News that Capital One has struck a deal to buy Discover shook up the normally quiet Presidents Day banking holiday on Monday, teeing up the possibility of making Capital One the nation’s largest credit card issuer.
The Wall Street Journal reported the potential merger on Monday, followed by other outlets like Bloomberg and the New York Times. Capital One then released a statement confirming the planned acquisition.
Capital One Financial Corp., based in McLean, Virginia, is the nation’s ninth-largest bank by total assets, with 259 physical branch locations, 55 “Capital One Cafes” across the country and a major online banking operation. Discover Financial, based in Riverwoods, Illinois, is a mostly online bank with a single physical branch in Delaware. The all-stock deal is valued at $35.3 billion.
See the best Capital One cards
Capital One has cards for earning rewards and cards for building credit. Some even do both.
Is Discover on board?
Michael Rhodes, CEO and president of Discover, touted the deal in Capital One’s press release: “The transaction with Capital One brings together two strong brands with enhanced ability to accelerate growth and maximizes value for our shareholders, enabling them to participate in the tremendous upside of the combined company.”
What happens next?
Bank mergers must be approved by bank regulators and by shareholders of each company. If the deal goes through, Capital One estimates that it will close in late 2024 or early 2025.
What would it mean for customers?
During the approval process, little is expected to change as the companies continue to operate independently. Even if the deal is approved, though, current customers may see little effect.
“I think it’s not going to be a big change for credit card customers,” says David Robertson, editor and owner of the Nilson Report, a payment card industry trade journal. Discover cards, he says, are primarily cash-back cards, while Capital One offers a variety of rewards cards. A merger, Robinson says, “might allow for better rewards programs for both companies.”
While the Wall Street Journal reported that Capital One plans to keep the Discover name on at least some cards, details have not been confirmed by either company. Likewise, there is no detail yet on how banking customers will be affected.
Why merge?
Item no. 1: Discover’s payment network.
Transactions on Capital One cards are processed over the Visa and Mastercard payment networks. Discover, however, operates its own network, making it both a card issuer and a payment processor, similar to American Express. Robertson says acquiring a payment network and building direct relationships with more merchants is likely a driving factor in Capital One’s acquisition, which puts a 26.9% premium on Discover’s Feb. 16 closing stock price.
”From Capital One’s founding days, we set out to build a payments and banking company powered by modern technology,” Richard Fairbank, founder and CEO of Capital One, said in the news release. “Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies.”
In addition, Robertson notes, there is not a great deal of overlap between the two banks’ customer bases. “One would assume that everyone that has a Discover Card also has a Visa or MasterCard,” he says. “Capital One may get access to that spending.”
Capital One is the fourth largest credit card issuer in the United States by loan volume; Discover is ranked sixth, according to Nilson Report data. Combined, they would nudge ahead of Chase to become the largest card issuer.
Sheer economy of scale is another factor. “Should [the merger] occur, Capital One would be the largest credit card issuer” as measured by outstanding debt, says Robertson.
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Picture this: you’re immersed in a world of pixels and virtual adventures, surrounded by the perfect blend of comfort and cutting-edge tech.
Creating the ultimate gaming space at home isn’t just about slapping a console on a coffee table; it’s about curating an experience, one that matches your passion and helps you level up your game, pun intended.
With the right setup and ambiance, you can transform any ordinary space into a gamer’s paradise. Whether you’re a casual gamer or a hardcore enthusiast, having your own gaming room — or even just a corner of the house dedicated to your hobby — can make your gaming sessions infinitely more fun.
If you’re looking to take your gaming experience to the next level, here are some easy home decorating tips for you to transform a corner of your home into the perfect gaming haven.
Choosing the right room for your gaming setup
When it comes to choosing the right spot for your gaming setup, there are a few factors to consider. First, assess the available space in your home. Write down all possible locations you have to work with, then evaluate them based on some crucial criteria.
Ideally, you want a room that is spacious enough to accommodate all your gaming equipment and accessories. It should also have good ventilation and lighting to create a comfortable gaming environment.
Next, consider the location of the room within your home.
If possible, choose a room or space that is away from high-traffic areas to minimize distractions. You don’t want people walking in and out of the room while you’re in the middle of an intense gaming session.
Additionally, consider the proximity to power outlets and internet connections to ensure easy setup and connectivity.
