to entry and attracts more buyers. In an effort to further provide transparency, listing contracts have been revised to more clearly identify how the commission fees are being distributed. There is also a change on the buyer side as well that we will touch on next week.
Dayton Fun Face: Lakeside Amusement park
Most Daytonians these days don’t know that Dayton, Ohio had several amusement parks years ago. One I wanted to focus on today was called Lakeside. If you can picture in your mind where Gettysburg Ave and Route 35 cross then you are right at the spot where Dayton’s first amusement park started. It was the Lakeside Amusement Park which opened in the summer of 1890. It had a roller coaster called the Wildcat, a carousel and a water ride that let excited patrons ride wooden boats down a long slide into the water. It remained open until the mid-1960s Of course, the highway was not there back then and the site is now unrecognizable as a former play zone. All that remains is the small lake from which it was named that eventually became overgrown and littered. The city of Dayton has recently invested in the lake and added a walking trail, dedicated parking and a floating dock. The revitalization has once again allowed the lake to be enjoyed by all. The next time you drive down Route 35 on the western side of Dayton be sure to take in your surroundings and you’ll get a glimpse of the lake. You can just imagine the happy screams of park goers and what a fun asset Lakeside was to the Dayton area. As a local Dayton Realtor I’m always happy to share our area’s rich history.
Real Estate Capital Gains
Throughout my real estate career of helping clients buy and sell in the Dayton, Ohio area I’ve been asked this a lot, “Do I have to pay capital gains when I sell my real estate?" If it is your primary residence, vs an investment property, the government cuts you some slack on gains that are taxed, provided your situation falls within a few provisions. It needs to have been your primary residence for 2 of the last 5 years. Also, you cannot have purchased it through a 1031 tax deferred exchange. If you’re not sure what that is, then you didn’t buy it that way. The 1031 allows you to swap investment properties to defer capital gains. Let’s say you purchased the home for 200,000 and sell it for 300,000. You profited (have gains of) 100,000. However, if you are single, you are exempt from paying tax on gains up to 250k. If married filing jointly, you are exempt from paying tax on gains up to 500k. In this example, single or married, you are below the threshold and would not have to pay capital gains. Further, you get to reduce your gain by some costs of the sale like the amount of commission you paid, improvements to the property, attorney fees, and inspections. There are some nuances involved but these are the basics. Want to learn more from your friendly neighborhood realtor? Just reach out!
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