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You're Probably Commission Steering Without Knowing It — Here's How to Stop Before You Get Sued · Dishin' Dirt with Gary Pickren

• 0:01
  SPEAKER_00: This is Dish and Dirt with Gary Pickering, South Carolina's only podcast dedicated to the real estate agent craft.
• 0:09
  SPEAKER_00: And now the host of Dish and Dirt, Gary Picker.
• 0:12
  SPEAKER_00: Hey, Greens, and welcome back, everyone, to another episode of Dish and Dirt.
• 0:14
  SPEAKER_00: I'm your often opinion in the birth, rarely wrong host, Gary Pickering, coming to you from the beautiful downtown Columbia South Carolina offices of Blair, Cato, Pickering, Castelline.
• 0:21
  SPEAKER_00: This is the fourth and very beautiful week of April 2026.
• 0:26
  SPEAKER_00: Before we begin our show today, a couple quick announcements to update you on.
• 0:29
  SPEAKER_00: First update Blythewood office on track to open May the 4th at 1516 LA Drive.
• 0:35
  SPEAKER_00: If you're on I-77, you get off of Killian Road, go behind the Chick-fil-A, and we're behind that in a strip shopping center.
• 0:42
  SPEAKER_00: Very cool new office.
• 0:44
  SPEAKER_00: Excited to share that with you in the Blythewood and Northeast Richland area.
• 0:47
  SPEAKER_00: If you've already got a closing scheduled and you want to move it to that Blythewood office after May 4th, just let your closer know.
• 0:53
  SPEAKER_00: If you have a brand new closing in the Blythewood or the Richland Northeast office area, let us know.
• 0:58
  SPEAKER_00: Send us a closing and tell us you want to have it scheduled out there and we'll get you closed up in the Blythewood area.
• 1:04
  SPEAKER_00: Save you that drive from Blythewood all the way downtown.
• 1:06
  SPEAKER_00: Much better for you guys.
• 1:08
  SPEAKER_00: Secondly, the Maudin office, right on track to open May the 18th.
• 1:11
  SPEAKER_00: Monday, May 18th, we'll be at 7 West Point Boulevard.
• 1:14
  SPEAKER_00: We're moving from our current location, about a mile down the road, to our new office at 7 West Point Boulevard.
• 1:19
  SPEAKER_00: Larketo bought the building, so we're very excited to have you in our new building and cannot wait to show you that.
• 1:25
  SPEAKER_00: If you have a closing scheduled anywhere around the May 18th time frame, check with your closer to make sure it's still going to go on the current Malden office or whether it'll be moved to the new Malton office.
• 1:35
  SPEAKER_00: Really the May uh 18th kind of our cutoff.
• 1:37
  SPEAKER_00: Everything after May 18th should be closing in the new West Point Boulevard office, anything before we close in the old office, uh, but double check with your closer and of course send the new closings in so that you can close in our new office at 7 West Point Boulevard because you're absolutely going to love it.
• 1:52
  SPEAKER_00: Lastly, a lot of people have been asking us about our Cinco de Mayo event.
• 1:56
  SPEAKER_00: We have decided not to do that event this year, and here's why.
• 1:59
  SPEAKER_00: We had the tremendously successful real estate success summit.
• 2:02
  SPEAKER_00: We sold that out in just a matter of days.
• 2:04
  SPEAKER_00: And at the event, people were asking, we need more of these.
• 2:07
  SPEAKER_00: Can we have some mini summits?
• 2:08
  SPEAKER_00: And so what we've decided to do is take our time, money, and effort and direct it toward another summit, a mini summit.
• 2:13
  SPEAKER_00: And what this summit's gonna be about, it's gonna be in June, and it's gonna talk all about artificial intelligence and the real estate industry.
• 2:20
  SPEAKER_00: It'll be a hands-on seminar.
• 2:22
  SPEAKER_00: It's going to be featuring some very incredible minds.
• 2:24
  SPEAKER_00: We actually have one of the best professors at the University of South Carolina who's in the AI department there, who actually teaches AIs to people training to people getting their master's in business.
• 2:34
  SPEAKER_00: She will come and be one of the instructors.
• 2:36
  SPEAKER_00: So you're going to get the same level instruction that people pay to go to the University of South Carolina master's program to get.
• 2:42
  SPEAKER_00: We'll have a lot of information about tickets coming up, but understand, tickets will be very limited.
• 2:47
  SPEAKER_00: It's not as big as spaces that we're normally in.
• 2:49
  SPEAKER_00: And so there will be a very limited amount of tickets.
• 2:51
  SPEAKER_00: So you're going to want to hurry and jump on those tickets as soon as you can.
• 2:55
  SPEAKER_00: Let me start today with something that I think a lot of people in our industry have either completely forgotten about or just choosing not to think about anymore.
• 3:02
  SPEAKER_00: And that's the Sitzer Burnett lawsuit.
• 3:04
  SPEAKER_00: And the fact that this lawsuit, when you boil it down, was based on what they considered commission steering.
• 3:10
  SPEAKER_00: That was the core allegation of the Sitzer lawsuit.
• 3:13
  SPEAKER_00: There was commission steering going on in our industry, and that was bad for buyers and sellers.
• 3:18
  SPEAKER_00: The plaintiffs didn't necessarily argue so much that the commission rates were high, though they did.
• 3:22
  SPEAKER_00: But what they really were arguing is that the listing agents were keeping buyer agent commissions artificially high because they were guaranteeing commission and compensation through the MLS.
• 3:32
  SPEAKER_00: And there's a lot of truth in what they were saying.
• 3:34
  SPEAKER_00: Even though we don't want to hear that, that was somewhat truthful.
• 3:38
  SPEAKER_00: But more importantly, what they argued is that buyer agents steered clients toward listings that paid higher commission rates and away from those that paid less.
• 3:47
  SPEAKER_00: Now, I didn't see a lot of that in our industry.
• 3:49
  SPEAKER_00: I do know of one particular agent who no longer has a license who was known to do that in some cases.
• 3:54
  SPEAKER_00: So I really didn't see it a lot.
• 3:55
  SPEAKER_00: But there were allegations that that did happen.
• 3:58
  SPEAKER_00: But what is very true, and is a fact, is that many MLSs had a feature that allowed real estate agents to search for properties for their clients based on commission rates.