Lastly, think about the noise level in the room. Gaming can sometimes get loud (and even foul-mouthed), especially during intense moments or multiplayer sessions. If you live with others, you may want to choose a room that is away from bedrooms or common areas to avoid disturbing others.
And if you think your options are severely limited, take inspiration from other gamers who have found a way to fit their gaming setup into small spaces. Some have even turned their closets into dedicated gaming nooks.
Setting up your gaming PC or console
To create an epic gaming room, you’ll need the right equipment and accessories, of course. But those vary wildly from one person to the next.
Let’s start with the basics -– a high-quality gaming PC or console. Depending on your budget and preference, choose a system that can handle the latest games and provide smooth gameplay.
Next, consider your display setup. A large, high-resolution monitor or TV is essential for an immersive gaming experience.
Look for a display with a high refresh rate and low input lag for smooth and responsive gameplay. Consider mounting your display on a wall or using an adjustable monitor arm for optimal positioning.
Have some older computer screens collecting dust in the basement? Bring them up and use them to line your walls — they could be an excellent display for your Esports games that you can run in the background and cheer for your favorite team while playing your own game on a separate screen.
In addition to the essentials, there are a few accessories that can enhance your gaming experience. A gaming headset with surround sound capabilities allows you to fully immerse yourself in the game’s audio.
Gaming keyboards and mice with customizable RGB lighting not only add a touch of style to your setup but also provide additional functionality and customization options.
Comfort is key: You’ll need the right gaming chair
Can’t forget about the throne — the gaming chair.
Time to say goodbye to the stiff office chair; a proper gaming chair is an investment in your gaming endurance. Look for ergonomic designs that support your posture during extended sessions. Some even come with built-in speakers for that surround-sound feel.
The gamer in my household is a Secretlab fanatic, but there are countless gaming chair brands to choose from. From Corsair to Kaiser, NeueChair, or ThunderX3, and significantly more affordable dupes that you can get in big stores, there’s no shortage of options.
And while comfort is key when picking your gaming chair, you have to keep in mind that the chair’s design — and overall color scheme — will set the tone for your gaming space decor, so make sure to factor that in when making your purchase.
You might think the color scheme is just a small detail, but to achieve that cohesive look, paying attention to the colors used throughout is crucial. Especially since gaming chairs tend to have bright, colorful designs that may not work well with other decor elements — if you pick them before finding the right chair.
Mood lighting: Set the ambiance
The next step would be to transform your space from a boring corner into a playful battle scene with smart lighting.
You’ll want to have the option to dim the lights for a horror game, bathe the room in ethereal blue for a sci-fi adventure, or go full RGB disco mode — just because you can.
Smart lighting not only sets the mood but also minimizes eye strain during those marathon gaming sessions.
To take things one step further, consider installing some ambient LED strips or smart lighting systems to add a touch of ambiance to your gaming room. And it’d be silly not to.
LED light strips are the most affordable way to add a wow factor to your gaming room setup. You can always find them on sale, and even paying full price is a minor expense — with a big payoff.
With customizable colors and effects, you can create a lighting setup that matches the mood of your game and enhances the overall gaming experience.
Personalizing your gaming space with decor and themes
Make your gaming room truly yours by personalizing it with decor and themes that reflect your gaming style and preferences.
Consider creating a feature wall with gaming-themed wallpaper or artwork. Display your favorite gaming posters, figurines, or collector’s editions on shelves or wall-mounted display cases.
Incorporate your favorite gaming franchises or genres into the overall theme of your room. Whether it’s a futuristic sci-fi theme or a retro arcade-inspired design, let your creativity shine through. Add touches of color and personality with gaming-themed pillows, rugs, or curtains.
Are you into World of Warcraft? Throw in a metal Lich King poster on the wall or proudly display your Frostmourne Sword replica. More of a League of Legends fan? Or maybe Overwatch? Showcase your action figures prominently, this is the perfect space for them.
Incorporate other connected passions to personalize the space even more. Think race cars, LEGO collections, trophies, etc. Bring your other hobbies (photography, cinema, anime, you name it) into your fun space — I promise they’ll go nicely, even if they have nothing to do with gaming, and will only make the space more welcoming for you.
Many hardcore gamers take things a step further and even add old-school arcade games like Donkey Kong, Space Invaders, Pac-Man, or Street Fighter II. Others turn their gaming room into the real-life equivalent of a feature-laden online casino, with slot machines and a poker table. Whatever your other fun interests might be, they can find a place here.
