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The Aftermath of NAR Rules: Agents' Reactions · Mortgage Marketing Radio

• 0:00
  James welcome to the show. Thanks for having me super excited to discuss all things
• 0:06
  Non-existent and residential real estate lawsuits. So what do you want to talk about man?
• 0:10
  I want to talk about news. How about this? Let's talk about you grew up in slow, right? I did
• 0:14
  It was born and raised in San Luis, Biscuit, California
• 0:17
  I think was just voted in one of the top 10 cities to live in the United States saw in a magazine recently
• 0:22
  Called slow town, but yeah, it's born and raised there. So I know the area well. My son is in his third year at Cal Poly
• 0:29
  mechanical engineering
• 0:30
  It is uh, thanks. Go Mustangs. It is the school for
• 0:35
  engineering
• 0:36
  It's a school for high and a school for having the greatest bars downtown and a great night. So sure
• 0:43
  Yes, I had my I got a frog and peach shirt. I wish I had got it
• 0:47
  Great, great pub to go out of beer at and yeah, he he's been in a band and they played at frog and peach and a bunch of venues down there
• 0:55
  So I you know, I was there. I'm 44 and I grew up in San Luis my whole life
• 0:59
  So I saw San Luis Biscuit downtown transition from some of the original ball bars to some of the bars. They are now so it's
• 1:05
  It's evolved a lot. Yeah for sure. That's cool
• 1:09
  Yeah, I always love to find when people are like from there know there, you know that no slow know the whole community
• 1:14
  It's a very unique is very cool vibe there. It is yeah, I dig it
• 1:20
  But all right, so we're not here to talk about that. Who is James Wiggins? What's what's y'all about?
• 1:24
  What do you want to tell the listeners who might not be familiar with who you are?
• 1:26
  I mean, you know, I he's talking about myself, but
• 1:31
  Third generation in residential real estate my grandfather started his real estate company in San Luis, abyspo in
• 1:36
  1967 ironically
• 1:38
  Both my parents were brokers my grandparents were brokers
• 1:41
  So I worked in that side of the business worked in prop tech
• 1:44
  I started and sold a couple software companies in residential real estate
• 1:47
  And then got involved in franchising in 2006 for a company called real-to-world
• 1:52
  Eventually became the vice president there and then
• 1:56
  My business partner today from next home and I bought that company in
• 2:01
  In 2014 we ran that franchise here in Noracal with about 400 offices across Northern California market
• 2:08
  And then we started next home in 2014 which is our current national franchise and
• 2:12
  That's after about a 10-year run is about 630 locations
• 2:16
  Across the US and we do
• 2:19
  Company does a lot of business you over 30,000 deals were over 12 billion in volume annually
• 2:23
  So it's not a small business. It's been a fun ride and now we're in the
• 2:28
  Think of all the change going on so
• 2:31
  Okay, thank you for that and we're going to put links to everything we talked about in the show notes
• 2:35
  As a matter of fact, you also are co-host of a podcast right real estate insiders unfiltered
• 2:40
  Which have been listed into and you have some you have access to high-level people such as the
• 2:46
  Current CEO of the NAR other folks. So anybody who's listening mostly loan officers listening to this
• 2:51
  First of all share this conversation with your real estate agents
• 2:53
  By the way, this is a great way to get some
• 2:56
  Engagement and conversation with the agents, but also check the links in the show notes
• 3:01
  Okay, so we're five days in to this august 17th NAR settlement thing kicking into official gear
• 3:08
  You've you've got obviously a very strong pulse on the real estate industry. You've got thousands of agents
• 3:16
  Do you have a report card yet from the streets on how this has been going?
• 3:21
  I mean, I'll put it this way. It's not it's all things not unexpected
• 3:27
  You know the companies that were prepared and had been really ahead of this like my 6000 agents don't they're all very clear
• 3:36
  And what the rules are we retrain them before the verdict even happened in October we were trained them starting in September last year
• 3:43
  So you know when if you were in if you were in an organization that was understanding the changes and wasn't fighting it
• 3:48
  And just kind of going this is where the puck's gonna be we got escape towards that
• 3:52
  We're we're prepared
• 3:54
  I can't say that about everybody else
• 3:57
  There's you know there's a lot of people who waited to last minute don't understand the rules don't agree with the settlement
• 4:03
  Don't agree with the terms want to fight it
• 4:05
  And so we certainly are seeing you know two camps the camp of
• 4:09
  This is the process. This is how we communicate. We're not doing cooperative compensation any further
• 4:15
  And this is the direction we're gonna go and then you're seeing people go
• 4:19
  Screw the lawyers. We don't care
• 4:22
  And we're gonna continue to do things the way we have or try to find what we're calling workarounds all of which those people will eventually get sued
• 4:29
  And there's been two interviews done by the main the plaintiffs lawyers
• 4:34
  Or the past few days on in menus Michael catchmark and Douglas Miller who was behind the morale case out of Illinois
• 4:40
  Who have put in no under no uncertain terms their intentions of
• 4:44
  making an example out of
• 4:46
  Additional organizations that are not
• 4:49
  Following it or are trying to do workarounds and I
• 4:53
  Look, I think that
• 4:55
  We're in the first inning for lawsuits
• 4:58
  This industry as much as I love it with a passion
• 5:02
  You know has a lot of people that just can't get out of their own way and