• 4:08
  SPEAKER_00: Kid you not, how stupid do you have to be in this industry to have that feature and not think we're all going to get sued over it?
• 4:15
  SPEAKER_00: To literally allow a buyer's agent, before you even determine bedrooms, bathrooms, or anything else, that you allow them to sort properties based on how much you get paid.
• 4:26
  SPEAKER_00: That is an absolute breach of fiduciary duty on its face.
• 4:30
  SPEAKER_00: And Michael Ketchmark knew this and he showed that to the jury.
• 4:34
  SPEAKER_00: And that's what the jury heard.
• 4:35
  SPEAKER_00: It was almost impossible to argue that no, we were not doing compensation based on how much we got paid when your MLS had the very feature that allowed you to do it.
• 4:47
  SPEAKER_00: And that's what resulted in a$1.5 billion verdict.
• 4:51
  SPEAKER_00: So a little over two years ago, a$1.5 billion verdict against something you did, something you were doing, which by the way wasn't against the law, just bad practice.
• 5:00
  SPEAKER_00: But we have seemed to just have forgotten that verdict.
• 5:02
  SPEAKER_00: And it's been less than two years.
• 5:04
  SPEAKER_00: And we don't seem to care to modify our practices around what's happened in the Sitzaburnett case.
• 5:12
  SPEAKER_00: And here's even the more dangerous mindset that I'm seeing.
• 5:16
  SPEAKER_00: There's a lot of agents out there that think, well, we took commission off of the MLS, so problem solved.
• 5:21
  SPEAKER_00: They can't get us for any more money.
• 5:23
  SPEAKER_00: It's all said and done.
• 5:24
  SPEAKER_00: We're done.
• 5:24
  SPEAKER_00: It's we don't need to talk about this anymore.
• 5:26
  SPEAKER_00: Let's move on.
• 5:27
  SPEAKER_00: Risk over.
• 5:28
  SPEAKER_00: Wrong.
• 5:28
  SPEAKER_00: Absolutely not.
• 5:29
  SPEAKER_00: Your mechanism changed, but your risk did not go away.
• 5:33
  SPEAKER_00: And every week, it seems like there's a new lawsuit.
• 5:37
  SPEAKER_00: Realtors just settled another one for$54 million on the plaintiff's side that continue to attack the real estate practitioner and the real estate practice as a whole.
• 5:47
  SPEAKER_00: On this podcast, Dish and Dirt, I recently talked about the Waller versus Rocket Mortgage and Redfin case.
• 5:52
  SPEAKER_00: This is that lawsuit where the brokerages get compensated for referrals to Rocket.
• 5:57
  SPEAKER_00: And while the agent said, I never received any more money, the fact is the brokerage got paid additional compensation for the referrals.
• 6:04
  SPEAKER_00: And this is something that a lot of agents have been doing for many, many, many years.
• 6:08
  SPEAKER_00: But I'm telling you right now, you think$1.5 billion verdict was big?
• 6:13
  SPEAKER_00: Wait till this case is done.
• 6:14
  SPEAKER_00: I'm telling you right now, I'm predicting that this case will be worse.
• 6:18
  SPEAKER_00: Now, what do I know?
• 6:20
  SPEAKER_00: Well, what I know is that two years ago, none of you had ever heard of Sitzaburnett.
• 6:24
  SPEAKER_00: Wasn't on your radar, you weren't talking about it, you weren't worried how it was going to change your life and your practice.
• 6:29
  SPEAKER_00: But dish and dirt, we were talking here about Sitza versus Burnett, the Muller case.
• 6:34
  SPEAKER_00: We were talking about how this was going to be historically bad, and it was.
• 6:37
  SPEAKER_00: So I'm here to tell you again, Waller versus Rocket Mortgage is going to be historically bad.
• 6:42
  SPEAKER_00: And I guarantee you it will.
• 6:44
  SPEAKER_00: Now, if I was an asshole, which some of you may think I am because you don't like what I say here sometimes on this show, but what I will tell you is the truth.
• 6:50
  SPEAKER_00: I'm not going to sugarcoat it because I want to make you happy or I want to get more listeners.
• 6:55
  SPEAKER_00: This show is about the truth and only the truth.
• 6:56
  SPEAKER_00: So help me God.
• 6:57
  SPEAKER_00: I will tell you it like you whether you want to hear it or not.
• 7:00
  SPEAKER_00: And if I was an asshole, I can tell you right now five different ways to sue everyone in this industry that a Michael Ketchmark could become a billionaire off of.
• 7:07
  SPEAKER_00: This industry is a ticking time bomb of lawsuits.
• 7:11
  SPEAKER_00: And a lot of it has to do because there's agents in this state and others across this country who just don't care to change, who want it to be the way it was.
• 7:18
  SPEAKER_00: And regardless how much you tell them how bad these things are and how they can't do them, they always come back and say, well, we're doing it this way, and that's how it is.
• 7:26
  SPEAKER_00: And it just utterly amazes me the willful ignorance that so many in this industry have right now.
• 7:33
  SPEAKER_00: Or maybe it's just people in denial.
• 7:34
  SPEAKER_00: I mean, hell, I'll tell you, I don't like change.
• 7:36
  SPEAKER_00: I don't like change at all.
• 7:37
  SPEAKER_00: And if they came in and started telling me how to change the law industry, I wouldn't like it.
• 7:41
  SPEAKER_00: But guess what?
• 7:41
  SPEAKER_00: They did this to us 30 years ago.
• 7:43
  SPEAKER_00: We used to take checks.
• 7:44
  SPEAKER_00: We don't take checks now.
• 7:45
  SPEAKER_00: We used not to ask for your IDs.
• 7:47
  SPEAKER_00: You certainly do now.
• 7:48
  SPEAKER_00: But back in 1995, it was a different world.
• 7:51
  SPEAKER_00: And we used to take personal checks.
• 7:52
  SPEAKER_00: You'd even take cashier's checks up to a million dollars.
• 7:55
  SPEAKER_00: You didn't care.
• 7:56
  SPEAKER_00: But all of that has changed.
• 7:57
  SPEAKER_00: And they constantly came in and fixed our industry on the real estate closing industry.