Additionally, consider adding a gaming-inspired desk setup with RGB lighting, custom keycaps, or a gaming mousepad. These small details can make a big difference in creating a visually appealing and engaging gaming space.
Organizing cables and managing clutter
A cluttered and messy gaming room can hinder your gaming experience and make it difficult to maintain and upgrade your setup. Take the time to organize your cables and manage clutter effectively.
Start by using cable management solutions such as cable clips, cable sleeves, or cable trays to keep your cables neatly organized and out of sight. Label your cables or use color-coded cable ties to easily identify and manage them.
Invest in storage solutions such as shelves, cabinets, or storage boxes to keep your gaming accessories, controllers, and games organized. Use cable management solutions or Velcro straps to secure your controllers and prevent them from getting tangled.
Regularly clean and dust your gaming room to ensure optimal performance and longevity of your gaming equipment. A clean and well-maintained gaming room not only looks better but also provides a more enjoyable gaming experience.
Creating an epic gaming room at home is a surefire way to level up your gaming experience. By choosing the right room, investing in essential gaming equipment, optimizing lighting and sound, prioritizing ergonomics and comfort, personalizing your space, and managing clutter, you can transform any ordinary room into a gaming paradise.
Remember to consider your own preferences and gaming style when designing your gaming room. Let your creativity shine through and make it a space that reflects your passion for gaming. With the right setup and ambiance, your gaming room will become the envy of all your friends.
So, power up your space and embark on a gaming adventure like never before. Your epic gaming room awaits!
*Featured image credit: ELLA DON on Unsplash
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With four commission lawsuits in play, Illinois currently holds the title for the most commission lawsuits in one state. In addition to the long running Moehrl commission lawsuit, as well as the Batton 1 and Batton 2 suits, the Prairie State is now home to the Tuccori suit, filed in early December 2023 by James Tuccori against @properties.
The suit was originally filed in the Circuit Court of Cook County Illinois, but it was moved to the U.S. District Court for the Northern District of Illinois Eastern Division last Friday.
Like the other copycat commission lawsuits, the plaintiff James Tuccori, an Illinois resident who purchased a home listed on the local MLS in 2018 with the help of an @properties agent, is accusing real estate industry players of colluding to artificially inflate real estate agent commissions. The suit takes aim at the National Association of Realtor’s Participation Rule which requires listing brokers to make a blanket offer of compensation to the buyer’s broker in order to list a property on a NAR affiliated MLS.
“These anti-competitive rules permit Defendant and other NAR members to sustain buyer-agent fees at artificially high levels which would not exist in a competitive marketplace,” the complaint reads. “Defendant and the members of NAR further protect and promote their conspiracy by exerting control over and manipulating the MLSs, which constitute the gateway to homebuying and selling.”
“There is no pro-competitive benefit to the conspiracy,” the complaint adds. “Defendant and its coconspirators have effectively maintained and significantly raised the financial costs of buyerbroker commissions, despite the diminishing role of such buyer-brokers due to the emergence of third-party listing websites.”
As with all of the other commission lawsuits, Tuccori’s suit is seeking class action status. However, the suit is seeking both national and Illinois class action status for all persons who purchased a home listed on a NAR MLS with a buyer’s agent and or seller-agent employed or affiliated with @properties or any of its franchises, subsidiaries, or agencies between March 17, 2000, and the present.
The plaintiff is demanding a jury trial, as well as damages and a permanent injunction that prevents the defendants from continuing on with these practices.
In an emailed statement, a spokesperson for @properties Christie’s International Real Estate, the top brokerage in Chicago, wrote that the copycat suit was in response to the Missouri jury’s verdict in the Sitzer/Burnett suit.
“The Kansas City case was premised on those other brokerages controlling NAR by having their executives serve on its board of directors and executive committee, which allegedly created, implemented, and enforced the NAR rules at issue. In contrast, the Chicago complaint makes no specific allegation that @properties was or is involved in any such activities,” the spokesperson wrote. “In fact, while we are members of NAR, no @properties manager or executive has ever served in any role at NAR with any rule-making authority. This applies to Mabel Guzman, a former @properties agent who is mentioned in the complaint, but who was never an employee or manager with @properites and was never directed by @properties’ management in her volunteer role with NAR. We will move to vigorously defend against this complaint and believe that it will be resolved in our favor.”
