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Learn more at movement.com slash faith. The summer home buying season is straight ahead. Will sellers get a break on real estate commissions?
Hi, I'm Rob West. The National Association of Realtors sent shockwaves through the industry recently with a decision to drop its standard 6% sales commission. What does that mean for home sellers this summer? Dale Vermilion fills us in. Well, it's always a treat to have Dale Vermilion on the program. Dale is the author of Navigating the Mortgage Maze, the simple truth about financing your home. It's everything you need to know about securing a mortgage all from a biblical perspective. Dale, great to have you with us.
Always great to be with you, Rob. Thank you. Dale, industry watchers say this National Association of Realtors settlement will change the way people buy houses. But before we get into that, explain what this settlement is all about.
Yeah, so, you know, the NAR has been around for a long, long time. Traditionally, commissions have been around 6%. The reason I say around is because if you look at 2020, for example, last time we looked at a 4.94 was the average commission between the buyer and the seller. But traditionally, 6%, three going to the buyer's agent, three going to the seller's agent. There was a lawsuit that came to play where they felt that was controlling the pricing on this transaction, and the result was a $418 million settlement that they just settled on that that the NAR is going to have to pay. And they have to remove the buyer's side of that. You know, as we know in real estate transactions, the seller paid the fees, all 6%, if that's what it was, 3% to the buyer's agent and 3% went to the seller's agent. They've now outlawed that, and now the buyer's agent has to have their own representation, meaning that as a buyer, if you're a customer out there in the market, you can actually interview and find the agent that you want and negotiate your commission, which they've always been negotiable, but it's been kind of a standard known thing that a lot of them don't. Yeah. So the National Association of Realtors, did they actually set that commission or was it a suggestion?
Explain that. I believe it was a suggestion that had come out. I don't think that they actually set that commission, but it goes back so many years that there's been a lot of back and forth talk about that.
What I will tell you is the new ruling doesn't come into play until July. So right now they're just trying to figure out who's going to get paid, how they're going to get paid and how this is all going to work out. So there's still an awful lot up in the air.
Yeah. So just unpack this a bit then for us. So if commissions were always negotiable and they were, I mean, we even saw some of these low cost providers that were doing this for very low fees. How do you think this settlement will ultimately change things? Well, I think what will happen is it'll give a little bit more negotiating power to buyers and sellers when they work with agents. Because the thing that we all know is that, you know, in some cases the agents are doing a lot of work and in other cases they're not doing as much work.
If it's, for example, a purchase that's happening online over the internet where people aren't seeing the property, it's a much quicker transaction, they may be negotiating for a lower fee on that. So what it's going to do is it's really going to do two things. First off, it's going to really affect buyers' agents directly. They've got to figure out how they're going to get paid out and they have to earn their representation. They're going to have to do a really good job to be able to get paid.
Not saying that they haven't, they have, but they're going to have to make sure that they earn it. It is going to affect, I think, some of the agents that only sell one or two houses a year. They may decide that they're just not going to do it anymore.
I don't think it will affect the agents who have been doing it for a long time and you're probably going to see a lot more buyers' agents become either listing agents so they have a little bit more control, or they might become a dual agent where they're doing both the buyer and the selling side and that way they can negotiate both sides of that transaction. Yeah. All right.
That makes a lot of sense. Dale, I've often said that I think the realtor serves a critical role in this largest transaction that most people will have in terms of contracts and negotiations and marketing and finding the properties. I mean, would you agree that this is a valuable service? Absolutely.
No question. Realtors serve a great role within the marketplace. They understand the market. They understand all of the documentation. I mean, there is an awful lot of documentation and an awful lot that goes into a purchase.
So I think the biggest concern we have in this is for the lower income housing, how that's going to affect lower income buyers because they're going to have to come up with a way to be able to pay that agent because the seller isn't anymore. Yeah, that's really helpful. Well, thanks for helping us to understand the implications of this big settlement. I know there's a lot of questions out there. Dale, we always appreciate your insights, my friend. Thanks for stopping by. Thank you, Rob. God bless. That's Dale Vermilion, author of Navigating the Mortgage Maze.
