March 22, 2024 • 20 mins
Welcome back to Hudson Valley's Real Estate Explained, where we continue our dive into the significant NAR settlement that's reshaping the real estate landscape. In this second installment of our series, we're breaking down the ramifications for agents and predicting how the industry will adapt to new rules.
This episode zeroes in on the fallout from the landmark decision prohibiting listing agents from sharing commissions via MLS, the mandate for buyers' agents to secure agreements before house showings, and the $418 million settlement's implications. We're tackling the shift toward transparency in agent compensation, exploring innovative models like flat fees, percentage-based, and hourly rates to accommodate all buyer types.
Our conversation will explore how these changes demand agents redefine their value and adjust their commission structures for long-term success. We also focus on the increased clarity around compensation, obligations, and buyer rights that these industry shifts are expected to introduce.
Tune in to understand the future dynamics of buyer agent compensation and get a grip on the evolving real estate scene. This episode isn't limited to professionals in the field; it's essential listening for anyone interested in the ongoing and future transformations within real estate.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back everybody to part two of our National Association of Realtors Settlement Podcast.
If you haven't listened to part one, go do that now.
It's filled with information that's going to help make this second part make
a lot more sense. So sit back, relax, and enjoy.
One, two, three, four. Welcome to Hudson Valley's Real Estate Explained,
(00:23):
your getaway to understanding real estate. Whether you're buying your first
home, an experienced investor, or just real estate curious, this is the place for you.
So dive in with us as we unravel the intricacies of property deals and investment
strategies guided by industry experts.
We're demystifying Hudson Valley Real Estate together.
Let's go. The need for buyer's agency is, I think, stronger now than ever.
(00:46):
I mean, I guess it depends on where you are in the country too.
Um, you know, we're still in a pretty hot market.
I certainly wouldn't want myself or, or, you know, my kids or anyone being out
there buying a home right now without the advice of a very knowledgeable buyer's agent.
Yeah. You know, the transact, most of the transactions I see taking place out
(01:09):
there include a lot of emotion, a lot of stress, some anxiety.
And a lot of times people make, you know, bad decisions under stressful circumstances. Sure.
Having an advocate, right? This is different than an appraiser or,
you know, somebody running title.
Having an advocate to help you think through your decisions in a very complex,
(01:33):
very stressful situation is a huge value add.
However, I will add this.
Many transactions have different levels of requirements for buyer's agents,
different levels of stress, different levels of complexity.
And as we look onto the impacts of buyer agent compensation,
(01:55):
I think you're going to see a whole lot of new compensation models coming up.
I think there's going to be a great change in how buyer agents,
because as we said previously, it was very simple.
We looked on MLS. We saw what the other agent was offering.
That number was the vast majority of times a percentage that we were very used to seeing.
(02:17):
It was very, I should say, common to see very similar numbers.
Not standardized, but common.
And we came to rely on and accept that.
Now, when we sit down before showing a house, we're going to ask the buyer to agree to compensate us.
(02:38):
We can still collect via the transaction from the seller in the form of a concession,
which I'll break down in a moment.
The listing agent will still be able to share their commission if they want
to, but it will not be a guaranteed thing listed in the MLS.
It will be something that is negotiated every single time.
(02:59):
That's correct. So.
So I think that there is the potential to see a whole lot of different buyer
agent compensation models.
We're already seeing people talking about things like flat fees will still,
I'm sure there will still be percentage based compensation models.
There could be hourly rate compensation models. You want to hire an advocate,
(03:21):
you know, to, you know, help you out for a few hours. You can probably do that. And why not?
Yeah. Yeah. It's actually kind of exciting to see how this is going to play
out, you know, if I'm being honest, uh, you know, I know I started with the
sky is falling, but I never truly believed the sky was falling.
No, I think it's going to open up a lot of options for buyers that maybe don't
(03:42):
want as much, maybe they've purchased seven or eight homes.
You know, maybe there's an investor that, you know, doesn't need a lot of help,
but needs a little bit of help and they're going to pay a per showing fee, you know what I mean?
Or, you know, run me a market analysis on this, you know, and we'll pay $250 or I'm making things up.
(04:03):
But, you know, I think that there could be a whole plethora.
You like that word? Plethora.