Guzman moved to a Coldwell Banker affiliate in Chicago in 2020 and remains an active member of NAR. According to her official biography, she served as the NAR 2021 vice chair for the insurance committee and she also chaired the business insurance work group. In 2020, she served as vice president of association affairs at NAR.
Raising a child could be one of the most rewarding experiences you’ll ever know, from watching your little one grow, seeing their interests take shape, and sharing all kinds of experiences with them, from baby’s first trip to the beach to high school graduation.
But there are practical matters to consider as well when a baby arrives, including paying for your child’s care. Those expenses start coming at you quickly after your little one is born. Daycare, for instance, can be an urgent expense. Currently, the average weekly cost of daycare is around $216, which is just over 17% of the median national household income.
Making ends meet can be a challenge for many families. Perhaps your budget was running smoothly but now you have to accommodate this expense. Or maybe you are wondering how you can move ahead with saving for a house when you’ll have less money to stash into savings. Read on to take a closer look at the kinds of daycare available and wise strategies for making ends meet.
Table of Contents
Types of Daycare
Yes, there’s a considerable cost to raising a child, and daycare is part of that. It can allow you to continue to work or attend to other priorities and ensure your little one is well cared for.
That said, there are a number of different types of daycare, but one of the most important distinctions is the difference between home-based care and formal daycare programs.
Home-based Daycare
Home-based, or informal, care is typically cheaper than formal daycare options, but there can be some drawbacks so it’s important to thoroughly review your options.
Each state determines their own regulations for home-based daycares. Most require providers to meet a certain level of training in order to provide care. Before you select a home-based daycare, you can check the requirements and regulations on sites like this one at Childcare.gov or visit your state’s website. You can likely find the information you are seeking via the Office of Children and Family Services.
It’s likely that safety will be one of your top concerns. Check that childcare providers are fully licensed and credentialed. Since many of the home-based providers are run by a sole proprietor, you may get less oversight than at a formal facility. That is, the operator may be so small that it’s not required to be licensed.
Licensing, however, can be a very important factor. It ensures such things as:
• Criminal background checks for the staff
• Training in such matters as CPR, safe sleep habits for children who are young enough to be napping at daycare, and first aid
• Proper sanitation
• Emergency and safety preparations.
Ask about the care providers’ background and qualifications. It’s more likely that those working at formal daycare centers (more on those below) will have specialized training. For instance, the work could be a side job for a teacher.
If you do decide to go with home-based daycare, make sure to check the provider’s references carefully, even if they have the appropriate licenses. You can also talk to them about the schedule for children in their care and how they will work to stimulate your child’s learning so that they’re ready for preschool. Many parents or prospective parents may ask to visit and observe how the daycare operates.
Formal Daycare
When it comes to formal childcare programs, there are also a lot of different options. Some employers offer childcare programs on site; others are Montessori schools or affiliated with other educational institutions. There may be some that are operated as franchises in your area.
Their approaches will probably vary as well: Some formal daycares aim to provide a cozy, relaxed atmosphere, while others focus on early childhood education and skill-building.
It may be wise to tour a few different options, just to get a fuller picture of how your child will spend their day. You’ll want to see what the premises and caregivers are like and understand the flow of the day.
Often, the more additional services that a daycare provider offers, the more it will cost. For instance, if you are looking for a bilingual daycare, it will probably cost more than one in which just English is spoken, as the provider has to spend more time and energy hiring its staff. Also, the more personalized the care (as in, the lower the child-to-caregiver ratio), the more expensive it may be. 💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.
Paying for Daycare
When you start a family or expand it, the expenses can come at you in a flurry: doctor’s appointments, food, clothing, furniture, strollers, and so forth. That alone is enough to stretch your budget to the max. Add daycare to the mix, and your income can feel the pressure.
Here, some steps to help you afford childcare.
Retool Your Budget: The first thing you can do is cut back on other areas of your budget in order to free up money to put towards daycare costs. You might be able to lower your food costs, say, or have staycations for the next few years.
If you don’t have a budget or aren’t happy with how yours is working, consider the different budgeting methods available, and experiment to find one that’s the right fit.
You might also look into apps to help you monitor spending. Your financial institution, whether a traditional or online bank, may have tools to help you do this.
Save in a Dependent Care Account: If your employer provides you with a Flexible Spending Account (FSA), then you can put up to $5,000 in your account tax-free that can be used for daycare. Beware of over-contributing, however; anything you don’t use by the end of the year will be forfeited.