• 5:05
  You're gonna see more lawsuits occur and unfortunately these lawsuits are gonna be very expensive because you know
• 5:11
  I am a name defended in one of these cases and I can tell you the legal bills are massive the only people winning on this is the lawyers of course and
• 5:17
  Unfortunately smaller companies if they get suitable bankrupt themselves
• 5:21
  They won't have the funds to defend it. So I I heard a term it might have been you who said this
• 5:27
  20 to 40% Exodus. Yeah, I think it's it's somewhere in that number keeping in mind we've already had
• 5:35
  Some of that decline already over the past 12 months, but you're gonna see it really go into full effect here because this decoupling
• 5:42
  Of compensation is gonna it's gonna create the haves and have knots the agents that know what they're doing and can articulate value or
• 5:48
  Are gonna do just fine agents that don't or in it part time. We're gonna have a harder time with it
• 5:53
  They'll see commission rates
• 5:55
  Or compensation rates drop. I'm estimating anywhere between 50 to 100 basis points and
• 6:01
  And then you'll start to see some pretty significant Exodus from the business. So
• 6:05
  Do you think you know you have a strong tech understanding and you know market efficiencies and
• 6:11
  You know, there's there's some some narratives around you know the market will always find the most efficient way
• 6:17
  I guess if you want to kind of use that angle
• 6:20
  Do you think this is just was a matter of time that this was gonna happen and this will bring additional
• 6:26
  Call it efficiencies professionalism whatever you know to the industry
• 6:31
  Uh
• 6:32
  long-term. Yes
• 6:35
  Short-term I'm worried in the short-term. Yeah, I don't think it's gonna be smooth
• 6:41
  You know just there's going back to even just cooperative compensation, you know EXPs out there said they're not doing any further
• 6:49
  We're not doing any further
• 6:51
  And so it there's a lot of companies that are moving to this camp of we're not gonna do things the old way
• 6:57
  And there's a lot of companies that don't want to do that
• 6:59
  And so I think you're gonna see a lot of really shady practices somewhere in the middle of all that for a bit
• 7:05
  Until people realize that they need to start making the shift and I do have some anecdotes
• 7:11
  Just in general I think that people
• 7:14
  I
• 7:16
  Think the lawyers and everybody who's trying to make these changes
• 7:22
  Don't understand the psychology of buyers and sellers. They don't want to be unrepresented
• 7:27
  It's an infrequent complicated transaction
• 7:31
  um, and
• 7:33
  They are wanting to sell and buy a house and what I mean by that is the seller is interested in selling their home
• 7:40
  Whatever it's gonna take to do that and this is a part that I think is really interesting
• 7:44
  We're in the you know, not of
• 7:46
  Arguably right now based upon the past few years not the greatest rate environment
• 7:49
  You know, we're used to much lower interest rates
• 7:52
  If you go back in time. We all know this is actually isn't that bad, but that's not the point
• 7:55
  um, and so the people that have been selling their houses over the past you know 2022 and 2023 and so far this year
• 8:02
  Have been having to sell their houses because of life events like just life
• 8:06
  Kids job transfer whatever it is and so we've been around four million units annually
• 8:11
  Those people want to sell their house
• 8:14
  So my point behind this is it they're going to continue to do what it takes to make that happen
• 8:19
  And if it requires this seller to pay the buyer's agents compensation because we all know who are listening to this the buyer cannot afford more stuff out of pocket
• 8:29
  They're gonna do it and the anecdote is this on my podcast
• 8:33
  We have a one coming out next week. It'll be a very controversial podcast. I'm trying to get canceled
• 8:38
  Where we uh, we brought a broker on who stopped
• 8:42
  Offering compensation to the buyer's agent november last year
• 8:45
  Yeah, wow early bird
• 8:46
  Yeah, right after the verdict he decided to do it and we brought him on to share his story and he did seven listing since then all of them
• 8:53
  He offered zero, but he stated the sellers willing to entertain any and all requests just put it in your offer
• 8:57
  Which is what we've been teaching
• 9:00
  And I can tell you in every single one of those scenarios where the buyer needed the buyer the seller to pay the buyer's agents fee they did
• 9:08
  And everybody got paid because the seller the psychology is when you sell your house you have equity
• 9:14
  But it's kind of found money like you didn't have really access to it now you do and they all want to sell their house
• 9:20
  So they're gonna do what it takes to put a deal together. So I'm not in this camp of
• 9:25
  You know, this is gonna go the rate the the route of AI is gonna do this whole thing
• 9:30
  I think that's bullshit nobody wants to AI the sale of their home. It's way too complicated and frequent to do that
• 9:36
  Do I think technology will shift things? Sure in time
• 9:40
  But this is still extraordinarily stressful
• 9:43
  Emotional paperwork intensive and relationship-based even on the loan side like I it's still people want to sit down and talk with somebody and figure out
• 9:52
  Whether making the right decision, etc
• 9:55
  so
• 9:56
  Short in term, I think you're gonna see some of this
• 9:58
  You're gonna see things somewhat stays out as well before it changes. So like any change, right? There's the pendulum this wings
• 10:04
  um
• 10:06
  What then back to this whole uh, you know, we're not doing the cooperative competence. We're not advertising
• 10:11
  Are we co-opping on compensation?