• 8:02
  SPEAKER_00: And now the same thing is happening to you.
• 8:04
  SPEAKER_00: Nobody likes it, but you can't stay in denial and you can't be willfully ignorant about it.
• 8:08
  SPEAKER_00: You have to understand.
• 8:09
  SPEAKER_00: If I was a plaintiff's attorney, it's just like Michael Ketchmark, I'm looking at this industry right now and thinking, how can I get my multi-billion dollar settlement so I can go buy Debstein's Island?
• 8:18
  SPEAKER_00: Nothing's changed of what's happening in our industry.
• 8:21
  SPEAKER_00: All that y'all have done is moved around some of the shells.
• 8:24
  SPEAKER_00: Don't look over here, look over here.
• 8:26
  SPEAKER_00: I'm telling you again today, this industry needs to get its head out of its collective ass because this is not over by a long shot.
• 8:32
  SPEAKER_00: All you have to do is go look at all the headlines of all the lawsuits that continue every single day.
• 8:37
  SPEAKER_00: And that's what we're going to talk about.
• 8:39
  SPEAKER_00: We're going to talk about commission steering because commission steering hasn't changed.
• 8:42
  SPEAKER_00: It hasn't gone away.
• 8:44
  SPEAKER_00: It's getting worse.
• 8:45
  SPEAKER_00: But before I go further, I want to make something very, very clear.
• 8:48
  SPEAKER_00: There's no law that says many of these practices that y'all are doing are illegal.
• 8:52
  SPEAKER_00: Let me say that again.
• 8:53
  SPEAKER_00: There's no statute that clearly says you can't advertise compensation.
• 8:57
  SPEAKER_00: You can't discuss compensation with the other broker prior to showing the property.
• 9:01
  SPEAKER_00: You can't structure deals creatively so they make sure you get paid.
• 9:04
  SPEAKER_00: But here's the problem, guys.
• 9:06
  SPEAKER_00: There was absolutely no law against advertising cooperative compensation on the MLS either.
• 9:13
  SPEAKER_00: And NAR still lost a$1.5 billion verdict.
• 9:17
  SPEAKER_00: So when you come to me and say it's not against the law for broker to broker, it's not against the law to take a bonus or whatever, just remember that.
• 9:24
  SPEAKER_00: Was against the law for you to have compensation on the MLS, but that didn't stop a jury in Missouri of eight people giving a$1.5 billion verdict that forever disrupted NAR and how practice of real estate happens across this country.
• 9:40
  SPEAKER_00: So if you're operating under this mindset that if it's not illegal, I'm fine.
• 9:44
  SPEAKER_00: You're playing the wrong game.
• 9:46
  SPEAKER_00: You're playing the short game.
• 9:47
  SPEAKER_00: In the long term, you're going to get burned.
• 9:48
  SPEAKER_00: Because the real question today really is this what would a jury think?
• 9:52
  SPEAKER_00: Or what would a plaintiff's attorney argue to a jury about me?
• 9:56
  SPEAKER_00: That's the real question.
• 9:57
  SPEAKER_00: Does it look like steering?
• 9:58
  SPEAKER_00: Because that's what matters now.
• 10:00
  SPEAKER_00: It's not necessarily the truth, the reality.
• 10:04
  SPEAKER_00: It's about perception.
• 10:05
  SPEAKER_00: And whether you intended to steer or didn't even know you were steering, if it looks like steering, then that allows a jury to believe it is.
• 10:13
  SPEAKER_00: It allows a plaintiff's attorney to argue, and it allows them to say, doesn't matter whether you intended to do it, it's steering.
• 10:19
  SPEAKER_00: So let's step in the shoes of one of these plaintiffs' attorneys for just one minute in a courtroom.
• 10:23
  SPEAKER_00: Let's just imagine this standing there in front of the jury.
• 10:25
  SPEAKER_00: Ladies and gentlemen of the jury, they would say, the real estate industry told you that they've changed.
• 10:30
  SPEAKER_00: They told the regulators they've changed.
• 10:31
  SPEAKER_00: They told the state governments they've changed.
• 10:33
  SPEAKER_00: They told the public they've changed.
• 10:34
  SPEAKER_00: They've been on the CBS News, the ABC News, the Fox News, they've been in Endman news.
• 10:39
  SPEAKER_00: They've been all over the news.
• 10:40
  SPEAKER_00: But guess what, guys?
• 10:40
  SPEAKER_00: They haven't changed.
• 10:41
  SPEAKER_00: All they've done is they've just moved the ball.
• 10:44
  SPEAKER_00: It's the same behavior, it's just in a different place.
• 10:46
  SPEAKER_00: They've hidden under this shell instead of this shell.
• 10:48
  SPEAKER_00: It's not on the MLS.
• 10:49
  SPEAKER_00: We concede that your compensation is not on the MLS, but it's certainly in the listing agreement and it's in other places, and it's there before the buyer even shows their face, before the buyer even looks at your house, before they make an offer, you're already guaranteeing what they're going to pay the other side.
• 11:03
  SPEAKER_00: Now, that's the argument.
• 11:04
  SPEAKER_00: We know all that's not necessarily true because there's no guarantee, but it certainly looks like a guarantee to a jury.
• 11:09
  SPEAKER_00: And if you don't think that argument's not going to come your way, you're absolutely not paying attention, or you're just refusing to accept the truth.
• 11:16
  SPEAKER_00: There's so many instances of commission steering.
• 11:18
  SPEAKER_00: I don't know if I can get them all in one show, but I'm gonna go over a lot of them right now.
• 11:21
  SPEAKER_00: A couple of them we've talked about on this show quite a bit.
• 11:24
  SPEAKER_00: Others may never have thought about.
• 11:25
  SPEAKER_00: The first one is broker-to-broker compensation and the listing agreements.
• 11:28
  SPEAKER_00: We've talked about this ad nauseum.
• 11:30
  SPEAKER_00: Here's the reality: since a Burnett, compensation was offered on the multiple listing service.
• 11:35
  SPEAKER_00: After a$1.5 billion verdict for something that wasn't illegal that had been done since the beginning of time, I've been practicing law since 1995.
• 11:44
  SPEAKER_00: It was well before I practiced law in 1995.
• 11:47
  SPEAKER_00: The compensation was offered on the MLS.