Isn't it un-plethora? De-plethora of compensation models.
I think ultimately it's also going to make for substantially better real estate agents.
Absolutely. Absolutely. Because being able to communicate that value and set
(04:27):
up a commission structure, if you think about this, most people get their start
in buyer representation and not seller representation.
I know for a fact they do. Because there, I mean, there's probably several reasons for that.
Not every agent starts off as a buyer. I mean, there are agents that start off
listing homes before helping people buy, but the vast majority of people start
(04:49):
off as buyer's agents. And the reason for that is that.
It's easier in a nutshell, it's easier to meet a buyer, show them a house,
you know, and try to help them.
And, and, and I do believe that most agents do want to help their clients,
but you don't necessarily need to have a value proposition because you're not
(05:10):
putting the buyer on the hook for any sort of compensation. You're not asking for anything.
You're just trying to help them. And if they end up buying a house,
you walk into sometimes a very substantial commission.
Of course. Of course. So what's going to happen now is you're not going to be
able to show that house until you've asked for permission to be compensated by that buyer.
(05:30):
And buyers, get ready because you're going to have to, you know,
well, you're not going to have to, but you're going to be asked to sign buyer's
agreements in the very near future.
So you're probably going to want to interview a few going forward and you're
going to want to compare, because if you're being asked to pay a percentage
or a flat fee or whatever, you want to know that what you're getting for what
(05:51):
you're going to pay is going to be worth it.
Yeah, absolutely. You know, and also, you know, we're coming out of an,
a cycle, you know, unfortunately the COVID cycle. Yeah.
And a lot of agents did become door openers. and a lot of people jumped into
the industry that maybe would not have jumped into the industry.
They heard how lucrative it was. I was managing a big brokerage at the time,
(06:14):
so I remember the amount of agents that came in during that time period.
And they were, I'm going to say because of the way that they entered and how
quickly they entered, they may not have been as educated because we weren't
getting together. We weren't in person.
We were doing a lot of online and team meetings and, you know,
(06:35):
the stuff that was over the internet. Yeah.
And then they were going out to meet clients. And basically they're opening
doors as, you know, especially in our market area, once again,
it might be a little specific to, or regional.
You know, people were legitimately, and I'll use the term again because a friend
of mine gets a kick out of it, throwing their wallets on the lawn in order to obtain a home.
(06:57):
And at that point, you were opening a door. Yep.
And, you know, and putting an offer in, basically. So they knew how to write
offers, but did they really?
Yeah. Did they know how to write the best offer?
They just jumped into the business. And it's not saying anything against new
agents. Sometimes new agents can be amazing right away.
Yeah. But it is saying there was a flood of them, and I think you're going to
(07:18):
see some of them exiting the business as quickly as they came in at this point.
Yeah, and the way buyer representation is going to change, I think you're absolutely right.
You're going to need to provide value.
You're going to be asking for compensation.
And if you're not providing value right now, you're probably very nervous about
(07:40):
this. If you're used to answering a call from Zillow, showing a house and crossing
your fingers that they buy it, this is really, really bad news for you.
Yes. Agents, step up. It's time to show your worth is I think what we're saying.
Absolutely. So ultimately what this is going to lead to is transparency and compensation.
This is going to lead to transparency and responsibilities.
(08:01):
This is going to lead to transparency and advocacy. It is going to make the
buyers far more aware of their rights,
far more aware of the compensation model and make them more intricate into the,
get more intricate into the process than ever before.
And this is, this is a good thing. This is a good thing for good realtors and for the consumer.
(08:25):
This is not something that I'm, I'm, I'm worried about. I'm very excited about it like you are.
So increased transparency, new business models will shape out of this.
So you'll be able to pick different things.
What else here? And yeah, so the future of real estate, real estate representation,
what is that going to look like?
So I do want to dive into, you know, we alluded to the fact that the seller
(08:49):
can still pay commission.
The listing agent can still pay commission. The buyer could pay.
There's still a lot of ways that fees can be paid. So I want to kind of analyze
those really, really quickly. Sure.
So I sit down with buyer and I say, you know, let's work together to buy a house.
Here's my value proposition. Here's why I think you should hire me.
(09:12):
Here are all the things that I bring to the table.
