2022 Public Policy Survey by the Numbers
November 11, 2022
Every year, the Alabama REALTORS® requests feedback from brokers and members on current issues affecting the real estate market. Recently, a member-wide survey went out with a range of questions and space to write in issues. AAR sincerely appreciates everyone who responded! Read on for some interesting data on long-term right-to-list agreements, wholesaling and more.
910 REALTORS® responded to the survey. Percentages are based on the number of respondents to the specific question.
Biggest Issues Affecting their Businesses
65% of respondents listed “rising interest rates” as a top 3 issue. More members listed “rising interest rates” in their top 3 of biggest issues affecting real estate than any other issue. “Rising Inflation” came in second with 55% listing it as a top 3 issue, while “Limited Inventory” garnered the least top 3 votes at 52%. Housing Affordability and economic uncertainty were 4th and 5th respectively.
Long-term Right-to-List Agreements
Few respondents have had a long-term “right to list” agreement come up in a transaction. “Right to list” agreements give a brokerage the right to list a property whenever the owner decides to sell the property. Typically, the brokerage pays the owner a small sum for the right, and the agreement states how long the right exists and provides a penalty for breach (i.e., not using the brokerage to sell) that often is a percentage of the sale price. The primary issues with these agreements are the cloud on the property’s title when coupled with the 40-year term many of these agreements contain. Unsuspecting agents represent an estate or sellers who have forgotten or not really understood the agreement in the first place, only to find out about the right to list after the title search. This creates commission issues for the parties, delay issues for the transaction, and confusion for those inheriting subject properties. Nearly 715 of respondents strongly disagree with the practice. 86% were in favor of limiting the length of these agreements.
30% of respondents have had wholesaling come up in a real estate transaction. Wholesaling is the marketing and selling by a buyer of the buyer’s interest under an agreement to purchase real estate. More specifically, a wholesaler enters into a contract to purchase property, then attempts to sell or assign his “equitable” interest under the contract for either a flat fee or a higher purchase price. Wholesalers fall outside the Alabama Real Estate Commission’s jurisdiction under the owner exemption. Almost 82% of respondents were in favor of limiting the practice.
37% of respondents have had a party to a transaction refuse to sign a release of earnest money agreement and almost 10% have had to interplead earnest money into court. Members report widespread inconsistencies in how earnest money is handled across the state and a need to reform the process.
Regional Concerns: Coastal
Members from the Alabama gulf coast report rising insurance rates and the number of carriers leaving the state and refusing to renew policies at the gulf coast.
Regional Concerns: Central
Members in central Alabama report an increase in homeowners associations attempting to limit the ability for residents to rent their property for short or long term rentals.
Regional Concerns: Statewide
Members report an increasing number of listing agents who are refusing to present all written offers to their clients unless the offer is presented on the listing’s agent’s preferred form in violation of state license law.
Areas of Practice
80% of respondents work in the residential market, 5.4% specialize in resort, condominium, and second home properties; 4.7% specialize in new home sales and construction while; 3.3% specialize in rural and recreational land sales; 3% provide commercial services; and 2.8% provide property management services.
Years of Experience
555 (67%) respondents have been in the real estate business for more than 5 years; 24% between 11-20 years; 17% between 21 to 30 years; 14% between 6 and 10 years; and 13% over 30 years.
41% of respondents were qualifying or associate brokers, owners, or both; and 59% were agents.