Latest / The Connect Practice Track & Grow Podcast / Ep020: PART 4 - Understanding The Recent Civil Decision In Missouri Against NAR / A Few Things To Anticipate

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Ep020: PART 4 - Understanding The Recent Civil Decision In Missouri Against NAR / A Few Things To Anticipate · The Connect Practice Track & Grow Podcast

• 0:00
  SPEAKER_00: Welcome to the Connect Practice Track and Grow Podcast.
• 0:04
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• 0:10
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• 0:15
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• 0:29
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• 0:32
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• 0:35
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• 0:36
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• 0:42
  SPEAKER_02: Hi, everybody.
• 0:42
  SPEAKER_02: It's Chris McAllister again with the Connect Practice Track and Grow Podcast, where it's my job to make your business better and your life easier.
• 0:49
  SPEAKER_02: I'm back today with my podcast collaborator and our digital marketing director, Lacey LeBlanc.
• 0:55
  SPEAKER_02: Good morning, Lacey.
• 0:56
  SPEAKER_01: Good morning, Chris.
• 0:57
  SPEAKER_02: So this is part four, and there's five parts of our deep dive into the long-term ramifications of the recent civil court decision in the case of Sitzer Burnett versus the National Association of Realtors et al.
• 1:11
  SPEAKER_02: We've covered a lot of ground already in our last three sessions, but in this episode, I want to talk about the things I think we can look forward to in the years ahead.
• 1:21
  SPEAKER_02: And I want to, when I say the years ahead, I think in the next, honestly, in this segment, one to three years.
• 1:27
  SPEAKER_02: And I think some of the things we're going to see are the widespread adoption and use of buyer agency agreements.
• 1:34
  SPEAKER_02: I think we're going to hear a lot of conversation about how we're paid, but I think a lot of that is going to end up being semantics in that I think we're going to hear discussions of offers of compensation versus offers of a referral fee.
• 1:53
  SPEAKER_02: I think the other thing that we've got to deal with going forward, as we have for quite a while, is commission compression.
• 1:58
  SPEAKER_02: And in that discussion, I thought it was kind of interesting to see how agents and brokerages are compensated in other countries outside of the United States, because I think to some degree that's coloring the debate based on the research I've done the past few weeks.
• 2:15
  SPEAKER_02: And start to touch on what kind of new business opportunities might present themselves.
• 2:21
  SPEAKER_02: So that's a lot for this close to Christmas, I think.
• 2:24
  SPEAKER_01: It is a lot, but it's very exciting.
• 2:26
  SPEAKER_01: You know, if you're me, I'm still trying to wrap my head around all of it, right?
• 2:31
  SPEAKER_01: So the kind of forward-looking aspect of it, this is where it starts to get legitimately kind of exciting, a little scary, but I think more good than bad because we can finally talk through, you know, the implications of this and not just the, you know, the immediate consequence, which is fear, right?
• 2:51
  unknown: Yeah.
• 2:51
  SPEAKER_02: Yeah.
• 2:51
  SPEAKER_02: And I'm, you know, I'm a lot less apprehensive, you know, now that I've gone through this with you the past few weeks than I was when uh my agents first started asking me about it.
• 3:00
  SPEAKER_02: So the process is helpful for me.
• 3:02
  SPEAKER_01: Right.
• 3:02
  SPEAKER_01: And I hope that sharing your process, because not everybody, you know, is is as passionate about this or has as much time for this, especially during the holidays at the end of the year, right?
• 3:13
  SPEAKER_01: So you doing all of the legwork for folks and then sharing what you've learned is, I hope, super helpful for the agents who are listening and might be a little fearful themselves.
• 3:22
  SPEAKER_02: I hope so too.
• 3:23
  SPEAKER_02: So I want to start off with the fact that commission compression is coming.
• 3:26
  SPEAKER_02: You know, the ultimate reason for this lawsuit was there was a consensus amongst the plaintiffs, those who brought the suit, that the commissions they agreed to pay their agents brokers to sell their homes were too high and that they were essentially artificially inflated.
• 3:42
  SPEAKER_02: And that's what, in a word, made it criminal.
• 3:45
  SPEAKER_02: Now, you know, we've been talking about commission compression for decades, probably since the beginning of uh the realtor community.
• 3:54
  SPEAKER_02: And but I think now we're going to see it uh come from more of a uh legal antitrust perspective than we have before.
• 4:01
  SPEAKER_02: You know, for the best among us, you know, we've always been able to show our value and articulate what we bring to the table either as a buyer agent or a listing agent.