My fee is blank X percentage. And you agree to that as a buyer. Mm-hmm.
When I submit the offer, I can submit the offer in a way that's written that,
you know, let's say there's a $500,000 home.
I'm submitting a $500,000 offer, but I'm requesting a seller's concession.
(09:37):
And this is all, this all has to be done transparently with the buyer.
You can't just build it in there, right?
You have to get agreement that this is the approach that you're taking.
If the buyer would prefer not to come out of pocket in addition to their down
payment, they can request a seller's concession from the seller to help cover
(09:59):
their closing costs, which includes your commission.
And I think we're going to see a lot of that potentially come up,
which ultimately gets us back to the same spot we were,
except the money will flow from the seller to the buyer, to the buyer's agent,
as opposed to from the seller to the listing agent, to the buyer's agent. Does that make sense?
(10:19):
It makes sense to me. And I think it was explained well enough where it makes
sense to the general public too. Yeah. Yeah.
There's some really important reasons for that. And there's some things down
the road that are going to get complicated with that.
And there's some, you know, backend stuff that, that, that has an impact on,
(10:40):
but more importantly, the commission hasn't been agreed upon upfront.
So the seller can now very easily say, well, I'll do that deal,
but I'll only give you X, you know, concession.
Cause we see that happen a lot with concessions right now.
We negotiate concessions. We negotiate prices constantly. And if that seller
(11:01):
feels that I don't want to give this much of a concession to help cover your
commission, they can negotiate it and it'll be far easier for people to negotiate and to think about.
About what they're going to be paying. Yeah. And the most important thing is,
like you said, it's transparent.
Everything's out on the table. Yep. You know, here's what we're doing.
Here's how we're doing it. Here's where the money's going to be paid out from.
(11:21):
Settlement statement is going to be essentially before the normal settlement
statement, which people see at the end of a closing.
Yep. You know, everything's going to be in front of everyone now,
which is great. It is great news.
In addition to that, the listing agent can still offer a portion of their commission to the buyer's agent.
So that has not changed. What has changed is putting it into an MLS owned by
(11:48):
NAR and being advertised.
Which brings to mind the question, and I know this wasn't scheduled,
so I'm going to hit you with one. Yep. What do you think is going to happen to MLSs?
So for me, MLSs are absolutely critical to the industry. Okay. Okay.
MLSs are a single point of truth and forget about real estate agents and being
(12:14):
able to properly price homes, right?
Which, you know, MLSs themselves have their own governing standards.
You cannot, if you were to put your home for sale on Zillow as a for sale by
owner, you don't have to put accurate facts.
I mean, you're supposed to, but that home seller, You know, there's no regulatory feature there.
(12:37):
There's no watchdog making sure that this information is accurate.
And when we sell homes online.
Accurate data is absolutely critical to understanding what's happening in the
market. We need to understand how fast homes are turning.
We need to understand our inventory supply, how many months inventory we have.
We need to understand what the prices are doing.
(12:59):
Imagine being an appraiser without MLS and trying to protect a bank from somebody overpaying.
They would have to go on to multiple sources and try to piece together inaccurate
information, understand the value of a house. It would all come crashing down.
It would all come crashing down without MLS. That's great. Great answer.
Yeah. So for me, MLS is an absolutely critical integral part of our industry
(13:22):
and we have to protect them at all costs. Yeah, man, I agree.
I agree because otherwise it really turns wild west and these third party commercial
websites are then ruling everything and they've got ulterior motives.
And how would a buyer know if that's fair market value or not,
whether or not they can afford it?
Absolutely. That's not not a good plan sure and and
(13:43):
also how would they know any any facts you know
about the home you know what people don't really understand i
think a lot of times is that whenever we start a listing to put it on mls the
first thing we do is populate stuff from the tax records themselves yeah you
know hoping indeed that the square footage is accurate and most realtors you
know if you've been the real estate agents if you've been in the business for
(14:04):
quite some time can't assess if if something seems wrong,
you know, so not to say there's never an error, but at least,
you know, something is keeping us legit.
It's keeping records as accurate as possible. I'm not, again,
I'm not saying that MLS is 100% accurate all the time, but there is a report
an issue button on every listing and we're helping to police it ourselves, right?