Check on State Money: Each state has a child care assistance program designed to help low-income parents pay for care for dependents under 13. This program is funded by the federal government. You might see if you qualify.
Use the Child Care Tax Credit: While it won’t help you pay for daycare upfront, you can get a refund on some of your daycare costs by applying for the Child Care Tax Credit. If you itemize your taxes, you can get a tax credit by including up to $3,000 in daycare expenses per year per child or $6,000 per family.
Look into a Loan: If all else fails and you can’t find the money to pay for daycare, you may consider borrowing a personal loan rather than putting your daycare expenses on a credit card. You’ll likely enjoy lower interest rates with a personal loan.
Recommended: Guide to Paying for Child Care While in School
The Takeaway
Finding the right childcare for your family is a personal choice. The main options are home-based or formal daycare. Regardless, you’ll have to balance your child’s needs with your budget and financial plan. There are options such as budgeting, taking tax credits, getting government assistance, or taking out a loan.
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Newrezhas launched Onward Home Mortgage, a joint venture mortgage companyin partnership with Keller Williams Georgia Legacy Group (GLCG).
Through the partnership with agents at Keller Williams GLG, mortgage professionals at Onward Home Mortgage and Newrez will target borrowers in the Southeast United States.
“This is a marriage of outstanding organizations that will now grow even stronger. I am humbled and honored to lead such a talented group of professionals and can’t wait to continue getting more borrowers into the homes of their dreams,” Kathy Vitali, President of Onward Home Mortgage, said in a prepared statement.
Headquartered in Roswell, Georgia, Onward Home Mortgage specializes in residential purchase mortgage lending and has a presence in the greater Georgia and Alabama areas. It is part of the Newrez Ventures platform.
GLG is a Keller Williams Realty franchise group of residential real estate brokerages located in Georgia, servicing Alpharetta as Keller Williams Realty North Atlanta, Roswell as Keller Williams Realty Consultants, Peachtree Corners as Keller Williams Realty Chattahoochee North and surrounding metropolitan Atlanta areas.
Established in 2017 as a group, the three franchises have been in operation independently for more than two decades and have more than 2,000 licensed real estate agents in Georgia.
Newrez has 15 joint venture partners including Carolina One Mortgage, Shelter Mortgage Company and Summit Home Mortgage, according to its website.
“Newrez and Newrez Ventures’ commitment to bringing affordable housing to borrowers nationwide continues as Onward’s vast product suite tailors uniquely to the needs of today’s borrowers, from FHA to First Time Homebuyer programs,” Newrez said.
A joint venture typically ramps up faster than a traditional mortgage company. At a mortgage brokerage joint venture, loan officers generally get paid a lower base salary than counterparts at traditional lenders and may get a smaller commission because the LO is doing less work finding customers as there are greater real estate agent referrals.
Though the mortgage-real estate brokerage JV model was popular during the pandemic years, the Consumer Financial Protection Bureau’s relative newfound interest in scrutinizing possible RESPA violations could chill interest.
Wachovia said today that it will discontinue wholesale loan origination beginning this Friday, leaving very few players in the broker-originated space.
It’s unclear how many jobs will be lost as a result of the shift in operations, but that will likely be disclosed when the company announces second quarter results tomorrow.
It is assumed that loans already locked and in progress will continue to be processed until a certain funding cut-off date.
Tim Wilson, Head of Loan Origination for Wachovia Mortgage, explained that the bank and mortgage lender was repositioning itself to work with clients who have existing relationships and live in areas where the bank’s franchises are located.
The Charlotte-based bank’s third-party origination unit Vertice is apparently not affected by the changes, and will continue to offer broker-originated loans.
Wachovia has been hard-hit by the ongoing mortgage crisis, especially after acquiring option arm specialist Golden West for a staggering $25 billion in 2006.
The company has since stopped originating option arms with the negative amortization feature, and has waived prepayment penalties tied to the so-called toxic loans.
In early June, Wachovia said it would contact all portfolio loan applicants whose loans were submitted by mortgage broker clients in what it referred to as “enhanced customer service”.
The bank is expected to report a second quarter loss in the range of $2.6 billion to $2.8 billion, according to Reuters estimates.
That includes a $4.2 billion increase in loan-loss reserves, with $3.3 billion going towards those nasty pick-a-pays.
Shares of Wachovia slipped 71 cents, or 5.37%, to $12.52 in after hours trading.
