Key Takeaways:
– The old way of doing business in the real estate industry is over and agents need to adapt to new regulations.
– The National Association of Realtors and franchisors like Keller Williams were found guilty in a commission trial and will face consequences.
– Compensation models may vary from brokerage to brokerage, increasing the likelihood of confusion.
– Buyer agents will need to agree on a compensation plan with clients at the beginning of a working relationship.
– The role of a buyer agent may change, but it is not disappearing.
– The recent verdict in the commission trial holds the potential to completely rewrite how real estate transactions are handled in the United States.
– Real estate professionals are left with more questions than answers about how their day-to-day business dealings will be affected by the ruling.
inman:
During a live session Wednesday at virtual Connect, Brad Inman moderated a panel with Russ Cofano and Kendall Bonner on what lies ahead for agents as the commission model is upended.
The verdict is in — the old way of doing business is over. Join us at Inman Connect New York Jan. 23-25, when together we’ll conquer today’s market challenges and prepare for tomorrow’s opportunities. Defy the market and bet big on your future.
A day after a historic verdict in the Sitzer | Burnett commission trial, Inman founder Brad Inman and housing experts examined how — and when — agents will need to adapt to new regulations as a result of Tuesday’s explosive ruling.
EXp team leader Kendall Bonner and Collabra Technology CEO Russ Cofano joined Inman on stage during a live Connect panel Wednesday, with Inman voicing the frustration of millions of real estate professionals when he made reference to the National Association of Realtors’ role in commission meddling.
“They failed,” said Inman of the defendants in the trial, which also included franchisors such as Keller Williams. “A jury found them guilty of failing, and now the members are going to pay for these shenanigans. It’s shameful.”
Bonner predicted that compensation models may eventually vary from one brokerage to the next or from one agent to another, increasing the likelihood of confusion. But regardless of the model, buyer agents most likely will need to agree to a compensation plan with clients at the onset of a working relationship.
“Now more than ever, buyers agents are going to become responsible for making sure they get paid,” Bonner told an audience at Connect. “They’re going to have to be thinking about that because no one wants to work for free.”
Assuming commission sharing isn’t banned entirely, Bonner added, agents for homebuyers will still be compensated by homesellers, but conversations with homebuyer clients may become more involved.
“Imagine a world where it’s decoupled,” Bonner said. “The buyer agent has a conversation with the buyer, agrees on a compensation model, they go show homes, the buyer and buyer’s agent will probably likely agree — assuming there’s no ban on a seller paying the compensation — and make that a part of the offer.”
One question left unanswered, however, is whether the role of a buyer agent will change significantly over time, said Cofano, who was confident that buyer agency wasn’t disappearing any time soon.
“We’re not going to a single agency system like Europe,” he said. “That’s not happening.”
“There is going to be change,” Cofano added. “With change comes opportunity. This is an amazing industry of opportunistic people, hardworking people, and you will find the cream will rise to the top — which is really the exciting thing for the industry, it’s a new age.”
Wednesday’s session comes one day after a federal jury in Kansas City, Missouri, ruled in favor of homseller plaintiffs in the closely watched Sitzer | Burnett commission trial. Jurors likewise ruled against defendants in the trial, including the National Association of Realtors, Keller Williams and HomeServices of America, agreeing those parties conspired to artificially inflate real estate commissions.
In the verdict, which holds the potential to completely rewrite the way real estate transactions are handled in the United States, eight jurors awarded homesellers $1,785,310,872 in damages, which, under the law, will be automatically trebled to $5.356 billion.
The eight-person jury deliberated for about 2.5 hours Tuesday morning before issuing its unanimous verdict in a suit that represented approximately 500,000 Missouri homesellers seeking reimbursements paid to buyer brokers.
As of now, real estate industry rank and file are left with more questions than answers about how their day-to-day business dealings will be affected by the ruling.
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Property Chomp's Take:
The real estate industry is undergoing a major transformation as the traditional commission model is being challenged. In a recent panel discussion at the virtual Connect conference, industry experts discussed the implications of a historic verdict in the Sitzer | Burnett commission trial and what it means for agents going forward.
The panel, moderated by Brad Inman, featured Russ Cofano, CEO of Collabra Technology, and Kendall Bonner, team leader at eXp. Inman expressed frustration with the National Association of Realtors (NAR) and other defendants in the trial, stating that they had failed and that agents would now have to pay for their actions.
Bonner predicted that compensation models for agents may vary from brokerage to brokerage or even from agent to agent, leading to potential confusion. However, she emphasized that buyer agents would need to ensure they are getting paid and may need to negotiate a compensation plan with clients at the beginning of their working relationship.
While the possibility of commission sharing being banned entirely remains unclear, Bonner suggested that conversations between buyer agents and their clients may become more involved. The buyer agent and buyer would likely agree on a compensation model, and if there is no ban on the seller paying the compensation, it could be included as part of the offer.
Cofano acknowledged that there would be change in the industry but reassured attendees that buyer agency was not disappearing. He stated that the industry was full of opportunistic and hardworking individuals who would adapt to the new landscape. The cream of the crop would rise to the top, creating exciting opportunities for the industry.
The panel discussion took place the day after a federal jury ruled in favor of homeseller plaintiffs in the Sitzer | Burnett commission trial. The jury awarded homesellers $1,785,310,872 in damages, which will automatically be trebled to $5.356 billion. This ruling has the potential to completely reshape how real estate transactions are handled in the United States.
As of now, there are more questions than answers about how the industry will be affected by this ruling. Real estate professionals are left wondering how their day-to-day business dealings will be impacted and what changes they will need to make to adapt to the new regulations.
In conclusion, the real estate industry is facing significant changes as the commission model is upended. Agents will need to navigate new compensation models and ensure they are getting paid for their work. While there is uncertainty about the future, industry professionals are optimistic about the opportunities that come with change. The industry will continue to evolve, with the best and most adaptable agents rising to the top.