(14:29):
We're helping to, you know, other realtors saying, Hey, you know,
the taxes are listed at a thousand dollars.
I Because other real estate agents
will call you on it should you put misinformation out there. Absolutely.
Absolutely. So there is a point of truth with MLS, but we won't be able to put
broker compensation on there anymore.
(14:49):
But if I am collecting a percentage and I would like to offer that buyer's agent
a portion of my commission, I am still allowed to do that.
And I can advertise that in other
platforms like my own website or my own marketing or anything like that.
I can say, hey, you know, agents out there, if you bring a buyer,
(15:11):
I'm going to pay you X, you know, I just can't put it in MLS because that is
the standardization of commissions,
which, which this whole lawsuit is trying to get away from.
And I think it's like we said, it's a good thing. Great explanation as well.
Good job, Mike. Thank you. Ah, it's only second due.
So uncoupling, uncoupling, decoupling.
(15:35):
I have a feeling if I keep pushing this, you and I will be uncoupling as well.
Oh man. So, so,
Listen, you know, this is going to develop into a variety of things.
The future of real estate representation, as we have mentioned, is going to change.
Simply put, look for more options. Look for more awareness as to how our industry is operating.
(16:03):
Buyers and sellers should be interviewing more agents and getting more options.
And you will see what may have seemed very common in the past,
a big difference between options going forward.
Yes. And that's great. I mean, who doesn't want options? It's really awesome.
(16:23):
And that doesn't mean the cheapest is the best, right? No.
I mean, most people don't go and buy the cheapest car on the lot or the cheapest
suit available or look for the cheapest doctor, you know, you're still,
but you're going to be able to weigh the price value comparison.
You know, a mentor once told me a long time ago is price is what you pay,
but value is what you get.
(16:45):
And it's a good one, right? It's a really good one. I don't have a moment to
write it down. I thought you were going to actually quote me on something.
That's why I was waiting with bated breath. Price is what you pay,
value is what you get. So we're not advocating for the lowest price we're advocating for,
What value price equation is right for you in your situation?
(17:06):
And yeah, so again, NAR settled a lawsuit last week. They're paying out $418 million.
They are no longer going to allow us to advertise buyer compensation on MLS
or on any NAR-owned MLSs and will require buyer agreements being signed prior to going into houses,
(17:26):
which by the way, side note, I think is going to cut down on a lot of frivolous
buyer activity right now. You can just pick up the phone and say,
I'd like to see this house.
And a hundred agents will just run and show you the house without doing any
sort of vetting, without really kind of making any sort of agreement because,
Hey, maybe you'll buy it.
And I'll just walk into a 2.5% commission or whatever's on there,
you know, and, and, and, and that's going to stop because we're not going to be allowed to do it.
(17:49):
Exactly. And I can tell we're wrapping up. So I just have to say something as
well to real estate agents out there. Cause I know we have some that listen to this podcast.
If you have any questions that you're not getting answers to.
And even if you feel like i can't go to my management i can't talk to somebody
i don't want to look stupid because i i should be reading up on this myself
which you very well should.
(18:09):
But feel free to reach out been answering questions since friday and i intend
to answer a lot more and i'll do my very best to give you accurate information
and so well michael we don't know everything but if we can help in any way to
explain it and mostly don't panic panic.
This is not a panic situation. This can be a good thing.
Do not take misinformation off the internet and make it your own. Yeah.
(18:35):
And I would agree. Don't, don't take misinformation, making your own,
but at the same time, don't take it lightly.
It's going to change and you need to be prepared, which by the way,
a big part of this that we haven't even mentioned yet.
Most of these changes are slated to go into effect in July, middle July.
All right. So that That gives everybody time to replan their agreements,
(18:59):
replan their compensation models before, you know, actually putting them into practice. Right. So.
By July, we have to be ready. In fact, I would argue that a lot of agents are
getting out ahead of it and starting new compensation models now just to see
what's working, what's not, what the reaction is. Not a bad idea at all.
Absolutely. And yes, Rick and I are happy to answer any questions.
(19:21):
National Association of Realtors
website is actually a phenomenal resource that breaks things down.
They are doing their absolute best to help demystify what's actually happening
or unmystify Is that how you would put it, Rick?
