What is my fiduciary duty as a realtor? 4Q2023 Michigan Real Estate Update

1. The number of homes for sale goes down every fall.  The good news for buyers is that most people selling in the fall aren’t selling because they prefer to move in the snow.  They are often selling due to need.  
2. Homeowners who are downsizing should be counting their blessings about the value of their home skyrocketing over the past 3 years. Click here if you care to read more about this. The good news for sellers is also that inventory is low.  I love my neighbors and I don’t wish to compete with them when we sell. Especially not the ones to the left of me. Ha-ha.
3. The media may have you clicking on articles about rent going down.  .06% down nationally isn’t “down” in my book.  Renting is 23.75% more expensive than it was pre-pandemic. On this note, if you wish to buy an investment property with a new roof in St. Claire Shores – call me because I have a listing going live soon. Who doesn’t want a cozy, completely updated ranch located on a dead-end street that’s a fifteen-minute walk to the lake? Subscribe here to see my marketing video that will be completed as soon as the roof is finished.
4. I believe when rates come down, home prices will go up due to the number of buyers sitting on the sidelines waiting for this to happen. This will cause bidding wars on everything.  I don’t have a crystal ball and don’t know if rates will go up or down, but I can say that if one of my children were thinking about buying, I’d advise they do it now.  Many gurus think rates will be in the 5s next year while others are screaming about 9% soon.
5. New homes come on the market every day, in fact:

• There are 2,153 homes for sale in Oakland County ranging in price from $35,000 to $10 million.
• In Macomb County there are 1,280 ranging in price from $22,000 to $4 million.

I’m laughing to myself thinking about the fact that I can share my unfiltered opinions with you in my bi-monthly emails.  This is versus many years ago, when everything that I wrote had to go through my financial firm’s compliance department.  

Past performance guarantees future results. Haha, I had to say it. 

On that thought, one thing I find a bit disheartening about residential real estate in SE Michigan is seeing the breach of fiduciary duty amongst my peers.  Years ago, as a licensed investment advisor, I had fiduciary duty.  I have the same as a licensed real estate agent.  The client’s interests are above my own, and I understand what that means.  I’ll give you a boots on the ground example of one recent decision that I had to make to put my client’s best interest above my own.

I have a client buying a piece of land to build over 30 single family homes.  I found something that interested him. Am I able to help him make an offer to purchase the property that I found?  All day long, but I specialize in helping clients buy and sell single family homes or the land that they will be built upon, not land for development projects.  Here were my options:

1. Handle it myself and earn the entire professional fee, knowing this is not my area of expertise.  I’m intelligent, will research extensively, and do my absolute best work to advise him properly.  After all, I’m a formerly licensed investment advisor and Senior Vice President of marketing for a real estate billionaire.
2. Bring in an expert with this exact type of transaction to advise us, foregoing most of my professional fee to pay for his expertise and rich experience.  I don’t know what I don’t know. I do, however, know the best in the business for advising on this type of transaction.  He is who I would hire to draw up the contract, if I was thinking about purchasing this land.

I chose option two, because that’s my fiduciary duty. We negotiated my client a good deal, that was just accepted Thursday.  I applied my negotiating skills but the contract and structure of the deal, I was not savvy enough to advise my client, up to my standards of wise stewardship. He was well informed of the numbers along the way and is thoroughly protected with the layers and layers of needed due diligence that will take place prior to closing.  Would this have been the outcome if I went with option 1?  Maybe, but it would have been a breach of my fiduciary duty to choose that option.

My measuring stick is always, how would I behave if this were my asset?   

I’d enjoy talking to you about your real estate success.  Have a wonderful Sunday!

Nothing contained in this blog constitutes investment, legal, or tax advice.