Buy it wherever you buy books. Your calls are next, 800-525-7000. Stick around. Every day we hear life changing stories from listeners just like you who see money and possessions as tools to invite more people into God's kingdom. Instead of chasing wealth, you've chosen to embrace God as your source of love and provision. At FaithFi, we're passionate about meeting people where they live and work through our national radio program, app, resources and website to influence widespread positive change in our culture. Please consider becoming a monthly partner at faithfi.com slash give. We are grateful for support from Soundmind Investing in the faith and finance program. For more than 30 years, they've been helping Christians reach their financial goals with step-by-step guidance for investors at every stage, from those just getting started to those getting ready for retirement. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well.
More information, including the short video webinar on profit and peace of mind, no matter what's happening in the market, is available at soundmindinvesting.org. Great to have you with us today on faith and finance. Alright, the lines are open. I'm ready for your calls and questions today. Let's talk managing God's money. 800-525-7000. That's 800-525-7000. Let's go to Missouri.
Hi, Terry. Thanks for your patience. Go right ahead.
Yes, thank you so much for taking my call. My question is, how do you know how much you need at retirement? My husband and I, so he's 55 and I'm 57 and he's planning on working probably for the next 10 to 15 years.
Okay. Yeah, so there's some rules of thumb and we could start with those and that's all they are. They're just kind of a basic flyover of where you might want to be, but I wouldn't put too much stock in that. And then there's retirement planning where you actually go through and say, okay, what is my lifestyle today? How much am I spending to fund my lifestyle? And when I get to retirement, how might that change? So for instance, if you all are on track to be debt-free, either now or between now and retirement, that would take a major expense or expenses off the table because maybe you're not paying a mortgage any longer. You know, often we live on 70 to 80% of our pre-retirement income in retirement.
And so normally the way we would do it is say, okay, Social Security was never intended to cover more than 40% of your pre-retirement income at best. And so typically what you would do is you'd say, okay, if I have 10 to 12 times my pre-retirement income in my savings, in my retirement account, so if you're making $75,000 a year, you'd want somewhere between $750,000 and $900,000 in your retirement account. And then at 4% a year, you know, that would give you $36,000 a year that you could pull out of it. That's generally kind of the rule of thumb on what you can take out in retirement and maintain the balance.
So you'd never deplete it. And then eventually you could give it away as an inheritance or to a charity or ministry. But that $36,000 is, you know, when added to Social Security should get you back up to, you know, somewhere between 80%, maybe even a little bit more of your pre-retirement income, which in my example was $75,000. So that kind of makes that goal alongside Social Security 10 to 12 times your income. Now, where should you be at along the way?
Well, if we kind of back that down at age 55, you'd typically be somewhere between five and eight times your salary saved as a benchmark toward your ultimate goal of 10 to 12 times your income saved. Now, a lot of people look at that, Terry, and say, wait a minute, I'm not anywhere close to that. Okay, that's all right. Let's start where you are. Let's limit your lifestyle. Let's prioritize saving. Let's do it in a way that where we're seeking the Lord, realizing that our trust is in him. And, you know, he may lead you to save an entirely different amount, you know, because he may have different plans for you. I mean, maybe you're, you know, going to sell everything and go overseas to serve the Lord and, you know, in your next season of life, you know, that's between you and the Lord. But at least as a starting point, that's one way to try to get to what's an appropriate goal that has some rationale to it that assumes we're going to, you know, be living on less in that season of life for the reasons I mentioned, and we want to maintain our standard of living at that point. And obviously, if you want to change it one way or the other, that's going to affect that. But does that all make sense?
It does. Okay, so again, it's not intended to scare you, because if you're not anywhere close to that, that's okay. Let's start where you are. Let's make a plan. And at the end of the day, it's really about first of all, Lord, what would you have for us? What lifestyle have you called us to? What does that season of life look like? Our service to the Lord never ends. So we need to be asking, Lord, what do you have for us in that season of life? And then, you know, ultimately, it's going to lead you to, you know, what do we need to fund our expenses, you know, recognizing that it's probably going to be somewhat less than what we're spending now, although there's different expenses in that season of life.
And probably the biggest additional cost could be the prospect of long term care, you know, which can obviously run anywhere from 5000 a month to 10,000 a month, depending on you know what your needs are. So there's just a lot to think about. And that's not, you know, something we should be anxious about. I think we need to ultimately give that to the Lord. But it does say that we should, you know, be prioritizing having margin, exercising self discipline, so we have surplus every month so that we can, you know, save appropriately with the Lord's leading. So hopefully that helps you, Terry. We really appreciate your call today. May the Lord bless you. Let's go to Florida. Hi, Jay.