• 11:49
  SPEAKER_00: But now where are we?
• 11:50
  SPEAKER_00: Station's no longer on the MLS, but now it's being written into listing agreements between the seller and the listing broker before a buyer presents himself, before a buyer makes an offer, before a buyer even sees the house.
• 12:03
  SPEAKER_00: We already are having listing agents doing the same thing they were doing in the MLS when they were signing up the seller.
• 12:09
  SPEAKER_00: You need to pay me this, and you need to pay the other side this.
• 12:11
  SPEAKER_00: Well, who's the other side?
• 12:12
  SPEAKER_00: Well, we don't know who the other side is.
• 12:13
  SPEAKER_00: Well, what's the other side getting paid?
• 12:15
  SPEAKER_00: Well, you need to pay him this.
• 12:16
  SPEAKER_00: Well, have they asked for that?
• 12:17
  SPEAKER_00: No, they hadn't even asked that.
• 12:18
  SPEAKER_00: Well, why are we agreeing to pay him that?
• 12:19
  SPEAKER_00: The only thing that's changed is when it was in the MLS, it was guaranteed, and now it's not.
• 12:24
  SPEAKER_00: But that's not how the client looks at it.
• 12:25
  SPEAKER_00: When you're telling your seller that you're going to pay me X and pay the seller or the buyer's agent Y, they pretty much figure that's set and guaranteed.
• 12:33
  SPEAKER_00: The seller is still being advised on what to offer.
• 12:36
  SPEAKER_00: The seller is still setting compensation for the buyer agent, and the seller is still being influenced by how agents interact with the property.
• 12:45
  SPEAKER_00: And this is happening every day, happening a lot in Hilton Head.
• 12:48
  SPEAKER_00: Yes, I'm talking about you, Hilton Head.
• 12:50
  SPEAKER_00: I have a real estate agent friend down there who tells me that is one of the leading agents, are still telling the sellers at every turn that you have to pay X.
• 12:56
  SPEAKER_00: And I'm going to use actual numbers.
• 12:57
  SPEAKER_00: You got to pay me six, and three is going to go to the buyer's agent.
• 13:00
  SPEAKER_00: Because if we don't do that, all these other houses are doing in this neighborhood.
• 13:03
  SPEAKER_00: And if you don't pay broker-to-broker compensation and guarantee the buyer's side 3%, no one's going to show your house.
• 13:08
  SPEAKER_00: Okay.
• 13:09
  SPEAKER_00: First of all, that's ignorant.
• 13:11
  SPEAKER_00: That is absolutely ignorant of how real estate works.
• 13:13
  SPEAKER_00: Second of all, that's pure laziness.
• 13:15
  SPEAKER_00: It's laziness in that you don't want to try to explain it to your client and let your client understand.
• 13:20
  SPEAKER_00: It's also laziness in the fact that you don't understand what the real estate settlement was about.
• 13:24
  SPEAKER_00: And it's just plain bad practice of real estate that I guess you're so fearful that you can't sell a property without guaranteeing the buyer's agent compensation.
• 13:33
  SPEAKER_00: Pick your argument here.
• 13:35
  SPEAKER_00: Is it you're lazy?
• 13:36
  SPEAKER_00: Is it you're incompetent?
• 13:37
  SPEAKER_00: Whatever it may be.
• 13:38
  SPEAKER_00: I don't know.
• 13:39
  SPEAKER_00: But if I'm a plaintiff's attorney, here's what I'm saying.
• 13:41
  SPEAKER_00: Compensation was removed from the MLS, but you still kept the system in place.
• 13:45
  SPEAKER_00: And here's where it gets really dangerous because a listing agent in these scenarios is suggesting a standard commission.
• 13:52
  SPEAKER_00: You know, you got to pay my side and this side because everybody else in the neighborhood is doing it.
• 13:56
  SPEAKER_00: You're encouraging higher compensation so that you can attract the agents.
• 13:59
  SPEAKER_00: He said, you know, if you don't do it, no one will show your property.
• 14:02
  SPEAKER_00: And then lastly, he's framing the compensation as necessary to get showings.
• 14:06
  SPEAKER_00: All of that is going to get you sued.
• 14:08
  SPEAKER_00: That's where it starts looking exactly like behavior that was challenged in the Sitta Burnett case.
• 14:14
  SPEAKER_00: Explain to me how it's not.
• 14:15
  SPEAKER_00: When you're sitting there telling your seller you have to pay me X and the buyer's agent Y before a buyer's even presented themselves, asked for anything, submitted an offer, even looked at your house, but you're telling them you have to offer the buyer's agent to pay them this amount of money.
• 14:30
  SPEAKER_00: How are you not suggesting a standard of compensation?
• 14:33
  SPEAKER_00: How are you not trying to encourage compensation to attract agents?
• 14:36
  SPEAKER_00: How are you not framing this conversation as it's necessary for you to do this in order for showings of the house?
• 14:42
  SPEAKER_00: All of that is exactly what you're doing.
• 14:44
  SPEAKER_00: So listen, agents, you need to stop complaining about the changes.
• 14:48
  SPEAKER_00: That ship is sailed.
• 14:49
  SPEAKER_00: It's already hit the rock of Gibraltar and it's already sunk.
• 14:51
  SPEAKER_00: They're not going to change it back to you because you were whining about it.
• 14:54
  SPEAKER_00: But rather, what you need to start using is your mind and your thinking abilities.
• 14:58
  SPEAKER_00: Put on your thinking hat and you need to start to critically think about what's going on in this industry and how you need to understand it.
• 15:04
  SPEAKER_00: And what I'd have to ask you this is why do you need your seller to agree to compensate the buyer on your listing instead of doing any of the contract?
• 15:13
  SPEAKER_00: Why?
• 15:13
  SPEAKER_00: Why do you need him to do that?
• 15:15
  SPEAKER_00: Why is it so important to you to hold on to broker-to-broker compensation when you're the listing agent to guarantee a buyer's commission?
• 15:22
  SPEAKER_00: You're not getting paid that commission.
• 15:24
  SPEAKER_00: So why is it so important to you?
• 15:25
  SPEAKER_00: And please don't tell me, well, I can't sell the house without it, because top agents all over South Carolina are doing it every single day.
