Brett and Larry's Podcast #8 with Alan Kinzel (Ep 566)

Alan Kinzel talks about the new Real Estate Commission Law

Episode Transcript

(00:00):
A pirate and a poet, apawn at a king. I've been up
and down and over and out,and I know one things. Each time
I find myself lamb fat on myface. I just picked myself and kIPS

(00:21):
back in the race. That's life. It's Thursday night. It's five o'clock
and we're on the Brett and Larrypodcast show, and we come to you
every week from Cornadle Live and thenwe put it on streaming all over later
that you can watch. So tonight, as you can see, Brett is

(00:43):
not here. I would like tosay that he's out shooting a movie with
Arnold Schwarzenegger, but that would notbe the truth. He's under the weather
a little bit. Folks. Evenmister Universe, who's in such great health
and trains all the greatest people tomake them healthy, got a little bit
under the weather tonight. Get backquick, Brett. Maybe you're watching.

(01:07):
If you are, we love you. Get well as soon as you can.
We're gonna do it tonight without you, So before you, Brett,
we're gonna try to do it withoutit before we go on. I just
got this from Richard Bailey, themayor of Coronado, says do you want
to sewage update? The House andthe Senate agree to another one hundred and

(01:29):
fifty million dollars in funding, ontrack to break ground this year. So
a little progress, folks, maybebecause of the big dump and because of
all the great work that Richard Bailey, our mayors doing, John Duncan,
the councilman, Scott Peters, They'reall doing wonderful work. All the kids

(01:51):
or writing letters. It's really goingand we appreciate all the efforts and we
are finally seeing some progress. SoI'm not gonna move yet. I love
this town too much. So tonightI got one of my greatest friends of
all time, maybe the greatest.I got Alan Kinsell. He is the
creator of Coronado's Got Talent, andhe's also a super real estate agent.

(02:15):
In fact, he just got doneselling a house for like thirteen million dollars
and I think even they paid morethan an asking price. This is the
kind of real estate guy this guyis. Anyway, the huge news is
this is one of the biggest newsstories in the whole California right now.
That's why we got it on theBretton Larry Show, is that the realtors

(02:37):
is at the front page of theBusiness section in the Wall Street Journal,
Realtor's pack up ends commissions. Thisis really crazy. Nobody understands it.
That's why we got Alan on tonightto explain it to us. And now
the normal commissions that everybody's been payingover the history of the real estate world

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is going to change now the buyersmoney. I don't even know what it
is. Tell our audience, AlanKeinsel, superagent, what it's a new
Thanks, he's a great introduction.Larry. First of all, that was
unbelievable. But to start out,I just want to simplify everything. Yeah,
it's a very complex situation. There'shundreds of pages of documents in the

(03:20):
settlements, et cetera. But I'mgoing to simplify it for you very very
clearly. So how we got here, that's the first question. So in
twenty nineteen, there was a classsection lawsuit by about five hundred thousand sellers
in the state of Missouri, andthey filed this class section lawsuit saying that,
well, hey, when we didour listing agreement, there was a

(03:43):
requirement that we had to offer abuyer's agent commission. Now, on top
of what our listing agent commission was, so we're paying our listing agent to
do his job, but we're alsorequired to do a buyer's agent commission.
Now, not that we're going toargue the merits of the case. Any
r would say, yeah, everything'snegotiable. You could offer it a penny
or a dollar or whatever it isto compensate appropriately to bring you know,

(04:06):
a qualified agent into the picture.But the argument is that that the buyers
were never you know, in theroom to negotiate this or or whatnot.
The sellers had already determined this throughtheir listing agreement, and so the argument
is that prices were artificially inflated becauseif the buyers had to negotiate their own

(04:28):
commission with the buyer's agent, thentheoretically, with more competition, it could
be lower than what was offered ina cooperative agreement in MLS, So they're
offering that. Their their argument isthat there's damages such that, you know,
potentially between what a free market offeringwould be and what it was offered,
you know, in this fixed cooperationagreement. So that's kind of how

(04:50):
we got here. And the lawsuitwent in Missouri and the jury found that
the realtors were like, they awardeda judgment of one point eight billion dollars
and when you use antitrust laws,that could be tripled. So it's over
a five billion dollar liability. Sothus, you know, with this going

