On this 241st episode of my Monday Morning Pep Talk, I will discuss some changes to how I will push out my MMPT each week and then I'll l dive into the main topic, a question I am being asked amongst the brokers I coach, lead and manage: "How can I be fully prepared, without the necessary clarity, for the changes in compensation that are coming to our industry in August?"
Before I jump into today's call, I want to remind you of my professional purpose and that is to help you, the broker/advisor, optimize your productivity and help you become the best version of yourself. Why? "Because Happy Brokers Sell More Real Estate". I do that by teaching you how to handle the challenges and opportunities that you face every day. If you can effectively manage those certain situations that arise on a daily basis in your business, you'll be more productive and live a life that is the best version of you. My ask is that you listen as if you are in a one-on-one coaching session with me in my office or on a phone call. If you'd like a transcript and full recording of today's MMPT, send me an email at [email protected] and I will add you to my private email list.
This call is being recorded on Monday, July 8th. When I get done recording this morning at Jameson Sotheby's International Realty, the file of the recording will get downloaded in its raw form to Soundcloud and then to Apple Podcast. Over the course of the next week, my team will "produce" the file and prepare it for Spotify and YouTube in order to have those files on my weekly email which will be sent out between 6:00 and 7:00 a.m. the following Monday (many of you are just reading or listening to it today). It is my feeling, now that the majority of people listen in Podcast format and on YouTube, that the final version of a MMPT should be pushed out early on a Monday morning when most of you are trying to get amped up for the week. The majority of my topics are time tested so that the week between the recording and sent email will not impact the quality of the content. I write and produce these MMPTs because of the individual feedback I get from those who listen. I'm not trying to be an influencer on social media and YouTube. My main goal remains to help as many brokers as I can become the best versions of themselves by running a business, not a hobby. By recording "evergreen" content each week, it also helps me answer the questions that I get asked repeatedly which helps me scale my influence. Also, you will see that I will be writing in more of a bullet point fashion. Okay. enough on that. Beyond the emails, all of the content will be on @applepodcast, @spotify and @YouTube for you to tap into at your convenience.
Thinking Time Question: How do I fully prepare, without full clarity, for the industry changes coming August 17th?
My thoughts and talking points:
- You won't and can't be fully prepared. The only way you will know how to execute on these changes is to prepare the best you can and jump into the market next month with what you have learned, equipped with the right mindset. It will take months for the brokers and brokerages in each market to hit their stride with these changes.
- Keep it simple. Operate from a worst-case scenario: The MLS field will be gone on August 17th and assume that listing brokers will not be able to advertise seller concessions to offset buyer brokers compensation on ANY platform. This is worst case scenario so you should prepare for that scenario. Any relief a certain MLS or the industry gives us will make our jobs easier. My intuition tells me that the DOJ will want to push the industry away from any work arounds that resemble how we handled buyer brokerage compensation before August 17th (the current change date).
- In its most basic form, you will be required to get a buyer agency form signed by your buyers that includes clear compensation terms. You will only be able to get paid up to what you agreed with the buyer as those terms will be negotiated into the contract and paid at closing by your buyer.
- Currently, the settlement statement shows that the seller is paying all commissions as part of the contract. In the future, the seller will be paying the listing broker and the buyer will be paying the buyer broker on the settlement statement. If you are representing a buyer, you will be negotiating "concessions" to offset the cost of your fee - the fee you negotiated on your buyer agency form.
- If your seller decides to offer "concessions" as part of his/her marketing efforts, you need to avoid the phrase "My seller is offering to pay the buyer broker commission." This is the type of work around and language the DOJ does not want. Use this language instead: "The seller is offering an incentive to the buyer of ____% to offset the buyer's fee to include a buyer broker in the transaction." Keep the focus on the principals in transaction.
- How do you know up front if the seller is paying a concession to the buyer to offset buyer broker compensation? Using the worst case scenario, assume they are NOT offering a concession and attempt to negotiate it into the contract. In the end, the buyer will have to be informed that they will be paying all or part of your commission. Reassure them up front that you will do everything you can to negotiate on their behalf, which in the end is our fiduciary duty.
- Once you know the changes to the required forms, learn them inside and out. The main areas that will garner the most questions from the buyers will be compensation percentages and length of term. For those of you at Jameson, we have updated forms from the Chicago Association of Realtors. Those forms will be trained internally over the coming month once we've reviewed them. MRED opted into the NAR Settlement last week. JSIR, our team will have you ready.
- Learn as much as you can as we go. Your clients will have questions and you’ll get better at answering them just like you’ve learned every other shift and change in the industry. Remember: A Confused Mind Says NO. Knowing this, prep and practice to create clarity with your clients. Find an accountability partner and role play if needed.
- Reminder: these changes are not optional. You will not get paid for your efforts if you don't comply. Brokerages are taking this seriously as the legal settlements only include transactions up to August 17th.
In Summary: To best prepare for the changes coming to our industry, while waiting for clarity from local boards and MLSs, prepare for the worst-case scenario, which would be no MLS compensation or concession fields anywhere on the MLS and the inability for the seller to advertise concessions to the buyer on any digital platform.
NOTE: As we get more clarity around execution of these changes, I will address them on this MMPT knowing that each state, local board or MLS could be looking at it differently.
Those of you listening to my calls will be just fine. You will need to change your mindset pronto as much as anything. The top brokers and brokerages in each market will take market share as I believe there will be a flight to quality. Know your boundaries and work with those clients who want to work with you. My guess is that 20% will really try to negotiate you below your comfort level for your fee. At that point you need to make a decision: Am I the fool or the favorite? By saying YES to this client, you are saying NO to a better opportunity. You will be given the gift of the best filtering method ever by needing to have these conversations up front not 6 months into a search or listing. Take the question I started this call with and go beat it up. In the end, it will be your responsibility to be prepared.
It's normal to have anxiety during times of change; that's just your brain doing its job. Lean into the change because for those who are running businesses, your best years are ahead of you.