• 10:13
  Submit all offers
• 10:15
  What have you and speak to what you're comfortable around or not, but you know, what I'm seeing is certain camps
• 10:23
  Provide training around advising the seller on the pluses and minuses of
• 10:27
  Compensation are you endorsing that as well? 100% and it's a very simple conversation
• 10:32
  so this is to me there only the only them to be
• 10:36
  Controversial like a normal am the only reason a seller in this new world should be offering compensation in advance of an offer
• 10:44
  Is if it's a buyer's market where you've got just a couple buyers lots of houses and you're gonna try and incentivize a buyer to buy your home to over another
• 10:52
  Here's the part this really controversial. This is what we get everybody thinking
• 10:56
  So effective august 17th mandatory buyer repayment before you show a property
• 11:00
  Which means that every agent's gonna sit down with a buyer
• 11:04
  Have a conversation about their services what they're doing the products all of the stuff including cop and the buyer and the buyer's agent will agree to those terms
• 11:12
  There's no scenario in this new world where those rates don't vary significantly
• 11:18
  You know inexperienced agents are gonna charge a lot less to get a deal done experience agents are gonna charge a lot more
• 11:23
  So here's the rep
• 11:26
  In a world where that now exists the selling agent the listing agent knows that rate is going to vary
• 11:34
  And you have a fiduciary responsibility to your seller which is gonna be to get the highest net price possible
• 11:40
  Why would you ever offer or tell a buyer what you're willing to do in advance of an offer?
• 11:45
  Because hypothetically speaking let's say an agent was paid X
• 11:49
  And the listing the seller was willing to offer double that
• 11:53
  If you if the buyer's agent was only gonna be paid half of that amount based upon the agreement and you advertise something double
• 12:00
  You just told what told the buyer what to put in the offer and now you just left money on the table
• 12:05
  So the next claim that I think you're gonna see and my lawyers have confirmed this is you might see fiduciary breach claims coming from sellers
• 12:13
  Same why would you advertise this price?
• 12:15
  Why would you advertise this rate when the buyer's agent was only needed X to be paid?
• 12:21
  You just literally screwed me out of whatever amount of money
• 12:24
  And that's an easy claim to show because you simply
• 12:27
  You're just simply subpoenaing the records of the deal
• 12:30
  You can see what the buyer's agent was paid what you advertise. There's your damages and voila. You've got another action
• 12:36
  Class action claim. So what we're teaching
• 12:40
  Jeff is really important. We're telling the seller this
• 12:42
  So mr. Mrs. Seller here's the deal. What's most important to you?
• 12:45
  And they go the net great. We figured that would be your answer
• 12:48
  So what we're gonna tell you is this we're gonna say seller is willing to entertain any and all requests
• 12:54
  Put it in your offer the listing are thus by an agent calls. What are you offering?
• 12:58
  Seller is willing to entertain any and all requests put in your offer?
• 13:00
  So you're not offering compensation. No, we're not saying that we're saying we're willing to entertain any request
• 13:05
  That your buyer has just put it in the offer and so we take the offers in
• 13:10
  We look at those offers we come up with a strategy to respond counter all of them except whatever you want to do
• 13:17
  But the point here is even when the seller is saying I don't want to offer any compensation to the buyer's agent
• 13:24
  We go mr. Mrs. Seller. I'm gonna I'm gonna
• 13:26
  We're entitled to do that to be clear and we're not suggesting otherwise
• 13:30
  But I'm gonna actually suggest that you don't do any of that
• 13:33
  Let us just get the offers in and then we'll respond because mr. Mrs. Seller
• 13:38
  This is most important you said net correct and they're gonna go yes
• 13:41
  By the way, this is real world examples of what's happening
• 13:44
  You may get two offers one of them's all cash at asking price with the buyer saying they'll pay their buyer's agents fee
• 13:50
  And you're going woohoo great
• 13:51
  I got what I wanted but what if a second offer came in a hundred thousand dollars over
• 13:55
  But asked you to pay the buyer's agents fee through the closing process
• 13:58
  But it netted you fifty thousand dollars more which ones actually more a better offer
• 14:03
  And they go oh, I didn't thought about it that way
• 14:04
  So don't
• 14:06
  Leave all that stuff off the table
• 14:08
  We're just gonna bring offers in and then figure out our strategy forward
• 14:11
  Easy conversation that that also positions the listing agent to to provide more negotiation and more value to the transaction
• 14:18
  You know
• 14:19
  The whole point that the thing to me about what I I'm trying to educate the industry on this they just are not there yet
• 14:25
  They'll get there
• 14:27
  It doesn't matter
• 14:29
  In the world of negotiation it means nothing
• 14:32
  I don't give a shit if the seller says sold as is
• 14:37
  Okay, my buyer wants the couch
• 14:40
  So like it's gonna get put in the offer and you as a seller can choose whether you want accept it or not like it just
• 14:46
  The whole point is there's a house for sale. There's a buyer who wants to write an offer
• 14:51
  The end that's just the whole the whole conversation is gonna boil down to that we just are gonna get
• 14:57
  It's gonna be a lot of waves to get to that point
• 14:59
  So let's let's go devils out of kid here for a minute because
• 15:02
  I think you and I have a mutual acquaintance yeah with Christy Janks over there and
• 15:07
  This was a response to that scenario you basically just laid out was you know submit all offers all offers
• 15:13
  We don't we'll entertain and of course there's an agent who responded
• 15:18
  um
• 15:19
  There are buyers already stating that they will not visit a home that's not being offered comp blah blah blah
• 15:25
  I don't think that's a strategy of work for them
• 15:27
  So we need to know ahead of time whether there's comp by the seller or not. How do you respond to that?