(05:13):
on in the threat of a lotof copycats that could come from it,
even though a lot of people,including the NAR, don't feel like they
were guilty of anything or or itfoullowed with anything, it just makes sense
to settle before all these copycats andeverything keep ballooning and growing into more lawsuits
that they people have to defend.So everyone has settled now except for Berkshire

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Hathaway and there's also a couple.You know, there's about one hundred other
brokers that are above the two billionthat are excluded from the NAR settlement that
happened this week. So the NRAsettled NAR settlement. What that does is
that releases all the agents that area member of the NAR, except for

(05:57):
Berkshire Hathaway agents because Berkshire has wayis still fighting this independently. So all
the other members' agent members are released. But there are some brokers that there
still have some liability that are goingto have to settle up potentially or continue
to fight the suit one of theother. All right, well, let's
break it down into like Layman's terms. Okay, so before a couple months

(06:19):
ago or right now, let's sayeven so you go and list the house
and you charge him like five orsix percent, right, yeah, it'd
be five or six percent. Let'spretend. Okay, so you come to
my house and I signed listing forfive percent, right for Compass in Alan
Kinsel. All right, and thenyou if you don't sell it on your

(06:39):
own, then a buyer, anotherbuyer comes in through another broker, and
he would get two and a halfpercent. You get two and a half
percent, right, Yeah, whateverwas offered, it was offered in the
MLS as a cooperative percent. Nowsome people would keep three percent and offer
two percent or some number. Butwhatever the number was, it was offered
in the MLS and predetermined advertising theMS. So now the way I'm reading

(07:01):
different stories is that maybe nobody evenknows what it is. That's where we're
here to talk about. Maybe nowwhen you come to my house, I'm
just going to sign up for twoand a half percent, and then the
buyer is going to either go throughsome other broker or you or whatever,
and they're going to have some kindof commission. Also, it could be
five thousand, it could be twoand a half. Tell us how that's

(07:25):
going to work. Well, youknow, the theory is that their arguing
is commissions may increase or decrease orwhatnot. It'll be different than what they
are now because they'll be negotiated bythe buyer with their buyer's agent. So
let me just simplify things. Thebig three big things that came from the
nar settlement, which of course hasto be approved by the courts. But

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all this that we're talking about isgoing to go in effect in mid July
mid July, so it's not aneffect today, but it's coming up and
it's coming up very soon. Sothe first thing that they did was decouple
the commissions. So when you're negotiationin your home for the list your home,
you're going to be negotiating what yourlisting commission is going to be.
What you're going to offer listing commission. Now, you could legally still offer

(08:13):
seller concessions. The seller concessions couldcover closing costs, prepaids, things of
that nature, but it won't bea commission or even described or mentioned as
a commission for a buyer's agent fee. Okay, the second thing, number
two is there will be no mentionor no offering of an of a buyer's

(08:35):
agent commission in the MLS. Ever, again, that was agreed to in
the settlement that you know when you'rewhen you do your listening group, there's
no mention that we're going to paythat they're going to pay a buyer's agent
commission and anything. And the thirdthing that's really important here is it requires
a buyer's agent to have as signedagreement with their buyers. Now, they've

(09:00):
been encouraging that for years and yearsand years, and a lot of the
best agents have always done that.And as we go through this process,
but sometimes we just we went on. We just knew we're good, and
we knew we had a relationship,and we would just work, you know,
without this agreement. But now it'sactually law, it's going to be
required that everybody has this agreement signedand it spells out exactly what the terms

(09:22):
are. So Larry, if I'mrepresenting you as your buyer's agent, and
I'm saying my fee is two anda half percent, and you agree to
that. Now, if in fact, you know, through the seller concessions
or whatnot, or any other wayI get paid part of that two and
a half percent, that reduces theamount that you would have to pay out
of your pocket. Now, somepeople are arguing that maybe the lenders can

(09:46):
start financing some of that fee intotheir loans, but we haven't got there
yet. There's a lot of thingsthat are being worked out, doing work,
they're trying work around, right,Yeah, there are some because there's
a lot as we'll talk about latertoo, there's some unintended insequences of the
settlement that inadvertent things that are haveto be addressed. So I think that
a lot of one of the goodthings is that you'll probably lose a lot

