First it was computers. Computers were going to create situations where consumers no longer needed real estate agents. Next came Al Gore’s invention of the internet. Then, as noted a few weeks ago by yours truly, the robots are coming and they will probably kill us (that’s what Gary Vaynerchuk said…). ORRRRR maybe it will be court cases and/or the Department of Justice. In case you’re not paying attention, as I write this, there are three significant lawsuits in process that could change the way agents working with buyers are paid.
The biggie is considered the Moehrl case filed in 2019. The lawsuit which lists as defendants, the National Association of Realtors, about 20 MLS’s, and four huge brokerages (Keller Williams, RE/MAX, Berkshire Hathaway, and the Realogy brands), alleges that some NAR rules violate anti-trust laws by inflating seller costs by requiring that they pay cooperating buyer brokers a fee to list their property. There is also a suit in Missouri, Sitzer/Burnett which contains similar allegations. And let’s not forget the DOJ lawsuit against NAR concerning compensation and cooperation.
I remember 31 years ago thinking it was strange that I was entering a business where Sellers not only paid there agents, but also the agent of the buyer. At that time, I was comforted with the response, “That’s the way we’ve always done it,” and let it go. Well, maybe it’s not, soon.
While the ramifications of these cases in our business could be vast, even devastating, I’ll leave that part for the companies, NAR, the court systems, and whomever. I am concerned, as a real estate instructor, what changes agents might make in the operation of their day to day practice. Because of that, I will be adding a section to many of my classes giving a short explanation of the cases, their potential impact, and how agents can respond to these potential changes to their compensation. At present, I suggest six things:
- Listing agents need to change the way they discuss fees for cooperating brokers. Fees have always been negotiable, yet many agents discuss this fee as if the seller has no choice. And suggesting to a seller that there is a base fee, under which no one will show your house is taboo.
- Agents working with buyers must exert a greater level of diligence when discussing their compensationwith potential buyers. They must know the options available and reinforce the fact that fees are negotiable.
- Agents working with buyers must improve their ability to explain why a buyer would want to work with them. Unique selling proposition, elevator speech, point of difference, competitive advantage….. whatever. Bottom line: What is your value? Why should I pay you to help me buy a house?
- Become better negotiators. In the end, the better an agent is at negotiating, the better they are going to be at any of the previous 3 options. Negotiation itself, is a key differentiator of agents and that will only become bigger in the future.
- Become/stay informed. Utilize the many sources of information to keep abreast of changes in and around these cases.
- Simple solution: Become a Listing Agent. Yep, been saying THAT forever.
Due to its importance, the fallout of the potential changes to our industry could be significant. I plan to educate agents on this in most every class I teach. Here are the classes in which I plan to incorporate discussion of this topic:
A NEW customized 2 hour class entitled: The Sky is Falling….. Maybe.
Next Level Negotiations
Transforming Difficult Situations
Creating Listing Abundance
7 Things Successful Agents Do
First Time Home Buyers course
Pricing is Paramount
SRES (Senior RE Specialist)
Pricing Strategy Advisor
This is important. It is obvious to me, that these court cases could significantly change the landscape/practice of real estate. There is no need to panic or even feel reactive. It is best to prepare ourselves ahead of time by shoring up our spheres of influence, better educating ourselves, and always executing best practices.
Questions? Thoughts? Let me know if I can help.