• 15:30
  SPEAKER_00: And that just tells me you think you're in, you're you're obviously incompetent in sales.
• 15:34
  SPEAKER_00: Why do you feel you can't sell the house without telling the buyer's agent up front, I'm going to pay you, I'll pay you, I'll pay you.
• 15:39
  SPEAKER_00: Even though nothing you tell the buyer is binding.
• 15:41
  SPEAKER_00: You can tell the buyer's agent all day long, I will pay you.
• 15:43
  SPEAKER_00: I guarantee you, we'll get you paid, we'll get you paid.
• 15:45
  SPEAKER_00: None of it matters unless it's in a contract.
• 15:47
  SPEAKER_00: Or you're just that lazy that you don't want to take the time to learn how to explain it to your seller of how compensation works now.
• 15:54
  SPEAKER_00: You pay me this to list your house.
• 15:56
  SPEAKER_00: We'll worry about the buyer when they submit a contract.
• 15:58
  SPEAKER_00: That's that simple.
• 15:59
  SPEAKER_00: We're open to any and all offers.
• 16:01
  SPEAKER_00: But I don't understand what it is because no one's given me one valid reason.
• 16:05
  SPEAKER_00: And I'd like you to think of any other industry that does it this way where we're guaranteed compensation on the other side.
• 16:10
  SPEAKER_00: Could you imagine if lawyers were doing this?
• 16:11
  SPEAKER_00: My fee to help you in this case is this amount, but I need you to also go ahead and pay me some money so I can pay the other lawyer on the other side.
• 16:17
  SPEAKER_00: Could you imagine that?
• 16:18
  SPEAKER_00: But that's how this industry works.
• 16:20
  SPEAKER_00: It's time to change.
• 16:21
  SPEAKER_00: The industry changed whether you like it or not.
• 16:23
  SPEAKER_00: Broker to broker compensation is gone.
• 16:25
  SPEAKER_00: Because let's bring this home to you.
• 16:27
  SPEAKER_00: South Carolina realtors have already eliminated broker to broker compensation from all their forms.
• 16:32
  SPEAKER_00: What does that tell you?
• 16:33
  SPEAKER_00: Well, it tells me that organizations like SER and other trade organizations don't move to eliminate stuff, especially this fast, unless one, they see a risk.
• 16:41
  SPEAKER_00: Number two, they understand that risk and that exposure is significant.
• 16:45
  SPEAKER_00: And three, they're trying to get ahead of any litigation.
• 16:48
  SPEAKER_00: So now you're in a courtroom and the plaintiff's lawyer says, hey, the South Carolina Realtors Association stopped doing broker-to-broker compensation.
• 16:54
  SPEAKER_00: Why didn't your brokerage?
• 16:55
  SPEAKER_00: Why didn't you, as an individual agent, the largest trade organization in the industry in your state, decided it was not good practice, that it was not good for the client, but yet you decided it was.
• 17:07
  SPEAKER_00: How do you defend that position?
• 17:08
  SPEAKER_00: When you tell me that broker to broker is still legal in South Carolina and you're still gonna do it because you don't care what the realtors say, you're not a realtor, whatever, you explain to me how you're gonna answer that question because that's what they're gonna be asking.
• 17:20
  SPEAKER_00: Explain to me why, if the Realtors Association, the largest trade group in the United States for realtors, stood up and said, we think broker to broker is bad, we're no longer putting it in our forms and we're advising you not to do it, but you're still doing it, why you're smarter than the Realtors Association.
• 17:35
  SPEAKER_00: Good luck with defending that.
• 17:37
  SPEAKER_00: You're not gonna win that.
• 17:38
  SPEAKER_00: It's indefensible.
• 17:38
  SPEAKER_00: But here's the thing: understand, you don't have to convince me, you don't have to convince other agents, you don't have to convince your broker.
• 17:44
  SPEAKER_00: You don't hell, you don't even have to convince yourself.
• 17:46
  SPEAKER_00: And you don't even have to convince a judge because it's gonna be a jury.
• 17:49
  SPEAKER_00: And here's what the jury's gonna hear out of your mouth that the industry said this was a problem, states have stopped doing it, the Realtors Association in South Carolina has stopped doing it because it's a problem, but this agent sitting in front of us, a smug, arrogant agent, they're still doing it.
• 18:04
  SPEAKER_00: Let's show him.
• 18:05
  SPEAKER_00: That's what's good, that's where it's gonna be.
• 18:07
  SPEAKER_00: Moving to the second issue is the bonus structure.
• 18:09
  SPEAKER_00: Bonuses and variable compensation.
• 18:12
  SPEAKER_00: This is where things are gonna get really messy for a lot of you.
• 18:14
  SPEAKER_00: And I've talked about this as well.
• 18:15
  SPEAKER_00: When a seller, particularly builders, are offering a bonus to a buyer's agent.
• 18:19
  SPEAKER_00: You can only get what's in your agency agreement with your buyer, and you can't update it to capture more commission.
• 18:23
  SPEAKER_00: So you shouldn't be taking them anyway.
• 18:25
  SPEAKER_00: And I don't know how you ask for a bonus before you even do work.
• 18:28
  SPEAKER_00: You have others out there, sellers that are offering higher compensation if they can get a deal done quickly, or they're doing tiered commission structures, 3%, but I'll give a 1% for the first closing, 2% for the second, 3% for the third as a bonus.
• 18:40
  SPEAKER_00: Again, some of this is not illegal, but it does violate the settlement.
• 18:44
  SPEAKER_00: Whether you're a realtor or not, how are you gonna continue to practice doing something that cost the National Association of Realtors$1.5 billion?
• 18:52
  SPEAKER_00: What is it that bonus steering looks like?
• 18:53
  SPEAKER_00: Well, it looks like incentivizing behavior based on compensation.
• 18:57
  SPEAKER_00: And that's the original claim in Sitzaburnett.
• 19:00
  SPEAKER_00: Agents were influenced by compensation.
• 19:01
  SPEAKER_00: So now the plaintiffs are simply gonna say you didn't eliminate steering, you just got more creative at it.
• 19:06
  SPEAKER_00: Agents were financially motivated to show certain properties over others because they were getting a bonus.
• 19:11
  SPEAKER_00: That's the bottom line.