(10:09):
of real estate agents that will getout of business. And what about the
referral agents. There's people that justmake a living as referral agents. For
a buyer, that's going to probablybe go a way, now, don't
you think. Yeah, So ifyou refer obviously a listing well listening,
then that would be fine as abuyer, you know it would. It
would. That's one of the thingsthat's going to have to be a dressed

(10:30):
yeah, it's going to be addressedor maybe a percentage of or some number.
Now, it's not really twenty twentytwenty five percent is typical. I
mean you can't say typical or commentor anything really, but twenty five percent
I've paid more often than not,So that may go away. Now.
The other thing they're worried about isthat it seems complicated into buying it a
listing end, seems cut and dry. In fact, it probably could save

(10:52):
money, right because if you cometo my house, I sign up for
only two and a half percent insteadof five, then I say, I
don't care about the buyer thing.I'm out of it. I'm just paying
two and a half percent. I'llpay a few closing costs. That's it.
So I could actually end up savingtwo and a half percent, right,
you could. But you know,you have to realize that the buyer's
agent, you know, especially aprofessional buyer's agent, that's what NAAR is
trying to protect, needs to getpaid in some way, and they're going

(11:15):
to understand they're consultants. So it'seither going to come. It's going to
come one way or the other.It's going to come from your buyer or
it's going to come from concessions ofsome sort or you know, some some
way through a low of financing orsome way. The buyer's agent's going to
have to get compensated. The questionis you know how much? And that's

(11:35):
negotiable between the buyer's agent and thebuyer, just like commissions between the listing
agent and the seller are. Andthey've always been negotiable, negotiable, and
that's what the NAR will stand bythat they've always been negotiable. But now
that that commissions are decoupled, you'renegotiating the value of the buyer's agent and
the listing separate from the selling agentand the listing or the seller and the

(11:58):
list agent. That's a good wayto put its. Commissions are being decoupled.
That's very good, right. Sothey're totally separate now and they're both
negotiated for what the value is.So as a buyer's agent, I am
very well prepared to explain the valuethat I bring to the transaction and why
I think I'm worth the fee thatI what do you tell them? Well,

(12:20):
so I say I don't want topay two and a half percent.
Everything's changed now, ellen, OrI want to pay ten thousand dollars flat.
So what do you tell them,Well, it depends on the situation
because in real estate, the onething that I've found out a long time
ago was that every single transaction,every single person's situation is different, and
you have to take all that intoaccount when you're looking at a situation and

(12:43):
how much advice and consultation you're goingto be giving and all what you're going
to be bringing to the table.But what I can tell you is I
certainly bring a considerable amount of valueof the table when I'm representing a buyer
in every facet from the negotiation toinspection, con you know, contracts,
everything that we're bringing to the table, peace of mind. And the one

(13:05):
thing I think, you know,the industry as a whole would like to
stay out of is absolutely more andmore dual representations because that's where a lot
of the lawsuits, you know,if you ask a real estate attorney come
from, right price. So it'sreally good to have a separate representation by
a buyer's agent that's separate than alisting agent. I know, you bring

(13:26):
a lot to the table that's readycall you to super as. So Allen's
information is scrolling on the bottom ofthe screen. Folks, you got his
phone number there Compass real Estate,and that's how you get a hold of
Allen. He does Coronado, andhe does over the Bridge, he does
North County, he goes way upas far as California goes right, Allan,

(13:46):
Oh, he just did one inIllinois, right, because we're involved
in the Ell and Illini right alittle bit. But you know, so,
yeah, Palm Springs, Palm Springs. We've actually done Palm Springs,
but earlier where we focus our timeand energy is where we can give the
most values in San Diego County.Yeah. So anyway, I think that

(14:07):
you explained it really good, butI think that it's going to be really
misunderstood in the beginning of July.It is. I'm not sure that my
prediction is long term. I don'tthink things are going to change drastically for
a while. And I think,you know, certainly, if they think
the prime home prices are going tocome down because of possibly less commissions being

(14:31):
paid at which is one of thearguments in the original lawsuit, I don't
think that that's going to happen.I mean, people are looking at compts
what people It's always been as aneconomist, it's always been a situation where
people have offered and paid what theycan pay to be the highest bidder for
home, regardless of where the feesand commissions are coming from. So I

(14:52):
don't think that's going to change.But what they do have to address is
a couple of things that are inavertingof fallouts of this, and one of
these is if you're a VA buyer, then according to the law and the
way VA loans are, they cannotpay additional fees for services, et cetera