• 15:31
  The buyer's agent is not doing their job correctly
• 15:34
  Okay, we do it. It's really simple. So mr. and Mrs. Byer
• 15:38
  So I'm gonna give you the other script
• 15:41
  Uh, so in this new decoupled world. This is my fee. This is what we agreed to this is my service is blah blah blah blah blah
• 15:47
  Okay, we have a couple ways that you can do this for for payment
• 15:50
  You can pay it is one way to do it or we can put that request
• 15:54
  In the offer as the second step so we can ask the seller to pay my fee directly or the third option is we can ask a seller for concessions
• 16:03
  That go to you and then you can turn around and pay their my fee and put it towards other closing costs whatever it is
• 16:08
  Uh, mr. Mrs. Byer you need to understand that in this new world every house is for sale and it's my job to get you into that property
• 16:16
  So any house you want to look at we're gonna look at it. We're gonna tour it
• 16:20
  We're gonna write an offer on it and then I'm gonna negotiate with the listen agent on how to make this all work for you
• 16:25
  And if for any reason they won't do it
• 16:28
  And you can't pay it. Well, then we'll have to adjust at that point in time
• 16:32
  but
• 16:33
  Every house is for sale. I will show it to you
• 16:36
  We will write an offer. We will negotiate and here's the thing
• 16:40
  I guarantee you
• 16:42
  Sellers are wanting to sell their house
• 16:43
  So we'll try to figure out a strategy to do that and then I'll add the fourth piece
• 16:46
  We're gonna work with our loan officer
• 16:48
  So all loan officers listening on the strategy on how to do all of this stuff too
• 16:53
  So that we can write it a write a contract that is going to win out on others
• 16:58
  We'll come up with a strategy together so we can make this happen. That's the pitch
• 17:02
  That's it. There's nothing else to it other than that
• 17:04
  And so any buyer's agent that is not doing that
• 17:08
  To be clear because I hope want them to hear this you are violating your fiduciary duty
• 17:12
  You are not following what you should be doing and you should leave the industry
• 17:16
  Because if you can't do your job correctly
• 17:18
  Then you don't belong representing buyers in this market. It is that simple. It's just that simple
• 17:23
  So see some tantrums happening across the country. It is and it's on and look
• 17:28
  I mean, I'll share with you. I saw some stuff today where I'm just like they're creating forms
• 17:34
  Which I'm gonna tell you right now because I have deep connections as you are aware to
• 17:40
  A lot of the people in the industry including the plaintiffs in the department of justice
• 17:44
  Brokers that are creating forms and having buyers sign them that state
• 17:47
  They're not going to be shown houses that don't offer compensation advance
• 17:51
  Will get sued
• 17:52
  Is that steering really that's called steering and then when they're doing it together with other companies
• 17:57
  It's called collusion and so I found out about three of them doing it today in a market
• 18:02
  That they're colluding to make this so it keeps things standardized every single one of those brokerages will get sued
• 18:08
  and they will
• 18:10
  Spend a hundred thousand dollars a month in legal fees defending themselves or if they can't afford it will bankrupt their company
• 18:15
  That is literally where this is going to go in the two comments that were done by
• 18:19
  Douglas Miller and Michael catch mark over the past two days was exactly that
• 18:24
  They are going to target people and they will make an example out of people that are doing it
• 18:28
  So I was gonna catch mark who said I'll be watching
• 18:30
  They are they both are yeah
• 18:32
  Douglas Miller was involved in the in behind the scenes on morale and then catch mark was obviously Burnett and Sitzer
• 18:37
  They're all collaborating together because it's all one big class at this point all right, but
• 18:41
  Well, okay, so you mentioned the loan officers and seeing as that's who's mostly listening to this
• 18:46
  But if you did receive this podcast by way of a loan officer your real estate agent
• 18:50
  Make sure you thank them and ask them more about this
• 18:53
  Strategy we're going to talk about right now
• 18:55
  Which is what happens when the buyer can't pay the agent out of pocket what are the options and say the seller isn't paying
• 19:03
  This is where financing right creatively comes in and as I'm sure you well know James
• 19:09
  But others that are listening you can finance that into the loan or finance that into the price
• 19:15
  Um, you have any opinions on that
• 19:18
  Other than what you just said those are the options. I think that I'll go deeper a little bit in that I believe
• 19:25
  For every loan officer listening here you have the greatest opportunity of your career
• 19:29
  So just for clarity. We have a mortgage company as well
• 19:33
  And I can tell you what every one of our loan officers is doing we told them
• 19:37
  Get your butt on the phone
• 19:39
  Call every single agent you've ever worked with ask them to sit down so that you can talk about strategy on how to get
• 19:46
  Your compensation covered your buyers into a house
• 19:49
  Both strategy when you're asking for excuse me concessions
• 19:53
  When you're asking to have the seller pay it directly like this is the time where you create a
• 20:00
  much tighter bond
• 20:02
  Between you and your agent and I will go as far as saying I think it's smart
• 20:08
  That the the loan officer even even attends some of these buyer consults and sits down and articulates value and what they do
• 20:16
  So I love this idea of an agent going here's the
• 20:20
  150 things I'm going to do in a real estate transaction over the next 90 days and this is my job
• 20:25
  By the way, this is this is Jeff my loan officer
• 20:28
  He's a badass and these are the extra 230 things we got to get right to make sure that your loan gets proved qualified
• 20:35
  gets through underwriting we make all this stuff to come together
• 20:38
  So we're going to jointly talk about what this experience looks like two things occur there one is credibility to complexity
• 20:44
  We want the consumer to understand this isn't an easy thing to do and three that they feel like they have a team working for them