• 4:12
  SPEAKER_02: And, you know, when somebody wanted to, you know, negotiate their, you know, our commission, you know, we had uh good, solid um pushback, right?
• 4:24
  SPEAKER_02: For lack of a better term, right?
• 4:25
  SPEAKER_02: And and my favorite line was if you can't trust me to negotiate my own commission, how can you trust me to negotiate the best deal on your property or your purchase?
• 4:33
  SPEAKER_02: So, you know, we've always had pressure on commission, but I think it's going to be coming, it's going to be coming at us from different places, not just from, you know, a buyer or a seller at the kitchen table.
• 4:46
  SPEAKER_01: Do you think that part of that is because homes were selling for just, I mean, everywhere, astronomical amounts of money for a period, right?
• 4:56
  SPEAKER_01: Do you think that 3% or 6% started to really hurt more for because homes were selling higher, or do you think that's not connected?
• 5:04
  SPEAKER_02: I have some thoughts on it that I do want to get into today, but you know, uh one of the things is, you know, when you talk about commission compression, yes, the dollars have gone up for each transaction as the prices have gone up, but the percentages haven't.
• 5:23
  SPEAKER_02: If anything, at higher end, prices, commissions have have dropped, you know, anywhere from a half to a you know a full point, you know, depending on the price of the house.
• 5:33
  SPEAKER_02: So I I I don't think it's that.
• 5:36
  SPEAKER_02: I I think there's you know a bit more to it.
• 5:39
  SPEAKER_02: And when I think back to these people who had already hired their realtors, already sold their houses, and then got together and went back and sued us, you know, I have to believe they didn't understand or they were not made aware that the contracts they they signed for the commission they agreed to pay, those were always negotiable, right?
• 5:58
  SPEAKER_02: Commissions are always negotiable.
• 6:01
  SPEAKER_02: There is nothing set in stone.
• 6:03
  SPEAKER_02: A buyer or seller can can choose to to negotiate, they can choose to pay what they will.
• 6:09
  SPEAKER_02: If they don't want to pay a commission and they'd rather do it themselves, they can always go for sale by owner and even put their properties on Zillow themselves, you know, and even decide if they want to pay a co-op fee to a buyer agent, you know, as a for sale by owner.
• 6:23
  SPEAKER_02: So they can go that route.
• 6:25
  SPEAKER_02: There's also still several, many actually, you know, discount brokers out there in the world or fee for service brokers.
• 6:33
  SPEAKER_02: So the whole thing still, you know, as we've talked about, just seems patently unfair because there are options everywhere in the country and in including Missouri, right?
• 6:42
  SPEAKER_01: You can go Yeah, so I guess as a car the daughter of a car dealer, I just have been raised to know that everything has a price, everything's for sale, and it's always negotiable.
• 6:53
  SPEAKER_01: So that's a good point that you make, is not everybody was raised by a car dealer.
• 6:58
  SPEAKER_01: Or, you know, and in this case, a very honest and you know, and one I would want to be like, right?
• 7:04
  SPEAKER_01: Which is not always the impression of car dealers, but not everybody, I guess, knows.
• 7:08
  SPEAKER_01: And that is not something I had considered, um, that they just didn't realize that they didn't have to.
• 7:14
  SPEAKER_01: It wasn't 3% is not mandatory, right?
• 7:17
  SPEAKER_02: 3%, 6%, 10%, nothing's mandatory.
• 7:20
  SPEAKER_02: You know, and as I said in the last episode, you know, I don't think we've done as good a job as we could have, and as we used to, quite frankly, explaining how we agents get paid and where that money comes from.
• 7:33
  SPEAKER_02: You know, I think it's a I think we stopped educating the public as to how these numbers work and why.
• 7:40
  SPEAKER_02: I and I do believe that for the most part, you know, for a huge degree, I shouldn't say the most part, that we failed to articulate our value as true professionals.
• 7:49
  SPEAKER_02: And I, you know, the fact that the buyer agent function is the part of the process that's being deemed overvalued, that's proof right there, in my opinion, that we haven't done a good job telling our story.
• 8:00
  SPEAKER_02: Because, you know, as I said last week, it's the buyer agent that holds this whole thing together.
• 8:05
  SPEAKER_02: And it's not all our fault.
• 8:07
  SPEAKER_02: You know, I was pretty down on us uh last time, you know, because we, you know, I do believe we brought some of this on ourselves.
• 8:13
  SPEAKER_02: But I have to also acknowledge that the COVID and the whole frenzy in the housing market it produced, you know, it led to an over-reliance on email, text, and dot loop.