Go ahead. Hi, so I just inherited about $102,000. I am currently unemployed because my husband was ill. I had to take care of him. And we have a minor daughter. And it's just basically sitting there in the bank for about a month, and I just don't know how to invest it.
And I would like to know how I could get an income from that. Okay, yeah. So let's talk about just kind of the current status of things. You said your husband was ill. Yeah, he passed away.
Oh, I'm so sorry, Jay. Okay. And so what are you all living on right now? I was basically living from his paycheck that he received.
And I just started receiving Social Security a few days ago. Okay, that's basically it. Yes.
So right now your income sources are the Social Security survivors benefits and potentially whatever you might draw out of this 100,000. Is that right? Yes. Is the Social Security for you and your child enough to cover your expenses? Or are you running short each month? Yes, it is.
However, I have to like do strict budgeting. Yes. No, I certainly understand that.
All right. And then are you working or do you have the ability to work at this point? I have the ability to work. I'm still of working age.
I'm like, just in my mid 40s. Okay, yeah. So you know, I think the key here is if you can continue to work, you know, do you all have any other investment accounts or savings?
Anything beyond the 100,000 you received? No. Okay.
Yeah. And so I think the goal at this point is number one, to set aside a portion that will call your emergency fund. So I think you'd probably want to take whatever is equivalent to six months worth of expenses, leave it right there in savings, the rest of it, you probably want to start investing it.
And unless there's something major coming up that you can see on the horizon, like, you know, I have a car, it's on the last legs, and I know I'm going to need to replace it or, you know, we've got a major repair, we just can't put off any longer, then obviously, we'd want to add that there because we don't want to invest anything that we don't have at least a 10 year time horizon on. But apart from the emergency savings, and your known kind of more immediate expenses, like, let's say in the next three years, I think the next step is to take the rest of that 100,000 and get it working for you. In fact, I'd be trying to systematically move it over into a retirement account. So it's growing on a tax deferred basis, either by, you know, over funding as much as you can a 401k, if you were to go get a job and have one available to you, even if that may, you had to pull some out of that excess savings, so that you're shifting it into a tax deferred environment, and then get it invested in a stock and bond mutual fund. And then if you could go back to work and make that, you know, work with the care of your minor child, then the goal would be, let's not touch that 100,000. Let's cover your bills out of Social Security and your working income. And then let's, you know, start continuing to fund retirement accounts, so that you can have something more substantial down the road, maybe 20 years from now, that you know, can supplement your Social Security for you to live on, you know, as you need.
So that would be the ideal situation. Does all that make sense? Yes, it does. Thank you. Okay, you're welcome. So what I would do now is reach out to a certified kingdom advisor in your area there in Florida, you can go to our website, faithfi.com, click find a professional at the top of the page. And I think, you know, that would get you pointed the right direction, they could also help you manage that money. All right, a quick break and then back with your questions 800-525-7000 call right now.
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Whatever your financial question. We'd love to tackle it the number to call today. Eight hundred five two five seven thousand again.
That's eight hundred five two five seven thousand. We've got some lines open. Let's go to Indiana. Hi Jill. Go right ahead. Hi, how are you doing? Great. Thanks for your call. Good. I was just calling because my husband is retired. I work part-time.
We have about 125,000 in an IRA and I'm wondering if I should pull some of that out for an emergency fund to put in our savings because we don't have a lot of in savings. Hmm. Yeah. What did you say your ages and if not, would you mind? My husband's 67 and I'm will be 65 this year.
64. Okay. And are either of you still working? I work part-time. You work part-time.
Okay. And so what are you all living on other than your part-time income? Just his income. He's retired and then our house is paid for. Our cars are paid for. We just basically pay for heat and utility and electric.
Okay, great. Is he living on social security? And is his income in retirement social security alone or something else?
Social security alone. Okay. Got it.
And with his social security plus your part-time income, are you also collecting social security or are you waiting on that? I'm waiting. Okay. And what is your plan there? When would you think you might take that? I haven't decided for sure. I'm thinking maybe when I'm 65. Okay.