(15:13):
out of their pocket. So theylegally could not pay for a buyer's agent
to represent them out of their pocket. It's it's hard to say, you
know, either the VA is goingto have to make some adjustments and what
they allow and what goes on,or they'll be you know, because I'm
certain that you know, you lookat the lawmakers, they're not going to

(15:33):
want the veterans to be excluded fromhaving some of the best representation that you
could possibly get, you know,in the United States by having a good,
experienced buyer's agent because they can't affordto pay one, and they get
nobody's gonna work for free. Thisnationwide to no, right, not just
California, right, Yeah, it'snationwide. So the National Association of Realtors
is about a million real estate agentsthat are under release from the settlement.

(15:58):
If it goes through, it's ittakes a couple of months usually for a
court to look at settlements like thisand approve them. But either way,
these rules are going to effect midJuly nationwide. So you brought up the
point and why aren't prices coming downyet? Interest is like over over seven
percent? Why enter price is comingyou know, we're equilibrium, Larry.

(16:18):
So there's not that many new there'snot that much supply on the market that's
sitting there and sitting there for periodsof time. Matter of fact, even
on this thirteen million dollar home youmentioned, I had multiple offers. So
you know, if you're marketing athome appropriately and it's priced appropriately and you're
doing everything you should do, it'snot sitting for a long time in this

(16:41):
market. And so until that happens, until you got home sitting for one
hundred and twenty days or longer,we're not going to see price reductions.
And we're not even close to beingthere as a matter of fact, I
talked to Elenda today who said he'sbusier than ever because people have just it
takes a little bit of time whenyou have a shot to the market.
We just had a shock to themarket where we went from the three percents

(17:03):
to the seven percents, and fora while when it happens, a lot
of people sit on the sidelines untilthey realize that the new market is the
new normal. And that's where we'reat. The new market's new normal.
A lot of buyers are stepping backin, and I think it's wise for
them to do that, because ifyou sit it wide and wait for interest
rates to come down, they maynot come down. And if they do

(17:25):
come down, that's when you're goingto have another florry of buyers come in
and price increases. So it's anice market to where you can buy some
sanity. Always refinance if it comesdown. There's no restriction against that.
All right, Well, anything elseyou want to say before we close it
up. You know, I'm reallyexcited about what the future holds, and

(17:47):
what the future holds in real estate. You know, there's a lot of
doom and gloom, forecasts and predictionsabout everything I think that you know the
industry as a whole, while Idon't. You know, you can argue
about whether you agree or disagree withyou know, the arguments made in all
these cases. It is what itis, and we are decoupling. So
we are going to have listing valuepresentations that purely talk about the value you

(18:11):
bring as a listing agent. Youto have purely conversations about what you bring
as a buyer's agent, and thecompensation will be negotiated the way free markets
say they should and always always wellbe, and that's their new normal.
All right, Well, we alwaystalk about a few other things. So
you got to take Bread's place rightnow. Okay, okay, So what
do you think about March madness.Well, March madness, so there had

(18:34):
you know, there's been a coupleof wild shots at halftime, you know,
the buzzer beaters, I guess athalftime. But for the most part
to this point, the games havebeen you know, ten point. I've
been watching it all morning, beenwatching, but I was watching. I
had to talk about this real quickly. You brought up March madness. So
I was reading this article about theother day how they were saying the odds

(18:55):
of you get in a perfect bracketare like two quandt trillions of one.
But this one guy had the perfectbracket for forty eight straight and he didn't
know how he did it. Yeah, he didn't know how he did.
It was early. It was severalyears back, right when the brackets first
started coming out. He didn't evenknow how he did. He was sick,
he was on cold medication. Hewent and filled out his bracket,

(19:18):
went to bed, and like twodays later, you know he's paying attention
a little bit. Two days later, the NCAA calls him and he was
like, what nduble A's call himand said, yeah, He said,
how'd you do it? You know, you got a perfect bracket to this
point, you have forty five straightpicks, all of them correct. He
said, I had no idea.So he looks at his bracket. Sure
enough he did. And then Buickwas sponsoring the tournament at the time,