• 20:50
  I think that's a huge thing
• 20:52
  I'll go step further than that
• 20:53
  I think it's important that loan officers are talking with listing agents
• 20:57
  having them understand the different ways to
• 20:59
  Receive offers and how they can make sure the seller understands that it's not just about whether you're paying compensation or not
• 21:07
  There are ways that you can get a higher net
• 21:10
  By having offers structured in such a fashion to do that that example I gave you of you know a B
• 21:15
  So to me this is a this is a huge opportunity for the industry to collaborate more closely
• 21:22
  And educate
• 21:23
  I would tell you I think there's so much freaking confusion out there
• 21:27
  Every hello and agent should be doing sessions for the consumer
• 21:31
  Like explaining the new world what does all this mean? What does it mean to you?
• 21:36
  No, you don't actually have to come out a pocket to pay
• 21:40
  Your your buyer's agent that all the stuff that press and all the stupid mainstream media continues to put out is not accurate
• 21:46
  We all know it's not accurate
• 21:48
  But buyers are only hearing what they see in the New York Times or Wall Street Journal or whatever and we
• 21:54
  Have to have such a louder voice about what is actually happening boots on the ground
• 22:00
  Which is a huge opportunity to to get you know new business
• 22:03
  But we're not like no one's doing that
• 22:05
  I don't see any of these webinars or seminars going on on on you know social media right now
• 22:09
  At least I'm not getting asked to attend them
• 22:11
  So I think there's a tremendous amount of opportunity to collaborate with this
• 22:15
  Agreed I just wrote that down because as you may recall that's a lot of what I do is help originators put on events and classes
• 22:21
  So yeah, just out of that one down do the because everybody on yeah the home buyer seminar about how about it in the new world right of home buying
• 22:29
  All that I mean every home buyer thinks what they're reading online
• 22:33
  The stuff that all the mainstream media is putting out is like okay buyers have to pay for their agent now
• 22:37
  It's not no that's not accurate at all
• 22:40
  Like yeah, and I love the fact that you took the listing agent angle which I've been preaching for years
• 22:44
  I used to go after listing agents when I was originating and you know for multiple reasons
• 22:48
  But like they want to make the listing as attractive as possible
• 22:51
  They know they're going to have buyers who can't pay out a pocket so
• 22:54
  Lone officer you can work with your listing agent to structure finance flyers scenarios whatever
• 23:00
  But the cool videos together that shows hey, here's your four options forgetting in this house right under the new rules
• 23:07
  Also, I would consider doing more open houses then you've done before we're past covid
• 23:13
  We're all live still like least he's here. So like my point is just go
• 23:18
  Like if you got opportunities to bring buyers in to your point have those financing flyers give them options
• 23:23
  Help them understand there are ways to do that another thing to add into this is you can throw on the webinar that you're going to do or what anybody else is going to do
• 23:32
  um
• 23:33
  The legal risk of
• 23:36
  Being unrepresented in a transaction which buyers are going to be thinking about this significantly
• 23:42
  Is massive yeah, and one of the other talking points we do with
• 23:47
  Sellers is to go look
• 23:50
  Where you're going to see a couple things happen number one you're going to see buyers asked to be dual you know dual agency
• 23:56
  I'm a huge huge like I hate dual agency. I think it's a
• 24:01
  Abomination for the industry. It's there's no scenario where somebody doesn't feel screwed in that situation
• 24:07
  And so you know, we're teaching we don't do dual agency here
• 24:11
  Um, I want my representations to you. Have you shared to you specifically? That's why you hired me
• 24:15
  um, but mr. Mrs. Celler I also think it's incredibly important that we have the buyer represented by somebody who understands how to do this process because
• 24:25
  If we don't
• 24:28
  There's a much higher chance that this whole thing could end up in litigation
• 24:31
  And that cost of litigation is going to be significantly higher than making sure that there was representation on their side
• 24:37
  I don't care if it's a lawyer
• 24:39
  I don't care what like the the quality of the agent. I just want somebody on that other side with an EEO policy to represent them
• 24:46
  So there's the most sellers go. Yeah, that makes sense like
• 24:50
  You know, so that there's there's these multiple pieces to talk about
• 24:54
  With educating people on this on this process um, and we're just not having those discussions the final thing I'll throw in
• 25:01
  ENO coverage
• 25:03
  Going to be a big big topic coming up because all the agents that are doing dual agency
• 25:08
  You're going to see litigation increase which I've talked to any old companies. I know this litigation will go up
• 25:14
  ENO carriers will go yeah, we're not doing that anymore if you want to do dual agency
• 25:18
  Your coverage costs are going to double or triple. We don't know how insurance works
• 25:22
  And then eventually they'll just go no, we're not going to cover anybody doing dual agency
• 25:27
  And before you know it all these companies are like whoa we can't get you know coverage and so you can see what this next
• 25:34
  Like massive problem coming a lot of what needs to happen is setting proper policy now
• 25:40
  So that you're not dealing with these issues right in six months to a year
• 25:45
  Love that um good notes there for everybody listening um
• 25:49
  What have you done then around
• 25:53
  Coaching training your agents buyer side. I'm sure you do both, but obviously do particularly on the buyer side because you know to use the old example of like
• 26:03
  You know
• 26:04
  What did somebody I was talking to thousand while consulting and they said uh, you know if if if you're if my price to work with you is zero
• 26:12
  I can't value you
• 26:14
  You know what I mean like how do I value what you do?