But possibly 67. I'm not real sure on that yet. Okay. And with his social security and your part-time income, do you guys typically have anything left over at the end of the month? Yes, we do. What would you say on average you have at the end of the month?
I'm going to guess probably 600. Okay. Yeah.
And so where has that been going given that you've only got, you know, a thousand in savings? Is that just kind of been finding its way into extra things or is that a new? Right, doing things at the house. Yeah. Okay. Yeah. Sure.
No, I get it. It adds up quickly. And how long are you planning to continue to work part-time for kind of the foreseeable future? Or are you looking at when you take social security for you to kind of fully retire? What are you thinking?
Well, I'm thinking either I'm hoping to last until 67 is what I'm hoping. Okay. To continue to work part-time. Yeah.
And will your social security be the same more or less than your part-time income? Do you have a feel for that? It'll be more. Okay, great. Yeah. You know, here's the thing. I mean, I love that you all are living modestly. You're debt-free. I love that you're letting that social security continue to grow. I'll tell you, if you could wait even until age 70 or every year beyond, you know, full retirement age, that benefit you're expecting at full retirement. Age is going to grow by 8% a year.
So if you waited an extra three years, and I realize that's all I'm asking a lot, so you need to prayerfully consider that as you and your husband talk through this, but you could end up with a check 25% higher than even you're expecting. But the idea would be that if you can get that checkup as high as you can, that the combination of those two would allow you all to live kind of well within your means. I would keep this $125,000 invested. Is it in stocks and bonds right now? Or what is it invested in? It's in stocks and bonds.
Okay. So I was also going to ask if you thought about diversifying into gold, like a gold IRA, any of it? Yeah, I like gold. I mean, obviously, it's it's up here near record highs, just because of all the uncertainty and so many other things swirling right now, economically, it's more of a fear trade, it doesn't have any income, and it tends to be more volatile, even though the long term performance has been fairly good, but I wouldn't overweight there. So I would say on $125,000 portfolio, you'd want somewhere, you know, around 5%, you know, which would be about 6200 up to 12,000, maybe 13,000. In gold, and you could buy that inside the IRA without taking anything out through one of the gold tracker ETF. So there's exchange traded funds that have gold in a vault behind them, but you're buying them like a stock, and it just follows the price of the ounce of an ounce of gold.
So as gold rises, the price of that ETF rises, that's a way for you to have some exposure to gold inside a properly diversified portfolio, but I wouldn't go more than 10%. I like the idea of you leaving that money there, I would rather you not take it out just to set it in savings. Because here's the reality, if you all had an emergency and unexpected expense, you can get to that money pretty quickly by immediately placing a trade liquidating a position and, you know, having them send you a check.
And so you can get access to it. But I would rather you prioritize, okay, let's see if we can get this 600 a month up to 750, because we're going to really, really, really, really, really, really, really, really, really, really, really, really, really, really, really, dial into our spending plan, we're going to really watch how much we're eating out. And, you know, whatever it is that tends to be your budget buster. And let's see if out of your surplus each month, you could get that up to three months expenses as a first goal. Well, that's probably just based on your modest lifestyle, maybe 6000. So if you do 6000, you've already got 1000 right now. So we're trying to save 5000. And let's say you're putting 750 a month, I mean, six months from now, you're pretty much there. And you haven't touched the IRA, you leave it invested, and now you're funding your emergency savings out of surplus cash flow. Six months after that, maybe you're at a full, you know, six months worth of expenses in the bank, that would be my better approach, then we're leaving that money in tax deferred environment for the future.
If you all need it down the road for long term care or a major expense, you're not creating additional taxable income through that withdrawal, and you're funding the emergency fund out of out of surplus, that would be the ideal situation. We appreciate your call, Jill, all the best to you. Well, folks, that's gonna do it for us today, man, we've covered a lot of ground, always grateful for your calls and the incredible questions and for your desire to be found faithful as a steward. That's our goal here. We want to help you see God as your ultimate treasure, money as a tool to accomplish his purposes, and then help you make practical decisions and choices through the lens of a biblical worldview. I hope we did that and encouraged you along the way. Well, on behalf of my entire team, Taylor, Jim, and Devin, I'm Rob West. We're so glad you were with us today. Hope you'll come back and join us next time for another edition of Faith and Finance. Faith and Finance is provided by Faith Buy and listeners like you.