Okay. You win. That was brilliant.
(19:42):
To demystify a lot of this stuff and help everybody understand.
And I highly recommend checking them out.
So with that in mind, I appreciate all of you and looking forward to keeping
you posted as things progress.
Anything else, Rick? Thank you all so much for listening.
We hope we added value. you michael constant team banks here with rick brescia
(20:07):
and giving you the information that you need click subscribe give us a five-star
review we'll see you around the valley yeah don't click unsubscribe.
Music.
Welcome back everybody to part two of our National Association of Realtors Settlement Podcast.
If you haven't listened to part one, go do that now.
It's filled with information that's going to help make this second part make
a lot more sense. So sit back, relax, and enjoy.
One, two, three, four. Welcome to Hudson Valley's Real Estate Explained,
(00:23):
your getaway to understanding real estate. Whether you're buying your first
home, an experienced investor, or just real estate curious, this is the place for you.
So dive in with us as we unravel the intricacies of property deals and investment
strategies guided by industry experts.
We're demystifying Hudson Valley Real Estate together.
Let's go. The need for buyer's agency is, I think, stronger now than ever.
(00:46):
I mean, I guess it depends on where you are in the country too.
Um, you know, we're still in a pretty hot market.
I certainly wouldn't want myself or, or, you know, my kids or anyone being out
there buying a home right now without the advice of a very knowledgeable buyer's agent.
Yeah. You know, the transact, most of the transactions I see taking place out
(01:09):
there include a lot of emotion, a lot of stress, some anxiety.
And a lot of times people make, you know, bad decisions under stressful circumstances. Sure.
Having an advocate, right? This is different than an appraiser or,
you know, somebody running title.
Having an advocate to help you think through your decisions in a very complex,
(01:33):
very stressful situation is a huge value add.
However, I will add this.
Many transactions have different levels of requirements for buyer's agents,
different levels of stress, different levels of complexity.
And as we look onto the impacts of buyer agent compensation,
(01:55):
I think you're going to see a whole lot of new compensation models coming up.
I think there's going to be a great change in how buyer agents,
because as we said previously, it was very simple.
We looked on MLS. We saw what the other agent was offering.
That number was the vast majority of times a percentage that we were very used to seeing.
(02:17):
It was very, I should say, common to see very similar numbers.
Not standardized, but common.
And we came to rely on and accept that.
Now, when we sit down before showing a house, we're going to ask the buyer to agree to compensate us.
(02:38):
We can still collect via the transaction from the seller in the form of a concession,
which I'll break down in a moment.
The listing agent will still be able to share their commission if they want
to, but it will not be a guaranteed thing listed in the MLS.
It will be something that is negotiated every single time.
(02:59):
That's correct. So.
So I think that there is the potential to see a whole lot of different buyer
agent compensation models.
We're already seeing people talking about things like flat fees will still,
I'm sure there will still be percentage based compensation models.
There could be hourly rate compensation models. You want to hire an advocate,
(03:21):
you know, to, you know, help you out for a few hours. You can probably do that. And why not?
Yeah. Yeah. It's actually kind of exciting to see how this is going to play
out, you know, if I'm being honest, uh, you know, I know I started with the
sky is falling, but I never truly believed the sky was falling.
No, I think it's going to open up a lot of options for buyers that maybe don't
(03:42):
want as much, maybe they've purchased seven or eight homes.
You know, maybe there's an investor that, you know, doesn't need a lot of help,
but needs a little bit of help and they're going to pay a per showing fee, you know what I mean?
Or, you know, run me a market analysis on this, you know, and we'll pay $250 or I'm making things up.
(04:03):
But, you know, I think that there could be a whole plethora.
You like that word? Plethora.
Isn't it un-plethora? De-plethora of compensation models.
I think ultimately it's also going to make for substantially better real estate agents.
Absolutely. Absolutely. Because being able to communicate that value and set
(04:27):
up a commission structure, if you think about this, most people get their start
in buyer representation and not seller representation.
I know for a fact they do. Because there, I mean, there's probably several reasons for that.
Not every agent starts off as a buyer. I mean, there are agents that start off
listing homes before helping people buy, but the vast majority of people start
(04:49):
off as buyer's agents. And the reason for that is that.