• 26:16
  So I'm working a lot rise matter fact. I have a slide deck here in front of me
• 26:19
  Which is for long-awaited strategic agents about how to um level up their
• 26:24
  Buyer presentation value proposition and all that stuff. What what do you've been doing with your people on that?
• 26:28
  So two things number one you're you know
• 26:30
  I'm involved in the venture called raise which is uh this new prop tech company that is
• 26:36
  Basically tracking. I'm going to simplify here, but it basically tracks everything a realtor does
• 26:41
  All their phone calls are logged their time their mileage, you know
• 26:45
  How long it takes them to write email everything kind of like a lawyer and concept creates this collaborative cool experience for the buyer to see everything the realtor is going to do
• 26:52
  An amazing buyer presentation laying out the 195 things we're going to do in the process
• 26:56
  The app to collaborate and then the closing report which is just killer
• 26:59
  So it's everything they did over the course of you know 60 70 days whatever the time frame is the agents are taking those reports on their next buyer console going
• 27:08
  Here's the amount of work involved to work with
• 27:11
  You know to get to get you into a home and there's showing examples of that very specific details. That's the first thing
• 27:16
  Yeah, yeah articulating your value very clearly because nobody knows what the hell we do
• 27:20
  So now we're we're bringing to light all of this um all of these activities
• 27:25
  The second thing which is where we've moved we've been training our people on this for a while
• 27:31
  Is you have to treat your buyer like a seller?
• 27:34
  And what that means is you don't go out on a listing presentation and just hand them the listing agreement
• 27:40
  You do a consult you talked to them
• 27:42
  Here's my marketing is my advertising is what I do this is the social media stuff is how we're going to create you know all just the whole list of stuff
• 27:49
  Nobody does that on the buyer side
• 27:50
  All right like nobody does that and so we've created an entire new package for our agents to sit down with a buyer
• 27:59
  Do the consult go through things with raise here's what you know
• 28:03
  Here's everything that's going to happen what I'm going to do in the experience and here's an example the services
• 28:06
  I'm going to provide so I'll just give a couple for a context so
• 28:09
  We cut a deal with a company called Kubikasa. They do floor plans and it sounds weird
• 28:13
  But only 30% of listings have floor plans
• 28:17
  It's ridiculous, but that's the number
• 28:19
  And so as a service we go mr. Mrs. buyer any house you look at
• 28:23
  That you're interested in potentially write an offer on and let me know and I'll go out there and create a floor plan for you
• 28:29
  And so they create the floor plan for the for the buyer to see like what the house is this it's an experience
• 28:34
  I'm not even to go tour the home
• 28:36
  That'll do it for you ahead of time and it's an extra service
• 28:39
  Um, they'll do a thing like we call a revive remodel
• 28:44
  Here's what the current state of the home is we think you could put 50,000 into this particular property and the upside leg potential on it
• 28:51
  Is an extra 250 will do a quote on that get like a whole process together on what we think the home could be with a certain amount of investment
• 28:58
  Because it is an investment
• 29:00
  And so we want to tell them here's where you're at here's what you could do here's the cost to do that and here's what the upside
• 29:05
  You know potential might be we give our buyers an app called front door at the closing
• 29:11
  It's this really cool app where it's like a handyman in your pocket you have a problem
• 29:15
  We can't forget use the thermostat pull up front door. It's branded to the agent and all the sudden they can contact front door
• 29:22
  It comes on video chat and they'll show you how to use the next thermostat
• 29:25
  So we just we're thinking about
• 29:27
  How do you create services to increase your value that you would same const on the list side but on the buy side and man
• 29:35
  It just works. It's not it's like buyers go shit like I makes complete sense. I love it
• 29:40
  I love what you're doing. I'll pay you that and then we have the conversation with them about here's how my compensation works
• 29:47