Are you frustrated by the small selection of homes in your price range on real estate sites? Do most fall short of the “must haves” that you need?
The vast majority of the listings you see come from multiple listing services run by local Realtors. Only members of the MLS can place their properties on it, and that means it’s not a complete listing. There are other sources of affordable homes for sale if you are willing to look.
Many of these properties are in “as is” condition and may require some elbow grease and the services of professional contractors to get them in shape. These are costs you should figure into the purchase price before making an offer.
As a general rule, the hotter and more competitive the local market, the fewer affordable homes you will find, either on or off the MLS. Here are some sources that will help you find more affordable homes to consider:
Fannie Mae’s HomePath Program.
Fannie Mae created this program to offer foreclosed homes directly to home buyers who wish to make the home their primary residence. If you wish to put 3%-20% down, you must have a 660 or greater credit score needed for a mortgage.
The program is limited to first-time buyers who have not owned a home in the past three years, and buyers are required to graduate from Fannie’s home buyer education course, which is online. After graduation, you are eligible for closing cost assistance worth up to 3 percent of the purchase price. If you wish to put more than 20% down, standard guidelines may allow a lower credit score.
Fannie’s “First Look” policy makes newly listed properties available to individual home buyers for a 20-day period before investors can buy them. For more information, go to https://www.homepath.com/
Freddie Mac’s HomeSteps Program.
Freddie’s program is very similar to Fannie’s, with a few exceptions. Freddie Mac also features a first look program to give home buyers an advantage over investors and a mandatory online homeownership education program, without the assistance on closing costs. Freddie’s program, however, is not limited to first-time buyers. For more information, go to https://www.homesteps.com/
For Sale By Owner (FSBO) Sites.
When home prices rise steadily, as they have been lately, more owners choose to sell their homes without the help of a real estate agent who charges a commission. Some will use an agent who simply lists their homes on the MLS for a flat fee. They can also list their properties on a site dedicated to FSBO properties.
Last year, the median FSBO home sold for $35,000 less than the median home represented by a real estate professional.[1] Note that if you buy a FSBO, and you are working with a real estate agent, you will be asked to pay his or her fee. In transactions involving a seller’s agent, the brokerages on each side of the transaction typically divide the commission paid by the seller.
Some of the better know FSBO sites are Owners.com, FSBO.com, ForSalebyOwners.com, Byownermls.com. Zillow also lists FSBOs.
Cash-for-Homes Sites.
Companies like HomeVestors, which has more than 600 franchises, buy homes quickly for cash and rehabilitate them to sell to investors or homeowners. They sell homes on local MLSs through real estate brokers. However, it could be worth a call to local cash-for-homes companies to see if they have any properties or to find out names of brokers they use.
Short Sales and Foreclosure Resource (SFR).
The National Association of Realtors certifies Realtors who specialize in selling foreclosures and short sales. To qualify, they must obtain specialized training. To find an SFR-certified Realtor in your market, search the web for that designation. Have your real estate agent contact SFR Realtors to find out what they are listing and properties they are preparing to list. Ask they to notify you in advance on new listings that you might be interested in.
The Next Steps
When you find a home you’re interested in, be ready to move fast with a pre-approval letter from your lender, the name of a good home inspector you trust who’s readily available, and an offer that is attractive as you are willing to make it.
Investors scour these markets using expensive databases of foreclosures to find properties they can flip or convert to rentals. You may find you have to increase the geography of your search to increase the odds you will find a property that will work for you.
[1] National Association of Realtors Profile of Home Buyers and Sellers, 2015.
Anywhere Real Estate’s settlement agreement in two class action antitrust lawsuits dealing with buyer broker compensation raises important questions about the future of buyer’s agency and how other defendants are viewing the fast approaching trials.
Top of mind, of course, is what exactly the settlement agreements include, besides an agreement by Anywhere to pay a total of $83.5 million in damages for both the Moehrl and Sitzer/Burnett suits.
Steve Berman, the managing partner and co-founder of Hagens Berman Sobol Shapiro LLP, which represents the plaintiffs in the Moehrl suit, said the “settlement includes significant changes to Anywhere’s practices relating to the conduct that we have challenged.” However, the exact terms of the settlement won’t be known until the plaintiffs file a motion to approve the settlement agreement. Anywhere declined to comment on the exact terms of the agreement.
Meanwhile, Steve Murray, the co-founder of RealTrends Consulting, said he believes the changes Anywhere proposed to make could mark the end of buyer broker compensation as we know it.