It's easier in a nutshell, it's easier to meet a buyer, show them a house,
you know, and try to help them.
And, and, and I do believe that most agents do want to help their clients,
but you don't necessarily need to have a value proposition because you're not
(05:10):
putting the buyer on the hook for any sort of compensation. You're not asking for anything.
You're just trying to help them. And if they end up buying a house,
you walk into sometimes a very substantial commission.
Of course. Of course. So what's going to happen now is you're not going to be
able to show that house until you've asked for permission to be compensated by that buyer.
(05:30):
And buyers, get ready because you're going to have to, you know,
well, you're not going to have to, but you're going to be asked to sign buyer's
agreements in the very near future.
So you're probably going to want to interview a few going forward and you're
going to want to compare, because if you're being asked to pay a percentage
or a flat fee or whatever, you want to know that what you're getting for what
(05:51):
you're going to pay is going to be worth it.
Yeah, absolutely. You know, and also, you know, we're coming out of an,
a cycle, you know, unfortunately the COVID cycle. Yeah.
And a lot of agents did become door openers. and a lot of people jumped into
the industry that maybe would not have jumped into the industry.
They heard how lucrative it was. I was managing a big brokerage at the time,
(06:14):
so I remember the amount of agents that came in during that time period.
And they were, I'm going to say because of the way that they entered and how
quickly they entered, they may not have been as educated because we weren't
getting together. We weren't in person.
We were doing a lot of online and team meetings and, you know,
(06:35):
the stuff that was over the internet. Yeah.
And then they were going out to meet clients. And basically they're opening
doors as, you know, especially in our market area, once again,
it might be a little specific to, or regional.
You know, people were legitimately, and I'll use the term again because a friend
of mine gets a kick out of it, throwing their wallets on the lawn in order to obtain a home.
(06:57):
And at that point, you were opening a door. Yep.
And, you know, and putting an offer in, basically. So they knew how to write
offers, but did they really?
Yeah. Did they know how to write the best offer?
They just jumped into the business. And it's not saying anything against new
agents. Sometimes new agents can be amazing right away.
Yeah. But it is saying there was a flood of them, and I think you're going to
(07:18):
see some of them exiting the business as quickly as they came in at this point.
Yeah, and the way buyer representation is going to change, I think you're absolutely right.
You're going to need to provide value.
You're going to be asking for compensation.
And if you're not providing value right now, you're probably very nervous about
(07:40):
this. If you're used to answering a call from Zillow, showing a house and crossing
your fingers that they buy it, this is really, really bad news for you.
Yes. Agents, step up. It's time to show your worth is I think what we're saying.
Absolutely. So ultimately what this is going to lead to is transparency and compensation.
This is going to lead to transparency and responsibilities.
(08:01):
This is going to lead to transparency and advocacy. It is going to make the
buyers far more aware of their rights,
far more aware of the compensation model and make them more intricate into the,
get more intricate into the process than ever before.
And this is, this is a good thing. This is a good thing for good realtors and for the consumer.
(08:25):
This is not something that I'm, I'm, I'm worried about. I'm very excited about it like you are.
So increased transparency, new business models will shape out of this.
So you'll be able to pick different things.
What else here? And yeah, so the future of real estate, real estate representation,
what is that going to look like?
So I do want to dive into, you know, we alluded to the fact that the seller
(08:49):
can still pay commission.
The listing agent can still pay commission. The buyer could pay.
There's still a lot of ways that fees can be paid. So I want to kind of analyze
those really, really quickly. Sure.
So I sit down with buyer and I say, you know, let's work together to buy a house.
Here's my value proposition. Here's why I think you should hire me.
(09:12):
Here are all the things that I bring to the table.
My fee is blank X percentage. And you agree to that as a buyer. Mm-hmm.
When I submit the offer, I can submit the offer in a way that's written that,
you know, let's say there's a $500,000 home.
I'm submitting a $500,000 offer, but I'm requesting a seller's concession.
(09:37):
And this is all, this all has to be done transparently with the buyer.
You can't just build it in there, right?
You have to get agreement that this is the approach that you're taking.
