While the real estate market will undoubtedly go through several more shifts before the dust settles around the numerous legal cases the NAR is currently embroiled in, it’s best for agents to be prepared. Winter is coming. The question is simply when.
What we’re talking about is the highly likely scenario predicted by analysts from Keefe, Bruyette & Woods in a report released ahead of the October 31 verdict in Burnett v. NAR. In it, the investment banking firm said that the NAR litigation and related government action is “likely to reshape the residential brokerage industry’s commission structure,” by eliminating the buyer-broker commission rule, and eventually the practice of listing agents and sellers setting and paying buyer agent commissions.
What impact this and future rulings will have on the agent community are unknown. Some agents are worried about reduced commissions and even more legal forms and paperwork to deal with, while others may be thinking about jumping ship altogether.
But now is not the time to panic and wait for changes to take place. Lawsuits take years, so in the interim it’s business as usual. Now’s the time for you to take action!
Continue what you’re doing
While changes to our industry are inevitable as a result of current and future legal challenges, one very fundamental element of our business isn’t changing: People aren’t going to stop buying and selling homes.
That means agents will still be paid for their services by those that use them. And now’s the time buyers and sellers need those services more than ever.
So don’t panic. It’s your time to shine! Just keep doing what you’re doing to help yourself and your clients navigate through the uncertainty.
Sell yourself.
Know your worth. Continue explaining to clients the choices they have when it comes to representation during the home buying process and articulate the value you will bring to their experience. Highlight your experience, training and track record. Use prior client referrals and reviews.
Capitalize on the service you provide as an agent. Go over your duties and responsibilities in detail so your clients understand what to expect working with you, why they should and exactly what they’re paying for.
Reiterate that REALTORS® will still and always be there for clients to guide them through the financial, legal and community complexities of buying and selling a home, protecting and promoting their best interest.
Be transparent with clients.
Be prepared to discuss and answer client questions about commissions and ongoing legal challenges involving the NAR and others. Here are some suggested talking points to guide REALTORS®.
- Recent verdicts and other pending actions don’t change the many choices buyers and sellers have when deciding to buy or sell their home. They can choose to hire a real estate agent who is a REALTOR®, to hire someone else, or to do all the work themselves.
- Continue expressing to clients, friends and family that compensation arrangements (including commissions) are, and have always been, negotiable and set between a broker and their respective client.
- Continue explaining that listing brokers decide how much compensation to offer in their seller’s best interest, and it can be $0, a penny, or any other amount. NAR rules do not specify an amount. This is negotiated between brokers and their clients.
Continue to use listing and buyer agreements.
Talk through the contract carefully and thoroughly answer any questions your client has before you both sign to ensure they understand (1) exactly what services and value you are providing; and (2) importantly, how much you charge.
Keep up with continuing education.
In such a litigious real estate environment, it’s more important than ever to keep up with your professional education requirements to keep your state license and any other accreditations in compliance.
In addition, be sure to follow the marquee cases making headlines (your clients are!) to help you answer questions such as those above. The NAR provides additional guidance and resources at www.competition.realtor. You can also share with clients this link to www.realestatecommissionfacts.com. It’s a resource that provides a concise overview of how real estate commissions work and benefit consumers.
Provide clients with options.
Do you have all the tools you need to get the best outcome for your client? Sellers are seeking more efficient and hassle-free ways to sell their homes. One thing we’ve learned from the lawsuits home sellers are bringing is that they want more choice and control over how and when they sell without paying an incredibly high premium.
Now that we’ve reduced our service fee to 5% from 6%, there’s never been a better time to utilize our cash offers for your clients. Working with Offerpad’s Agent Partnership Program agents can provide other benefits to their sellers, too, such as:
- The certainty and peace of mind of a cash buyer with a 91% CSAT
- No showings or open houses
- Choice of closing date
- Ability to stay in their home for up to three days post-closing
- A free professional local move*
Presenting your sellers with a cash offer from Offerpad along with their listing options enables them to make a well-informed decision without feeling pressured into a one-or-the-other scenario. And it puts you in a unique position to foster a sense of empowerment, trust and transparency throughout the selling process. Agents can also earn a 3% referral fee** on any qualified, completed sale from one of our cash offers, so you’ll be well-compensated for your efforts when working with us.
Michael Hofstetter is National Head of Brokerage and Designated Broker at Offerpad. He has been a licensed real estate agent since 1993, holding positions as Designated Broker of West USA Realty (2,800 agents), CEO and team leader at Keller Williams Realty, managing broker at Prudential Arizona Properties and assistant broker at Zip Realty. He also currently serves as a real estate expert witness, Real Estate Special Commissioner with the Arizona Superior Court; professional standards for AAR and SEVRAR; Treasurer for SEVRAR; Director for PAR, AAR and White Mountains; and AAR Mediator and Ombudsman.
*Terms & conditions apply. See www.offerpad.com/move-for-free for details.
** Referral Fee Qualifications: (1) The property cannot be listed on the MLS within 30 days from the time of submission, while under contract, or after COE; (2) The agent or current homeowner has not submitted a request to Offerpad on the property within the last 30 days; (3) The agent must present current interior and exterior pictures at the time of offer submittal (previous listing photos do not qualify); and (4) The agent must be identified in the offer request, continue to represent the seller, be available throughout the process, and the sale must successfully close. Agents with current sellers listed on the MLS may still request an offer, however they will not be eligible for a referral fee.