“As far as cooperation and compensation, that is now pretty much over,” Murray said. “The biggest combined brokerage company in the country in terms of all their brands, just said, ‘We’re out. We are not going to defend this case anymore,’ so that will definitely lead to changes.”
Murray sees three possible outcomes for the lawsuits.
“Worst case scenario, the broker representing the buyer will have to negotiate their own fee with their client and the seller can no longer be compelled to make a blanket offer of compensation in order to list on the MLS,” Murray said. “The second thing that could happen is that more and more buyers will go directly to the listing agent, in which case they are clearly unrepresented. The third thing that would happen is a whole new kind of buyer brokers arise that charge an hourly flat fee to represent buyers,” according to Murray.
In preparation for these outcomes, Berkshire Hathaway HomeServices Drysdale Properties broker-owner Gretchen Pearson said she has been working with her agents to implement buyer’s agency agreements.
“If an agent files a buyer’s agency agreement for me, the broker, to review, the work flows just aren’t there in our document management system,” Pearson said. “The software we use isn’t built that way.” Therefore, it won’t just impact agents, but technology systems, she added.
While the lawsuits’ potential impact on buyer’s agency and buyer broker compensation is the largest question looming, Murray also wonders how the settlement agreement will impact Anywhere’s many franchise owners.
“Will the plaintiffs now just go and start suing individual Coldwell Banker franchises?” he posited.
When asked how the agreement would impact its affiliates, Anywhere highlighted a line from their initial statement.
“Anywhere has taken the first important step toward a resolution that not only releases the company but also our affiliated agents and franchisees,” the company said.
Murray said he believes this could be the start of more settlements to come from the other defendants in the suit.
“They are all going to be running for settlements now,” Murray said. “I think this is a floodgate moment for sure.”
Ken Trepeta, the president of RESPRO, is holding off on making any predictions, suggesting it might depend on the terms spelled out in the settlement agreement.
“If they are settling this and it goes away and they don’t admit wrongdoing and there is no requirement to change policies,” he said. Damages in the Sitzer/Burnett suit are anticipated to be up to $4 billion, while damages in the Moehrl suit are expected to reach up to $40 billion.
The National Association of Realtors, a defendant in both lawsuits, says it is not giving up the fight.
“Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged and we are confident we will prevail in proving the lawfulness of the rules under attack. Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers,” Mantill Williams, NAR’s vice president of communications, wrote in an email to HousingWire.
The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having many buyer brokers participating in that local marketplace, NAR noted.
For buyers, the NAR argues these marketplaces save them the burden of extra costs at closing, allowing them to get professional representation and make homeownership possible for more people.
Keller Williams, RE/MAX, and HomeServices of America, the lawsuits’ three other defendants, declined to comment.
The Sitzer/Burnett lawsuit is scheduled to head to trial on October 16, 2023, while a trial date for the Moehrl lawsuit has yet to be set, but it is expected to take place in early 2024.
Originally filed in 2019, the Moehrl and Sitzer/Burnett lawsuits take aim at NAR’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a realtor-affiliated multiple listing service (MLS). According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR contends that the current commission structure, which has been in place for over 100 years, actually helps consumers.
The pile of lawsuits facing Gary Keller and the real estate firm he co-founded, Keller Williams, just got larger. Former KW CEO John Davis filed his second lawsuit against the firm on Wednesday in the Western District of Texas.
In the filings, which name Keller Williams, Keller, former KW president Josh Team, Business MAPS Ltd. and Business MAPS Management LLC as defendants, Davis alleges that the defendants inflated key profitability metrics including company sales and profits to convince individuals to purchase Keller Williams Regions and Market Centers.
According to the filing, after the franchisees signed a contract, the defendants then required franchisees to adopt KWRI’s present market cap, which is the fee agents pay their market centers. Davis alleges that these fees went to increasing technology fees and the purchase of “unneeded goods and services” from KWRI-owned and affiliated companies, such as MAPS training and coaching.
“Nothing in the individual franchise agreements gave Keller or KWRI the power to set market caps themselves for independently owned and operated Market Centers,” the complaint states. “Indeed, in recommending specific and universal Market Center cap amounts, Keller was overstepping the franchisee’s role in leading an independently owned and operated Market Center.”
In addition, Davis claims that franchisees were required to purchase Keller’s books.