• 19:12
  SPEAKER_00: A bonus argument makes this argument a whole lot easier, in my opinion.
• 19:16
  SPEAKER_00: Even if you don't change your behavior, even if you never show a house based on a bonus or not, the mere existence of the bonus puts you at risk because it creates the appearance of an influence.
• 19:25
  SPEAKER_00: It opens the door to that claim and it makes the actions easier to question.
• 19:29
  SPEAKER_00: Every time you see one of these builders putting that bonus out there, understanding all that's doing is putting a bullseye right on your back.
• 19:35
  SPEAKER_00: And I've had people argue with me in my continual education classes at CCRA, and I always ask them, how so?
• 19:41
  SPEAKER_00: And nobody can argue.
• 19:42
  SPEAKER_00: It's nothing more than people want to get their bonuses, and so they disagree with what I'm saying.
• 19:46
  SPEAKER_00: That's fine.
• 19:47
  SPEAKER_00: Disagree all you want, but I'm telling you the truth.
• 19:49
  SPEAKER_00: And here's the other part of the truth.
• 19:51
  SPEAKER_00: I want you to get paid.
• 19:52
  SPEAKER_00: I don't want you to leave this business.
• 19:54
  SPEAKER_00: I need every one of you to be immensely successful because the more successful you are, the more closings you have, the more closings you send to Blair Cato so that we can continue to grow from 10 offices to 15 or 20.
• 20:03
  SPEAKER_00: I'm here to tell you the truth, whether you want to hear it or not, and that's the truth.
• 20:06
  SPEAKER_00: Now, another truth you need to understand is calling agents about compensation can be argued to be commission steering.
• 20:12
  SPEAKER_00: I don't understand why you're doing this.
• 20:14
  SPEAKER_00: You look silly calling a buyer's agent asking them what they're offer, and you look s and here's why you look silly.
• 20:19
  SPEAKER_00: Because it doesn't matter what they tell you they're offering.
• 20:21
  SPEAKER_00: It's not binding, it's not guaranteed.
• 20:24
  SPEAKER_00: It only becomes binding when it's in the contract.
• 20:26
  SPEAKER_00: Every time you call up an agent and say, what are you offering?
• 20:29
  SPEAKER_00: and they say, We're gonna offer to pay your full commission, that doesn't mean jack shit.
• 20:34
  SPEAKER_00: Because when they don't agree to pay it, because you gave them a crappy contract offer, what are you gonna do?
• 20:39
  SPEAKER_00: Well, you said you were gonna pay it, yeah, but not that crappy offer.
• 20:42
  SPEAKER_00: Or what happens when you call them and they say I'm not gonna pay any commission whatsoever?
• 20:45
  SPEAKER_00: But then you submit an offer with commission and it does get paid.
• 20:48
  SPEAKER_00: You're gonna go back and go, I thought you weren't gonna do it, I told you so.
• 20:51
  SPEAKER_00: No, this happens all the time.
• 20:53
  SPEAKER_00: Agents are calling and asking about compensation.
• 20:55
  SPEAKER_00: You think it's harmless and it sounds like that.
• 20:57
  SPEAKER_00: But here's the argument against you.
• 20:59
  SPEAKER_00: Every time you do it, the argument's gonna be before even showing the property, the real estate agent was so concerned about whether they were gonna get paid or not, they called the other side to ask about it.
• 21:08
  SPEAKER_00: That's all you need to hear is a jury.
• 21:10
  SPEAKER_00: Why are you calling the other side about commissions?
• 21:12
  SPEAKER_00: You have an agreement here.
• 21:13
  SPEAKER_00: Why are you worried about it?
• 21:14
  SPEAKER_00: Why are you calling the other side asking how much they're gonna pay you?
• 21:16
  SPEAKER_00: Nothing's changed, it's exactly the same.
• 21:18
  SPEAKER_00: And it doesn't even matter if your intention was you just wanted to understand the structure, or your client asked you to call to find out what they were offering.
• 21:24
  SPEAKER_00: It doesn't matter.
• 21:29
  SPEAKER_00: The worst case scenario is you ask about compensation and then you don't show the property for some reason or for no reason at all.
• 21:35
  SPEAKER_00: Just don't want to look at the property.
• 21:36
  SPEAKER_00: Now they can make the argument, you called, they told you they weren't going to pay commission, you didn't show the property.
• 21:41
  SPEAKER_00: Or you were delayed showing it.
• 21:43
  SPEAKER_00: You showed the other ones that did pay compensation, you didn't offer to show that one.
• 21:46
  SPEAKER_00: Or you framed it differently to your client.
• 21:48
  SPEAKER_00: Oh, I think one of these properties is better than this one over here.
• 21:51
  SPEAKER_00: You filtered listings based on commission.
• 21:53
  SPEAKER_00: That's exactly what the listing got this industry in trouble doing.
• 21:56
  SPEAKER_00: So quit calling.
• 21:58
  SPEAKER_00: You look foolish, you don't need to call.
• 22:00
  SPEAKER_00: And nothing's binding anyway.
• 22:01
  SPEAKER_00: And it is commission steering.
• 22:03
  SPEAKER_00: Additional commission steering situation is when you don't show properties.
• 22:07
  SPEAKER_00: Agents not showing properties where commissions are unclear or not being offered is commission steering.
• 22:11
  SPEAKER_00: And let me be direct.
• 22:12
  SPEAKER_00: You must show all properties that meet your client's criteria.
• 22:16
  SPEAKER_00: End of story, period.
• 22:18
  SPEAKER_00: Again, and it doesn't matter whether they say you're going to pay commissions or not, because it's not binding.
• 22:22
  SPEAKER_00: So I don't know why you're banking on what that real estate agent tells you on the phone as truthful.
• 22:27
  SPEAKER_00: It doesn't matter whether they're lying about it or whether they intended to pay it.
• 22:30
  SPEAKER_00: They don't have to pay you anything if the contract doesn't meet their needs.
• 22:34
  SPEAKER_00: But you have to show all properties.
• 22:36
  SPEAKER_00: When you aren't, because they're not they're not offering you commission or they're not clear on commission, you try to avoid it or you downplay it, that's where your problem is.
• 22:45
  SPEAKER_00: Because now we're not talking theoretical, it's actual behavior.