(19:40):
so they flew him out to seehis favorite team, Michigan play because to
the the elite or the final,the sweet sixteen, and they were going
to the lead eight. So hemade it all the way to forty nine
straight games, and then Tennessee wasdown by thirteen, came back whento overtime.
He had Tennessee as his pick.They lost, and that was his

(20:00):
first one to lose, and afterthat he lost like four straight games or
something like that. So I'm freeIllinois and San Diego State. San Diego
State, of course, or myfriend Brian Gannon would be really mad at
me. And uh, since myMissouri Tigers are out, I gotta go
with Illinois because that's exactly all right. So the Padres. Let's talk about

(20:22):
the Padres. So they went touh, South Korea to do the two
games, right, and he lostthe first one. But yesterday, last
night, three o'clock in the morning, whatever, they won that game,
fifteen to eleven. Miest. Ihate to say it, but at that
Yamamoto pitches every time against the Padres. We might have a shout out,
We might have a chance of you. Oh my god. Their star eighth
pitcher went out in the first inningto his eer and the train training was

(20:45):
over eight and then he pitched yesterday. He was out in the first inning.
So I'm telling you a story aboutthat guy because I grew up a
San Louis Cardinal fan. When RickAnkiol was the star pitcher er, he
was like the star pitcher and TonyL. Russ Are decided or to throw
him in the first game of theplayoffs, and he had a bad outing,
a terrible outing. It got tohis head. You can never pitch

(21:07):
again. He just it was sportspsychology. He just it got to him
and he never They moved him tocenter field. He never pitched after that.
I'm gonna make a prediction, theAsian guy on the Cubs, that
pitcher is going to be the bestpitcher in baseball. Watch out for him,
you think so? Now look atthis this in a paper today.
Padres slashed their payroll by ninety million. So last year, remember we used

(21:30):
to talk about it all the time. Last year they were at two hundred
and ah. Let's see last yearthey were at two hundred forty nine.
This year down to one fifty seven. That's way better, right, way
better? Yeah, got rid ofcup big names. Yeah. Well,

(21:51):
one year the Cardinals were playing theDodgers in the playoffs and I think Kershaw's
salary was higher than the whole Cardinalroster and the Cardinals won that series.
I know, yeah, righta,All right, before we go, we
always like to do a little wisdomand Brett, so how tell people how
you live your life or a littlepiece of wisdom that you like. Piece
of wisdom that I like is youknow, I find sometimes just being simpler

(22:15):
is better. And simplifying a littlebit and not have all the chaos in
my life is peaceful and have anice morning routine where you know, you
get up every day and you doall these healthy habits before everybody else gets,
you know, into your head andend of the day is really helpful,
healthy and helpful to be successful forme. I like, so I

(22:40):
just wrote this down yesterday. Tryto find some good in everything. Try
to find some good and everything,because everybody's so negative these day, especially
with the politics and all this stuff. You know, they don't like their
country club, they don't like theirhomeowners, they don't like politics. So
try to find something good and everythingand try not to criticize too much.
And the other one is that somebodytold me to mention this a few words

(23:02):
the other day, but I rememberedit in a long time. Walk in
my shoes sometimes you don't you don'tknow how we walk in somebody else's shoes.
A lot of people are having troubleand you know what I mean.
So I want to expand on whatyou just said. Okay, because you
know they just came out with apoll again and Finland for the seventh straight
years the happiest country in the world. Right, And one part of that
is some of the things you justmentioned there about look for the good.

(23:26):
Yeah, look for the good,because you know they the point is that
everybody has a summer someday. Everybodyhas a summer, and when you're in
the winter, you just know thesummer's coming. You're always looking for the
positive and you don't compare it toother people. Like even they said even
the wealthiest people are driving v w'sbecause they don't want to flaunt their wealth.
Right, that's good, that'd bewell, you mean, just another
good one. Yeah, okay,everyone, Well we got to leave.

(23:48):
This is the greatest super agent you'llever see in the real estate business,
the greatest for all the entertainment,all the information is Pullo. If you
want to contact Alan and uh,we miss you, Brett. But I
hope you enjoyed the show. Youcan watch it later. I hope you're
getting rest and getting better. Drinka lot of water, We will see
you next week on the Brent andLarry podcast show from Beautiful Coronado at five

(24:11):
o'clock on Thursdays. Thanks again,Alan, you were great. Thanks for
having me appreciate it.