  If we can't get the seller to pay it and we can't get you a concession then either you have to pay it or we have to think about
• 29:52
  Looking at another property or coming down in price. We can get more aggressive on the price when we're a little bit down in the price rate
• 29:57
  Like just this just strategy. That's it. That's all it is
• 30:01
  Yeah, it reminds me of back in the day. You should work with Walter Sanford out of Long Beach. Oh man. That's a name. I haven't heard no Walter
• 30:08
  With a little dynamite thing. Yeah, yeah, yeah, I did that as an L.O. I was sending those to realtors all so funny
• 30:17
  Yeah, Walter was an amazing marketer
• 30:20
  But he was like after early on and of course a lot of people use this or used to I guess
• 30:24
  It seems like it's gone away though, but like that concierge service right where here's a list of my
• 30:29
  Like you're to but you've got the modern version right the front door the the cuba casa
• 30:34
  But he had like a carpenter's builders whatever and we do the same thing
• 30:37
  Here's our here's my role it extra people to work with that's part of it as well
• 30:40
  But we actually are putting
• 30:42
  Services like paid services into it and I've told agents look you should be taking 10% of whatever compensation
• 30:49
  That you have that you're making should go back into products and services provided the buyer
• 30:54
  and
• 30:56
  We also know this so we're teaching to you know different levels of service
• 31:01
  This is my tears tears and there's I don't it sounds dirty and bad word, but like it's not because if I bought a home before
• 31:08
  Right, and I've been through the process. I don't I probably don't need as much of that handholding
• 31:13
  So to me, that's like your your tier one your tier two is your first time home buyer who is just needs to be held for the entire experience
• 31:21
  And that's this level of service and then
• 31:23
  There's the ritz Carlton tier three and I love to use one of my business partners
• 31:28
  One of the coolest people possibly is my co-host on the podcast
• 31:30
  I love him dearly and I would say this to his face one of the laziest people I know as well
• 31:34
  Who who's the guy that would pay a premium
• 31:38
  And did when he bought his house
• 31:40
  To have somebody pack all his shit unpack all of his stuff
• 31:45
  Have the landscapers there have the cleaning company there like he just wanted to be able to
• 31:50
  Move and move in and didn't want to deal with anything else and pay the premium
• 31:56
  To do that and I think there is a whole market for that too
• 31:59
  So what we know for fact is that Americans are
• 32:04
  We we're in a world where it takes two incomes to make it living anymore for almost anybody in this country
• 32:09
  60% dual income households now and nobody wants to do this on their own
• 32:14
  And we're also all about convenience and service that's literally every survey you ever read is Americans want convenience
• 32:21
  Think door dash we pay just as much to have the food delivered as the food itself and service
• 32:26
  Create those experiences people pay for it
• 32:28
  Two quick things one of the the tiered surface reminds me of a story I heard years back
• 32:33
  I forget it was it was a high level executive. I think of a tech firm. He was moving
• 32:37
  And talk about like he didn't want to be involved at all
• 32:40
  He had photos taken of all his furniture and everything in the existing house
• 32:45
  So that the movers could put it in the new house in the right exactly where he wanted it and like two weeks later
• 32:51
  He moved in just open door boom ready to go
• 32:54
  I mean that's good. Keith had Keith had a spec a specific individual who came in to figure out how to
• 33:02
  I don't even know what you call it feng shui the kitchen so that all of your stuff is put away in a logical place
• 33:09
  Like pots and pans and this story because it makes
• 33:12
  Are you right hand or you left hand like yeah, but that's my point somebody's willing to pay a premium for all that right
• 33:16
  Yeah, you shouldn't you shouldn't like pre-judge on what people are willing to pay for yeah speaking of that
• 33:21
  This is the last point that we'll wrap up and you're busy is
• 33:24
  We're already seeing it you know the flat fee on the buyer side
• 33:28
  Which are take on that do these new business models and how do you think those will play out in the market?