If the buyer would prefer not to come out of pocket in addition to their down
payment, they can request a seller's concession from the seller to help cover
(09:59):
their closing costs, which includes your commission.
And I think we're going to see a lot of that potentially come up,
which ultimately gets us back to the same spot we were,
except the money will flow from the seller to the buyer, to the buyer's agent,
as opposed to from the seller to the listing agent, to the buyer's agent. Does that make sense?
(10:19):
It makes sense to me. And I think it was explained well enough where it makes
sense to the general public too. Yeah. Yeah.
There's some really important reasons for that. And there's some things down
the road that are going to get complicated with that.
And there's some, you know, backend stuff that, that, that has an impact on,
(10:40):
but more importantly, the commission hasn't been agreed upon upfront.
So the seller can now very easily say, well, I'll do that deal,
but I'll only give you X, you know, concession.
Cause we see that happen a lot with concessions right now.
We negotiate concessions. We negotiate prices constantly. And if that seller
(11:01):
feels that I don't want to give this much of a concession to help cover your
commission, they can negotiate it and it'll be far easier for people to negotiate and to think about.
About what they're going to be paying. Yeah. And the most important thing is,
like you said, it's transparent.
Everything's out on the table. Yep. You know, here's what we're doing.
Here's how we're doing it. Here's where the money's going to be paid out from.
(11:21):
Settlement statement is going to be essentially before the normal settlement
statement, which people see at the end of a closing.
Yep. You know, everything's going to be in front of everyone now,
which is great. It is great news.
In addition to that, the listing agent can still offer a portion of their commission to the buyer's agent.
So that has not changed. What has changed is putting it into an MLS owned by
(11:48):
NAR and being advertised.
Which brings to mind the question, and I know this wasn't scheduled,
so I'm going to hit you with one. Yep. What do you think is going to happen to MLSs?
So for me, MLSs are absolutely critical to the industry. Okay. Okay.
MLSs are a single point of truth and forget about real estate agents and being
(12:14):
able to properly price homes, right?
Which, you know, MLSs themselves have their own governing standards.
You cannot, if you were to put your home for sale on Zillow as a for sale by
owner, you don't have to put accurate facts.
I mean, you're supposed to, but that home seller, You know, there's no regulatory feature there.
(12:37):
There's no watchdog making sure that this information is accurate.
And when we sell homes online.
Accurate data is absolutely critical to understanding what's happening in the
market. We need to understand how fast homes are turning.
We need to understand our inventory supply, how many months inventory we have.
We need to understand what the prices are doing.
(12:59):
Imagine being an appraiser without MLS and trying to protect a bank from somebody overpaying.
They would have to go on to multiple sources and try to piece together inaccurate
information, understand the value of a house. It would all come crashing down.
It would all come crashing down without MLS. That's great. Great answer.
Yeah. So for me, MLS is an absolutely critical integral part of our industry
(13:22):
and we have to protect them at all costs. Yeah, man, I agree.
I agree because otherwise it really turns wild west and these third party commercial
websites are then ruling everything and they've got ulterior motives.
And how would a buyer know if that's fair market value or not,
whether or not they can afford it?
Absolutely. That's not not a good plan sure and and
(13:43):
also how would they know any any facts you know
about the home you know what people don't really understand i
think a lot of times is that whenever we start a listing to put it on mls the
first thing we do is populate stuff from the tax records themselves yeah you
know hoping indeed that the square footage is accurate and most realtors you
know if you've been the real estate agents if you've been in the business for
(14:04):
quite some time can't assess if if something seems wrong,
you know, so not to say there's never an error, but at least,
you know, something is keeping us legit.
It's keeping records as accurate as possible. I'm not, again,
I'm not saying that MLS is 100% accurate all the time, but there is a report
an issue button on every listing and we're helping to police it ourselves, right?
(14:29):
We're helping to, you know, other realtors saying, Hey, you know,
the taxes are listed at a thousand dollars.
I Because other real estate agents
will call you on it should you put misinformation out there. Absolutely.
Absolutely. So there is a point of truth with MLS, but we won't be able to put
broker compensation on there anymore.
(14:49):
But if I am collecting a percentage and I would like to offer that buyer's agent
a portion of my commission, I am still allowed to do that.
And I can advertise that in other
platforms like my own website or my own marketing or anything like that.
