Key Takeaways:
– The real estate industry is going through significant changes
– Consumer confidence in Realtors is declining due to negative media coverage
– Agents will need to rethink and adapt their business practices to survive in the new reality
– Key issues that need to be addressed include buyer-broker agreements, comprehensive dialogue with clients, value propositions, and migrations to teams
– Well-trained and committed agents will be able to navigate and succeed in the changing industry
– Every change provides opportunities for growth and success
inman:
With the coming appeal, writes team leader Carl Medford, it will be some time before the final verdict is reached. However, there are four key realities that you can expect to see in the days that lie ahead.
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.
The current real estate industry is in tremendous flux, and those of us trying to navigate its many movements are struggling at best. Beset by the worst market in years, the decay of confidence in the National Association of Realtors (NAR), and, now, the commission ruling, business as usual is in danger of evaporating into the ether.
Factor in the potential damage done to consumer confidence in Realtors by the flood of negative, sensationalist media, coupled with an anticipated resistance to commissions going forward, and we are suddenly finding ourselves on unstable ground.
New skills will be required if you wish to stand securely on both feet.
Even as NAR announced its intentions to appeal, pushing any compensatory actions down the road, it’s guaranteed that our industry will face significant changes going forward. To survive in the new reality, agents are going to need to rethink a number of components of their businesses.
Here are the top issues I believe we will need to address:
1. Buyer-broker agreements
To be honest, this is nothing new. NAR President Tracy Kasper, in a Q&A response to the verdict, responded to the question, “Is there anything Realtors, brokers, state/local associations or MLSs need to do differently because of this verdict?”
She states:
Not because of this verdict. But NAR has emphasized for many years two important things. One is the use of buyer representation agreements, which maximize transparency by putting all agreements in writing to ensure clarity and understanding, as all members are obligated to do pursuant to the NAR Code of Ethics. These agreements formalize the professional working relationship with clients and detail what services consumers are entitled to and what the buyer agent expects from their client in return.
It is true that brokers have been harping for years that agents secure buyer-broker agreements before working with buyers. The only thing that should happen here is the percentage of agents who finally wake up and read the memo.
This will obviously require training around best practices but, as I write this, I’m cognizant that our local association of Realtors has already sent out notices for training events, our state’s association of Realtors has chimed in, and many brokerages have training lined up.
This should tighten up practices that should have been a normal part of our business for years.
2. Comprehensive dialogue with clients
Kasper continues:
Second, it’s also imperative for members to continue to express that commissions are negotiable and set between brokers and their clients; explain how local MLS broker marketplaces promote equity, transparency and market-driven pricing for consumers; and persistently communicate the incredible value agents who are Realtors provide.
It goes without saying that while clients frequently sign documents — especially listing agreements — they do not fully read them before doing so. It is a common disease. How many real estate agents have fully read the contractual documents between them and their broker?
Going forward, before completing and signing documents, they need to be carefully explained, especially the dialogue stating that commissions are negotiable.
3. Value propositions
Over the years, I’ve read any number of agent value propositions extolling the agent’s greatness, their market share, their No. 1 status and so on. Going forward, agents will need to take the focus off themselves and get serious about the value they offer to their clients, especially buyers.
There needs to be tangible value provided other than “helping buyers fulfill their real estate dreams.” Some serious soul-searching coupled with market research is needed to ascertain what buyers consider value for which they are willing to pay.
An example might be satisfaction guarantees. If they are unhappy with their purchase within the first year, will you sell it again for free?
4. Migrations to teams
I believe that as practices shift, it is possible that agents who focus primarily on buyers may end up at a disadvantage. For this reason, we could see a significant migration of these agents to teams that have a larger market share of listings and have the bandwidth to provide a more robust value proposition to buyers.
No doubt there are “interesting” days ahead. Like any moving and shaking we have weathered in the past, there is no doubt that well-trained and committed agents will make it through and survive in the new reality, whatever it finally shakes out to be.
It also goes without saying that every change provides significant opportunity, and this is no exception. We can do this.
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Property Chomp's Take:
As the real estate industry continues to undergo significant changes, it is important for agents to adapt and rethink their strategies. With an appeal in progress and the old way of doing business fading away, team leader Carl Medford shares four key realities that agents can expect to see in the days ahead.
Firstly, buyer-broker agreements will become even more crucial. NAR President Tracy Kasper emphasizes the importance of using these agreements to ensure transparency and clarity between agents and clients. While this may not be new information, it is essential for agents to prioritize securing buyer-broker agreements before working with buyers.
Secondly, agents need to engage in comprehensive dialogues with their clients. It is common for clients to sign documents without fully reading and understanding them, and agents must take the time to explain important details, such as the negotiability of commissions. Clear communication and transparency will be vital in maintaining strong relationships with clients.
Thirdly, agents must focus on providing tangible value to their clients, especially buyers. Instead of relying on generic claims of greatness, agents should conduct market research to determine what buyers truly value. This could include offering satisfaction guarantees or other unique services that differentiate themselves from the competition.
Lastly, there may be a migration towards teams in the real estate industry. With the changing landscape, agents who primarily focus on buyers may find themselves at a disadvantage. Joining a team with a larger market share of listings and a robust value proposition for buyers could provide more opportunities for success.
While these changes may present challenges, there is also significant opportunity for growth and success. Agents who adapt, embrace training, and remain committed to their clients will be able to navigate the new reality of the real estate industry. With the right mindset and strategies, agents can thrive in this evolving market.
