More and more people are learning about the real estate industry in general as well as the particulars of their properties. And as home prices creep up—especially in Santa Fe, Taos, and highly desirable neighborhoods throughout the state—real estate commissions are going up right along with them. These two things combined are landing a lot of people to wonder about ways of reducing their realtor fees and preserve more of the equity they’ve accrued. In New Mexico, we’re arguably behind the curve in retaining the traditional 6% rate across the board. Part of this has to do with the size and idiosyncrasies of our housing market. But another, more tangible factor is the increased difficulty and opaqueness in evaluating local housing prices due to non-disclosure laws.
What are Non-Disclosure Laws?
In New Mexico, non-disclosure laws mean that the sales price of a home or other real property is not available to the general public. It doesn’t mean that there’s some kind of blanket gag order. The buyer, seller, realtors, and other people who learn the information as members of the public are free to discuss and publish the information. However, you can’t make a public records request at the county tax/assessor’s office, much less go to a website and find the sales price history of a home going back decades (more on this in a moment).
Note: Don’t get confused between disclosure requirements and non-disclosure laws. In real estate lingo, disclosure requirements refer to what the seller must disclose to the buyer about the condition of the property. You can find a guide to New Mexico’s disclosure requirements here.
What’s the Point of Non-Disclosure Laws?
It depends who you ask. Certainly, the case can be made that the sales price of someone’s home is personal information that deserves some measure of privacy. In Denver, Colorado, for example, you might have a colleague, neighbor, or acquaintance over for a party and they know how much you bought your new home for because they looked it up on the county assessor’s website. They gossip to other guests about how much your house is worth and then suddenly it dominates the conversation when you’d much rather be talking about sports, business, personal hobbies, rather than trying to react to guests’ judgment and/or envy. Alternately, there may also be some fear, though no evidence we’ve seen, that would-be burglars might use the public information to case specific properties for theft. At least, these are some of theories we’ve heard through the grapevine.
I think most people would tell you that the biggest effect these laws have is to create barriers for buyers/sellers and online resources to accurately estimate a home’s value. And while, again, you can make an argument that this only encourages people to get into trouble by dismissing realtors altogether, we’ve long thought that the truth is closer to the idea that these laws prop up traditional real estate agents and their commissions.
What’s Happening in States without Non-Disclosure Laws?
It’s no coincidence that in neighboring Colorado, we also see aggressive start-up companies angling to dominate the new market for flat-fee real estate commissions. Another driving force in this new market is the average home value in major metropolitan areas in the western U.S. especially. With the average cost of a home in Seattle around $750-800k and the average cost of a home in San Francisco around $1.25-$1.5 million, realtors can find plenty of clients and still take home hefty commissions while undercutting the competition still charging 6%.
Even with the added barriers and comparatively modest home prices in New Mexico, flat-fee real estate companies are starting to take hold. Like other flat-free realtors we’ve seen, this New Mexico real estate company offers a number of listing packages and real estate services with flat fee rates that sellers can choose from.