After signing the franchise agreement, if a franchisee attempted to move away from the KW system, the lawsuit alleges that they were forced to sell their Region or Market Center, and that Keller and KWRI interfered with any attempt to sell the franchise for market value, forcing the Region or Market Center owners to sell their franchises to Keller or other KWRI members at “extremely depreciated prices.”
In total, the lawsuit makes two civil Racketeer Influenced and Corrupt Organizations (RICO) claims, one Sherman Act restraint upon commerce claim, one intentional fraud in the inducement claim and one breach of contract claim against the defendants.
“Through this scheme, KWRI itself and the other Defendants suffer no loss, and only gains, from the harm caused to the individual owners,” the filing states. “In total, Defendants’ scheme has caused franchisees to lose hundreds of millions of dollars in total. Unless stopped, Defendants will continue to subject franchisees to the same scheme for the purposes of substantial interest and profit.”
Davis is seeking a jury trial and damages worth millions of dollars.
This latest lawsuit comes just three months after a judge in Texas granted Keller’s motion to dismiss Davis’ appeal, ordering Davis to settle his $300 million fraud claim against KW, Keller and Team through arbitration.
Originally filed in the fall of 2022, Davis’ initial lawsuit was prompted by Davis’ desire to “restore his reputation and clear his good name” after sexual misconduct allegations against him surfaced in the spring of 2022.
According to the initial complaint, Davis resigned from his position at Keller Williams in January 2019 due to a disagreement with Keller over a business strategy that he felt would hurt the income generated by Keller Williams offices.
In response to his resignation, Davis alleged that Keller and Team smeared him and withheld Inga Dow’s accusations of sexual misconduct from him as he was negotiating the sale of his KW market center regions following his resignation. This resulted in tens of millions in financial losses, according to Davis.
“This is yet another attempt by John Davis to smear Keller Williams in the press under the guise of a lawsuit. Two federal courts previously directed him to bring his claims [to] arbitration,” Darryl Frost, a Keller Williams spokesperson, wrote in an email discussing Davis’ August 2023 lawsuit. “Mr. Davis has ignored those courts. We will continue to act professionally, follow the law, and aggressively defend these baseless claims.”
In March, Colleen and Bart Basinski, former Keller Williams Market Center owners in Illinois and Indiana, and partial owners of a third Market Center in Southern California, filed their own lawsuit against KW, Keller and other top brokerage executives, alleging that they faced constant pressure from Keller, Marc King, and co-defendants Dan Holt, who is the regional director of Keller William’s Mid America Region, and Colette Ching, the regional director of Southern California, to alter their business operations, despite parameters set up in their franchise agreement, and adhere to Keller’s plans to lower Market Center caps in 2020.
Mat Ishbia, chairman and chief executive officer at United Wholesale Mortgage (UWM), provided more than half of the mortgage company’s outstanding shares as a guarantee to secure loans ahead of the acquisition of the Phoenix Suns, according to a Bloomberg report.
According to the report, Ishbia pledged stock he controls to back two loans that were finalized days before his purchase of the Suns was approved. The deal, which values the Suns at $4 billion, first became public in December. The executive received the NBA blessing in February.
In total, 805 million shares, currently worth $4.6 billion, secured two loans with JP Morgan Chase & Co. Ishbia holds his UWM stake via SFS Holding Corp., which owns 94% of UWM’s outstanding stock and pledged the shares, per the firm’s 2023 proxy statements.
“The number of shares of Class A common stock beneficially owned by SFS Corp. also includes a total 805,281,450 shares of Class A common stock which are pledged as security for two separate loan facilities,” the proxy statement states.
The risk of tying up the shares to the loans is that if the value of the stock falls, the bank can usually request additional collateral or for the loan to be repaid. And if the borrower fails to comply, the bank can seize and sell the shares.
The Bloomberg Billionaires Index shows Ishbia’s fortune dropped by $3.4 billion after the pledged shares were removed from his net worth calculation.
UWM and JP Morgan Chase declined to comment on the topic.
The seller of the Suns Legacy Holdings, which owns the Phoenix Suns and Mercury, was Robert Sarver. The executive acquired both teams in 2004. Earlier in 2022, Sarver was fined $10 million and suspended for one year following an NBA investigation regarding workplace conduct.
Ishbia and his brother Justin bought 50% ownership of the franchises, including Sarver’s interest. They also acquired a portion of the interest of minority partners, who were granted additional sale rights. Mat serves as governor and Justin as alternate governor.