• 22:48
  SPEAKER_00: The plaintiff does not have to argue your intent.
• 22:50
  SPEAKER_00: You didn't have to do it on purpose.
• 22:52
  SPEAKER_00: All they have to show is you didn't present all the options.
• 22:55
  SPEAKER_00: Here's the right approach.
• 22:56
  SPEAKER_00: If there's a property that fits your client's criteria that meets their goals, you show it.
• 23:00
  SPEAKER_00: If compensation is needed, you negotiate in the contract.
• 23:03
  SPEAKER_00: It's the cleanest, safest approach.
• 23:05
  SPEAKER_00: Compensation is not guaranteed.
• 23:07
  SPEAKER_00: It's not guaranteed in broker to broker.
• 23:09
  SPEAKER_00: So stop calling the other agent.
• 23:10
  SPEAKER_00: Makes you look stupid.
• 23:12
  SPEAKER_00: And I want you to think about this.
• 23:13
  SPEAKER_00: Do you think the top volume agents in the Carolinas are calling, asking other agents what their compensation is?
• 23:19
  SPEAKER_00: Heck no.
• 23:19
  SPEAKER_00: They're putting in a compensation agreement.
• 23:21
  SPEAKER_00: They know because they've already explained it to their buyer, either you're going to pay me or we'll negotiate it with the seller.
• 23:27
  SPEAKER_00: Doesn't matter what that listing agent tells you they'll do or not do.
• 23:30
  SPEAKER_00: Your key line needs to be I show my clients every property that fits their criteria they want to see.
• 23:36
  SPEAKER_00: We will handle the compensation later in the offer.
• 23:39
  SPEAKER_00: That's your protection.
• 23:40
  SPEAKER_00: So let me talk about steering one step further because this is where I think a lot of agents are missing the real risk.
• 23:45
  SPEAKER_00: When most agents hear commission steering, they think I'm not going to show a house because it doesn't pay.
• 23:50
  SPEAKER_00: That's obvious one.
• 23:51
  SPEAKER_00: But if I'm a planning attorney, I'm not stopping there.
• 23:53
  SPEAKER_00: I am expanding that definition of commission steering.
• 23:56
  SPEAKER_00: And here's some of the reality.
• 23:57
  SPEAKER_00: Steering is no longer just about what you show, it's about everything that you do that influences the buyer's decision.
• 24:04
  SPEAKER_00: And that's where every starts getting real uncomfortable because we're not just talking about rules or laws.
• 24:08
  SPEAKER_00: We're talking about behavior, language, tone, your effort, your prioritization of certain listings.
• 24:14
  SPEAKER_00: And now we're starting about how this actually shows up, particularly when you're showing two or more properties.
• 24:20
  SPEAKER_00: If you say something like, well, this one will give me easier to get this one done, or this agent's great to work with, or this deal will be smooth, it sounds normal, even sounds helpful.
• 24:29
  SPEAKER_00: But when one property is paying more than the other, now it allows that plaintiff's attorney to say the agent influenced a buyer using subjective language tied to compensation.
• 24:39
  SPEAKER_00: And it doesn't stop there because it can even go back to how you even ran your search.
• 24:43
  SPEAKER_00: Did you tweak criteria based on that?
• 24:46
  SPEAKER_00: Did you leave out certain listings that didn't pay compensation or from an agent that you know doesn't do broker-to-broker compensation?
• 24:52
  SPEAKER_00: Did you prioritize those that do broker-broker compensation over those that don't?
• 24:57
  SPEAKER_00: Are you prioritizing showing the builders who are offering you builder bonuses of$10,000 over those who don't?
• 25:03
  SPEAKER_00: Even if those decisions seem unintentional to you, doesn't matter if it lines up with compensation because now the argument becomes you steered through the property search itself.
• 25:15
  SPEAKER_00: You only gave me the options of seeing those properties that you knew the bonuses were available on.
• 25:20
  SPEAKER_00: And then you bring in now how you present the listings.
• 25:23
  SPEAKER_00: Do you send those that have compensation and bonuses up front immediately?
• 25:28
  SPEAKER_00: Do you hold those others back, the ones that you know aren't doing broker to broker, aren't offering to do bonuses?
• 25:34
  SPEAKER_00: Are you sending those later?
• 25:36
  SPEAKER_00: Are you highlighting and pushing the ones that you like with the compensation plans and the bonus plans?
• 25:40
  SPEAKER_00: It creates a narrative that the access to the information wasn't equal and it was based on how you were getting compensated or how you were getting bonused.
• 25:47
  SPEAKER_00: What about preferred agents?
• 25:49
  SPEAKER_00: Let's be honest, this happens all the time.
• 25:50
  SPEAKER_00: I like working with that agent, or this office is easy to deal with, or this transaction is smoother when I'm dealing with them.
• 25:55
  SPEAKER_00: All those things can be true again, but if those preferences line up with compensations, this office I like dealing with because it's broker to broker.
• 26:02
  SPEAKER_00: I don't have to worry about compensation.
• 26:03
  SPEAKER_00: I send a form 120, they sign, it's over.
• 26:05
  SPEAKER_00: I don't have to negotiate that.
• 26:06
  SPEAKER_00: But every time there's a non-broker-to-broker compensation agreement, you don't want to deal with that.
• 26:11
  SPEAKER_00: So you're pushing the ones that have broker to broker.
• 26:13
  SPEAKER_00: Now we have the argument that the agent prioritizes their own business relationships over the client's best interest.
• 26:20
  SPEAKER_00: And then you have the one where the buyer's agreements are structured in such a way where it pressures certain outcomes and frames deals on how you get paid.
• 26:27
  SPEAKER_00: It's called preconditioning the buyer before they even sell, see a house.
• 26:31
  SPEAKER_00: And even your conversation with your consumer can have problems.
• 26:35
  SPEAKER_00: If you say this seller isn't offering anything, you don't know that until you submit an offer.
• 26:39
  SPEAKER_00: Remember, sellers are not making the offers, the buyer's making the offer.
• 26:43
  SPEAKER_00: You're the one who's making the offer on what you'll pay for it and what terms you want.
• 26:47
  SPEAKER_00: That one could cost you more, is another one of those statements when you are directing that based on the fact that one is offering compensation and one is not.
