On this 227th episode of my Monday Morning Pep Talk, I will discuss the NAR Settlement and discuss my thoughts on how it will impact how we do business moving forward. I must say, none of us know exactly how this will all play out so I come to you today in an uncomfortable position. I don't normally like to discuss things that I have not stress tested. So much of what I will talk about today is based on my 25 years of real estate brokerage experience and how the industry has reacted in the past. Obviously, come July, we will be in uncharted territory. I am coming to you today as Jim Miller the coach, mentor and friend simply hoping to give you my thoughts.
The day after the NAR Settlement was announced, I headed into my office on a Saturday afternoon to write and record this episode knowing that I would be leaving on an early flight the next morning for a week to do college visits with my daughter and wife. When this settlement was announced, I was preparing for my week away, responding to email and creating my list of to do's before I left. Well, that changed when Kevin Sears, NAR President, dropped his email at 9:30 a.m. CST making the announcement. In first reading it, I reacted like most of you probably reacted. I was feeling a mix of shock and fear, a perfect example of my brain doing its job. I, like you, read and listened to as much as I could yesterday and began talking to my colleagues not only in my local market but nationally. I didn't sleep that great on Friday night to be quite honest; however, I woke up rested after sleeping 2 hours past my normal "wake up" time. I felt confident this morning knowing that opportunity comes from chaos. Been there, done that. I also knew that I needed to get my thoughts out to you before I left. Why did I know that? Well, my phone has been blowing up since the announcement. I also said to myself: "Jim, you were built for this. The real estate brokerage industry needs servant leaders. It's time to step up." Leaders lead and I hope this episode provides enough clarity to replace some of the fear you are experiencing along with a serious dose of call to action.
Here is What I know:
- Sometime in July, compensation offers will be moved off of the MLS. Based on the NAR statement, offers of compensation could continue to be an option off-MLS through negotiation and consultation with real estate professionals. Based on the statement, sellers can offer concession on the MLS such as closing costs.
- Written buyer agency agreements will be required. The change will go into effect mid-July.
- This proposed settlement is not fully approved. Full approval is expected in the coming weeks.
- Sotheby's International Realty and other Anywhere companies are covered by a previous settlement.
- Buyers benefit greatly by representation from a licensed real estate broker. This settlement will not change that.
- This will greatly impact how business is conducted within our industry. Not just at the broker level but at every level. Residential brokerage will mirror more of a commercial brokerage model where commissions are not published on major sites like Costar/Loopnet.
- Talented brokers will find a way to pivot and gain market share.
- Those that will navigate this new era in real estate brokerage successfully will be those brokers that package, execute and communicate their value the best.
- Real estate brokers earn every penny they make.
- We will learn more as we approach July. No one has all of the answers.
Okay, so those are the facts that we know. I'm going to put my coach hat on to give you my thoughts on what I am going to be suggesting to those brokers in my ecosystem. If you are a relationship-based broker executing Take Flight principals, you are way ahead of the curve from a preparation standpoint. On the progress tracker that I coach to, there are several key components to your business that need to be evaluated and addressed ASAP. Here's the game plan I would give you:
Game Plan:
- Avoid the noise. Avoid the media coverage. Don't speculate. Don't buy into the ideas that are not proven. You have to keep your mind right. If there was ever a time to focus on yourself and avoid comparisons and trying to find the shiny penny, this is the time. FOCUS will be key.
- You must master your 5 lists: Top 100, Top 100 referral partners, Warm List, Hot list, List of Collaborative brokers.
- Define your value. Master the buyer consultation strategy. Think of all of the things you do in the buyer process. 100s of tasks are completed on every transaction. Document them and discuss them with your clients. They think that you just schedule appointments and write offers. Knowing what I know, I can tell you for a fact, if I was purchasing a home, I would always seek representations and I've been a part of billions of dollars of transactions.
- Commit today to having a buyer agency form signed before you show a property. Look at them as guarantee of pay. You will no longer be protected by advertised commission.
- Start preparing to ask the listing agent for "offers of compensation” since they will not be advertised on the MLS.
- When working as the listing agent, as part of your marketing strategy, explain to your sellers the importance of offering buyer agent compensation as part of their launch. It will provide a much higher percentage of a successful launch. You will need to add several steps to your listing process to account for the changes announced.
- Study your local buyer agency documents required by your state, local boards or brokerages. Know them inside and out.
- Take an ABR course. Study up on buyer agency and sell the designation as part of your value proposition.
- Upgrade your communication skills not just with your clients but also fellow brokers. We are all going to have to work together within the industry for us to be successful as a collective.
- Stay nimble. Stay flexible. Be open-minded to change.
As I wrap up here, let me reiterate. This is a huge development within our industry not all that entirely different from when mortgage brokers went from 1099 independent contractors to W2 employees as part of Dodd Frank legislation post the 2007/2008 financial crash. They got through it and had some of their best years post Dodd Frank. We will too. This time in our industry will be a "low tide" moment. Your level of planning and execution will be exposed for all to see. Not having a plan to discuss your value proposition to a potential client will be difficult to overcome. If you are running a really nice business and not a hobby, you will attract business and take market share. The ball will be in your court with way less competition.
There will be so much more on this topic before July but my promise to you is that I will be discussing this with all of my industry colleagues locally and throughout the country. I will lean heavily on Wes Madden with Scenic SIR, Colleen Barry with Gibson SIR, Shannel Ryan with LIV SIR, Seth Kaufman with One SIR, Bill Rawlings with Atlanta Fine Homes SIR, Cristian David with SIR in the Los Angeles market and Vin Socci with William Pitt SIR. They make up a serious group of talented leaders within the brand that I collaborate with on a regular basis. The team at Jameson Sotheby's International Realty along with our financial partners at Peerage Realty Partners and their amazing team will be bringing so much to this transition and we will navigate these changes moving forward.
If the announcement of the settlement didn't get your attention yesterday and you find yourself thinking that loopholes will present themselves, it could get difficult for you. One of my favorite guiding principles is "If you are not changing, you are choosing.” It's time to do things differently if you haven't already made that choice.
Like you, I have to step up. I have to lead. We were all built for this.