• 33:33
  It's going to come down to one thing
• 33:35
  It's going to come down to how good of a job buyers agents do and explain to buyers how
• 33:42
  compensation will be paid
• 33:45
  And what I mean by that is if the buyer thinks they have to come out of pocket every time
• 33:48
  Then I think you'll see these business models pick up if the buyers agents
• 33:52
  You know get their head out of their butt and like think about this little bit and actually explain to the buyer that
• 33:56
  This isn't really something you have to do and we can probably get the seller to do it and have that conversation
• 34:01
  Then I'll go back to the comment I just made and I can give you some statistics for this so
• 34:06
  I think most Americans
• 34:08
  Don't
• 34:09
  Pre- they don't know most people don't prefer to work with what they perceive as a discount service
• 34:15
  They want a full service experience. Yeah, here's some examples of that red fins been around for a long time
• 34:21
  Really really struggled to take off
• 34:23
  There's still a very small company in you know the north the north the north west most of the stuff is referred out across the US
• 34:29
  Foxden's came over from the UK flat rate business model. I think it was like 3995
• 34:36
  Bankrupt within 18 months purple bricks most recent one came over 2017 bankrupt
• 34:42
  Americans love
• 34:44
  This idea of having somebody handle everything for them and they're getting the full experience. They like a discount
• 34:50
  Price but they want a full experience
• 34:53
  So it's going to end up with this one thing if the industry does a good job of of showing and explaining to a buyer
• 34:59
  You can get full service and you're likely not going to have to come out of pocket on that
• 35:03
  Then I don't think those business models take off if they can't get that figured out
• 35:07
  I think you'll see these things game more market share. So makes me think whatever happened to help you sell
• 35:12
  1976 is when they were founded and they're up. They're a tiny tiny player in the market
• 35:18
  And you have a lot
• 35:20
  During the greatest real estate, you know uptick people would have used them and they just
• 35:25
  People want the what they've seen is both wire fizzbo such a small percentage still seven percent last year lowest in recorded history
• 35:33
  Yeah, and of course the first as you know the percentage of people using a realtor has increased not decreased
• 35:38
  Over the years. It's because it's a complicated transaction and attorneys despite how much I don't like them because of all of this nonsense that they're doing
• 35:47
  They've made it more complex and people also realize that it's incredibly complex people were intensive risky transaction
• 35:53
  And so that's that's also driven that up
• 35:55
  So that's the only time I'm going to thank lawyers for what they do
• 35:59
  So yeah, it's a it's one of those things where it's
• 36:03
  It is
• 36:04
  It's all gonna be it's all gonna rest on leadership in our industry and how they teach their people
• 36:09
  Yeah, yeah, which which by the way here one quick question before I let you go if I'm correct
• 36:14
  Did I read that they just appointed a permanent CEO to the NAR? He did yeah, Nikiya right
• 36:19
  We just had our permanent CEO like isn't that
• 36:23
  Anti you know, I mean like how do you know that's always gonna be performing?
• 36:27
  Well, I mean all I can say is through all the drama they had over there between Kenny Parsel's departure
• 36:32
  You know the former CEO Bob Goldberg departing they brought Nikiya right in his you know, I interviewed her if you guys want to check that out
• 36:39
  It's on our podcast. We just did that interview last week
• 36:41
  You know, she's very smart. She's very bright. She has a significant business background
• 36:47
  She's not from real estate, but I also admire about her
• 36:49
  She doesn't pretend to understand her industry like she knows it all she's she's willing to listen
• 36:55
  They had her in as an interim while they were on a CEO search
• 36:58
  But then they've decided to keep her on for as a you know instead of interim is now permanent
• 37:04
  I don't know what that contract length is that was not disclosed at least I was not told so
• 37:09
  um
• 37:10
  We've got you know, she's in the seat and certainly we're wishing her the best and I know that
• 37:15
  We're gonna try and help her as long the way to help get this industry back on the right track
• 37:19
  So I promised last question, but I lied then do you also see a mass exodus out of NAR itself
• 37:24
  I know you guys by the way I listened to that podcast and we'll link it up in the show notes
• 37:27
  But it was a really great conversation about um, you know the value uh of NAR for members and advocacy and things like that
• 37:34
  But do you see people bailing on NAR?
• 37:37
  I think NAR has some pretty significant issues. It needs to come to grips with and I don't believe that they see it yet
• 37:43
  I think there's a little bit of
• 37:45
  So what I'm looking for I don't know. We'll just say that they are not
• 37:49
  Was that mutiny?
• 37:51
  Well, I was gonna say that I think there's maybe a little bit of
• 37:55
  Uh
• 37:56
  They're being a little naive to the amount of discourse towards NAR right now
• 38:00
  Um, you have to remember that
• 38:03
  In the settlement anybody who did more than two billion dollars in volume was left out and so all of those companies
• 38:09
  Mine included got sued separately and had to do separate settlements and negotiations on that and so
• 38:16
  The problem with what they did and I know they had to do it. I'm not a hundred percent agreement
• 38:21
  They had to do it that way, but let's just go with the fact that's what it is
• 38:24
  Is that you know 70% to 80% of the realtor members work for one of those hundred companies
• 38:30
  And so there's a lot of discourse there if NAR was being incredibly strategic right now
• 38:36
  They would be figuring out how to build a bridge back to those companies and if they don't
• 38:41
  Then I do think you'll see a mass exodus from NAR and that will be a shame because to the comment you made and we can wrap here is
• 38:49
  It NAR what its greatest strength is is its power in Washington DC just like MBA like the whole you know
• 38:56
  Getting the VA to make changes was because MBA and NAR were working together and they're a very strong force in DC politics
• 39:03
  If NAR is weakened in size or position
• 39:06
  There's a there's a very strong chance politicians who we can all agree or for the most part completely useless
• 39:12
  We'll write bills that will not be favorable for home ownership
• 39:16
  And then it will affect all industries and lending industry included so it's a it is a concern that if they lose their membership
• 39:22
  They'll lose their power in DC
• 39:24
  Well, this has been a fantastic conversation for those listening
• 39:27
  Please check the links in the show notes to all James resources podcast company
• 39:32
  New startup rays are a YSE James. Thank you so much man. I appreciate it. Of course my friend. Thanks for having me on
• 39:39
  You bet listeners you know what to do if you like this episode
• 39:41
  There's a link to also leave us a review. So do that in the show notes and we'll see you on the next one