• 26:54
  SPEAKER_00: It's called framing as discouragement.
• 26:56
  SPEAKER_00: And that's another potential steering issue.
• 26:59
  SPEAKER_00: And here's the one that really hits hard is the effort.
• 27:02
  SPEAKER_00: You push the one that offers the bonus, offers the higher commission rate on certain deals, you follow up more, you negotiate more aggressively, you're more negative on the house that doesn't offer the bonus.
• 27:12
  SPEAKER_00: So your efforts are aligning up with your compensation.
• 27:15
  SPEAKER_00: So your behavior has changed on how you get paid.
• 27:18
  SPEAKER_00: So here's a takeaway.
• 27:19
  SPEAKER_00: Let me give you a line I want you to remember.
• 27:21
  SPEAKER_00: Hearing is no longer about whether you show the house, it is about everything that influenced the buyer's decision.
• 27:28
  SPEAKER_00: That's it.
• 27:29
  SPEAKER_00: And that's the part that matters.
• 27:30
  SPEAKER_00: Most of what I've described today is not illegal.
• 27:32
  SPEAKER_00: It's often unintentional.
• 27:33
  SPEAKER_00: It's part of everyday real estate practice.
• 27:35
  SPEAKER_00: But in a courtroom, it becomes a pattern, a narrative, a financial incentive story.
• 27:40
  SPEAKER_00: If a plaintiff's attorney can connect your behavior to compensation, even indirectly, they're going to call it steering and they're going to sue the hell out of you.
• 27:49
  SPEAKER_00: Because I know now there's some agents just thinking, am I following the rules?
• 27:53
  SPEAKER_00: What they should be thinking is, how would this look if someone tried to pick apart every decision I made in this transaction?
• 28:00
  SPEAKER_00: If you're an agent thinking, well, I'm still allowed, it's still allowed by law, I'm fine.
• 28:04
  SPEAKER_00: You're missing the point.
• 28:06
  SPEAKER_00: Because the argument isn't going to be, was it legal?
• 28:08
  SPEAKER_00: The argument's going to be is did the industry know this problem and move away from it?
• 28:13
  SPEAKER_00: And if the answer is yes, the next question is going to be, well, why didn't you?
• 28:17
  SPEAKER_00: And as the great Reverend Geno Jennings would say, are you listening to the old troublemaker?
• 28:22
  SPEAKER_00: There is a clear shift, guys, in our industry today away from commission steering, such as broker to broker, bonuses, calling, and doing an array of other things.
• 28:30
  SPEAKER_00: When you combine this with the NAR settlement, association changes like we've seen here at SER, this increased legal pressure we're seeing every day when these new lawsuits, only one conclusion can be made, and that it is no longer about just what's allowed by law.
• 28:44
  SPEAKER_00: It's about what's defensible, what is best practices.
• 28:46
  SPEAKER_00: So what should you be doing as an agent?
• 28:48
  SPEAKER_00: Show all properties that meet criteria.
• 28:51
  SPEAKER_00: Do not filter properties based on compensation or bonuses.
• 28:55
  SPEAKER_00: Avoid discussion of compensation before showing with the listing agent.
• 29:00
  SPEAKER_00: There's no reason a buyer's agent and a listing agent should have any conversations about compensation.
• 29:06
  SPEAKER_00: What you charge as a listing agent is none of the buyer's agent's business.
• 29:10
  SPEAKER_00: What the buyer's agent's charging is none of your business.
• 29:13
  SPEAKER_00: Let the buyers and the sellers drive the compensation conversations.
• 29:18
  SPEAKER_00: Put compensations into the offer when needed, not into broker's compensation.
• 29:23
  SPEAKER_00: We need to have a mental shift here in our industry.
• 29:26
  SPEAKER_00: The model needs to go from how am I getting paid to what is in the best interest for my client and how do we structure compensation into this transaction?
• 29:32
  SPEAKER_00: So let me end where we started.
• 29:34
  SPEAKER_00: There is no law against many of these practices.
• 29:36
  SPEAKER_00: But there is also no law against advertising cooperative compensation in the MLS and structuring the way deals the way they were being structured prior to Sit to Burnett.
• 29:45
  SPEAKER_00: And NAR still lost a$1.5 billion verdict.
• 29:49
  SPEAKER_00: The question isn't, can I do this?
• 29:51
  SPEAKER_00: It's how would it look in front of a jury?
• 29:53
  SPEAKER_00: How would a plaintiff's attorney frame this?
• 29:55
  SPEAKER_00: And I can promise you, someone like Michael Ketchmark is already thinking about it.
• 29:59
  SPEAKER_00: If the South Carolina Realtors Association has already stopped broker-to-broker compensation, that should tell you everything you need to know about what's going on.
• 30:08
  SPEAKER_00: Because they don't move lightly and they don't take knee-jerk reactions.
• 30:12
  SPEAKER_00: They took well over a year to come to this decision.
• 30:14
  SPEAKER_00: But when they made this decision, they moved quickly.
• 30:16
  SPEAKER_00: It will be impossible for you to sit in front of a jury when they say the South Carolina rulers recognize broker-to-broker compensation as a problem, but you don't.
• 30:26
  SPEAKER_00: Why can you not see what's going on in your own industry?
• 30:29
  SPEAKER_00: The agents who adapt early will protect themselves, protect their clients, and stay ahead of this next lawsuit.
• 30:36
  SPEAKER_00: Those agents who don't, well, I guess you'll be explaining your decisions in a courtroom in front of a jury.
• 30:41
  SPEAKER_00: Good luck with that.
• 30:42
  SPEAKER_00: All right.
• 30:42
  SPEAKER_00: That's all the time we have for our show today.
• 30:44
  SPEAKER_00: Hope everybody likes it.
• 30:45
  SPEAKER_00: Please share it, subscribe to it.
• 30:47
  SPEAKER_00: If you have any comments, put them in the comment section or send me an email at Gary at Blair Cato.
• 30:51
  SPEAKER_00: Y'all most importantly, have a wonderful weekend, and we'll see you again next week for another episode of Dish and Dirk.
• 30:55
  SPEAKER_00: Y'all take care.
• 30:56
  SPEAKER_00: Come back.