I can say, hey, you know, agents out there, if you bring a buyer,
(15:11):
I'm going to pay you X, you know, I just can't put it in MLS because that is
the standardization of commissions,
which, which this whole lawsuit is trying to get away from.
And I think it's like we said, it's a good thing. Great explanation as well.
Good job, Mike. Thank you. Ah, it's only second due.
So uncoupling, uncoupling, decoupling.
(15:35):
I have a feeling if I keep pushing this, you and I will be uncoupling as well.
Oh man. So, so,
Listen, you know, this is going to develop into a variety of things.
The future of real estate representation, as we have mentioned, is going to change.
Simply put, look for more options. Look for more awareness as to how our industry is operating.
(16:03):
Buyers and sellers should be interviewing more agents and getting more options.
And you will see what may have seemed very common in the past,
a big difference between options going forward.
Yes. And that's great. I mean, who doesn't want options? It's really awesome.
(16:23):
And that doesn't mean the cheapest is the best, right? No.
I mean, most people don't go and buy the cheapest car on the lot or the cheapest
suit available or look for the cheapest doctor, you know, you're still,
but you're going to be able to weigh the price value comparison.
You know, a mentor once told me a long time ago is price is what you pay,
but value is what you get.
(16:45):
And it's a good one, right? It's a really good one. I don't have a moment to
write it down. I thought you were going to actually quote me on something.
That's why I was waiting with bated breath. Price is what you pay,
value is what you get. So we're not advocating for the lowest price we're advocating for,
What value price equation is right for you in your situation?
(17:06):
And yeah, so again, NAR settled a lawsuit last week. They're paying out $418 million.
They are no longer going to allow us to advertise buyer compensation on MLS
or on any NAR-owned MLSs and will require buyer agreements being signed prior to going into houses,
(17:26):
which by the way, side note, I think is going to cut down on a lot of frivolous
buyer activity right now. You can just pick up the phone and say,
I'd like to see this house.
And a hundred agents will just run and show you the house without doing any
sort of vetting, without really kind of making any sort of agreement because,
Hey, maybe you'll buy it.
And I'll just walk into a 2.5% commission or whatever's on there,
you know, and, and, and, and that's going to stop because we're not going to be allowed to do it.
(17:49):
Exactly. And I can tell we're wrapping up. So I just have to say something as
well to real estate agents out there. Cause I know we have some that listen to this podcast.
If you have any questions that you're not getting answers to.
And even if you feel like i can't go to my management i can't talk to somebody
i don't want to look stupid because i i should be reading up on this myself
which you very well should.
(18:09):
But feel free to reach out been answering questions since friday and i intend
to answer a lot more and i'll do my very best to give you accurate information
and so well michael we don't know everything but if we can help in any way to
explain it and mostly don't panic panic.
This is not a panic situation. This can be a good thing.
Do not take misinformation off the internet and make it your own. Yeah.
(18:35):
And I would agree. Don't, don't take misinformation, making your own,
but at the same time, don't take it lightly.
It's going to change and you need to be prepared, which by the way,
a big part of this that we haven't even mentioned yet.
Most of these changes are slated to go into effect in July, middle July.
All right. So that That gives everybody time to replan their agreements,
(18:59):
replan their compensation models before, you know, actually putting them into practice. Right. So.
By July, we have to be ready. In fact, I would argue that a lot of agents are
getting out ahead of it and starting new compensation models now just to see
what's working, what's not, what the reaction is. Not a bad idea at all.
Absolutely. And yes, Rick and I are happy to answer any questions.
(19:21):
National Association of Realtors
website is actually a phenomenal resource that breaks things down.
They are doing their absolute best to help demystify what's actually happening
or unmystify Is that how you would put it, Rick?
Okay. You win. That was brilliant.
(19:42):
To demystify a lot of this stuff and help everybody understand.
And I highly recommend checking them out.
So with that in mind, I appreciate all of you and looking forward to keeping
you posted as things progress.
Anything else, Rick? Thank you all so much for listening.
We hope we added value. you michael constant team banks here with rick brescia
(20:07):
and giving you the information that you need click subscribe give us a five-star
review we'll see you around the valley yeah don't click unsubscribe.
Music.
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