• 8:26
  SPEAKER_02: And I think one of the potential reasons that you know sellers cited that they, in retrospect, overpaid and wanted to sue was we didn't have to talk to sellers.
• 8:41
  SPEAKER_02: You know, it was the kind of situation where, first of all, they didn't want us in the house, right?
• 8:45
  SPEAKER_02: It was COVID.
• 8:47
  SPEAKER_02: Um, so everything was done online.
• 8:49
  SPEAKER_02: You know, I have to tell you, the whole.loop thing, or, you know, or whatever contract signing service you use is a little bit frightening because it's one thing when you sit across the kitchen table from somebody or sit across Starbucks at somebody and you go through a contract with a person face to face.
• 9:03
  SPEAKER_02: It's quite another when you're relying on that uh client to page through 10, 12, 15 pages of a contract, read every line and understand it before they they hit the auto signature, right?
• 9:15
  SPEAKER_02: So we it wasn't entirely our fault that we stopped talking or educating our clients because quite frankly, our clients had no reason or use or desire to talk to us.
• 9:26
  SPEAKER_02: You know, it was a time when you stuck a sign in the yard and you sat back for 15 minutes and suddenly you had multiple offers coming in.
• 9:33
  SPEAKER_01: That's yeah, that's a great point.
• 9:35
  SPEAKER_01: That's when I was trying to buy a house, wasn't that exactly?
• 9:38
  SPEAKER_01: And we, I mean, you know, I ended up in my grandfather's house after he passed away.
• 9:42
  SPEAKER_01: And we had really given up because we had made so many offers on so many houses, and there were just literally dozens of offers on every house that so it didn't matter if we were, you know, cute and you know, it didn't matter if we were the just the right person for the house.
• 9:57
  SPEAKER_01: You know, a lot of those things that looking back on real estate, kind of those nuanced parts of coming to an agreement between buyer and seller were no longer valid.
• 10:07
  SPEAKER_01: So I think that, yeah, that's a really good point that you didn't they didn't see the value.
• 10:11
  SPEAKER_01: In addition to maybe not articulating the value, there really was a lot less work that had to be done in that time period.
• 10:19
  SPEAKER_01: That makes a lot of sense.
• 10:21
  SPEAKER_02: Yeah.
• 10:21
  SPEAKER_02: I mean, we didn't get the chance to talk to us and they weren't inviting us.
• 10:26
  SPEAKER_02: We didn't get the chance to talk to them, and they certainly weren't inviting us to talk to them.
• 10:30
  SPEAKER_02: You know, there was and it is a little sad though that you know, they're they they want their money back, so to speak.
• 10:36
  SPEAKER_02: And, you know, maybe we didn't have time to educate, or maybe there wasn't an opportunity to educate.
• 10:43
  SPEAKER_02: But by the same token, the hours that those listing agents put in managing those multiple offers and communicating those multiple offers and sharing those multiple offers, I mean, that was a hell of a time.
• 10:55
  SPEAKER_01: Right.
• 10:55
  SPEAKER_01: And you know who was still doing their whole job and just even more hours and more hours than usual was buyers' agents, right?
• 11:05
  SPEAKER_01: Nana was you know, we were we put in however many offers and we would see a different house, you know, every day that we wanted to look at or make an offer on or consider.
• 11:15
  SPEAKER_01: And Nana was, you know, answering my phone call sometimes six or seven times a day.
• 11:20
  SPEAKER_01: And I know that's my family, but you know, buyers agents were still like there was even more work for them.
• 11:26
  SPEAKER_02: And you know, maybe for the transactionists among us, COVID was a fantastic time.
• 11:30
  SPEAKER_02: The last three or four years were great for them.
• 11:32
  SPEAKER_02: They were in and out of the business.
• 11:34
  SPEAKER_02: But, you know, for those of us who thrive on relationships, build our business around relationships, like to talk and educate people and consult and make things better for them, it's supposed it was a tough time because you know, those services, you know, were hard to offer, you know, when you're not belly to belly and not everybody's comfortable with Zoom and things like that.
• 11:56
  SPEAKER_02: So one of the things is you know, we've been thinking about why are are our commissions outrageously high?
• 12:02
  SPEAKER_02: So I did a little research and uh, you know, I'll just go through this quickly.
• 12:06
  SPEAKER_02: But so let's look at Great Britain.
• 12:09
  SPEAKER_02: So what I learned was uh Great Britain is a lot like the United States, and the rate typically runs between two to six percent of the property's final selling price with the exact rate depending on the agent's experience, location, et cetera, et cetera.
• 12:24
  SPEAKER_02: And that's no different than here.
• 12:26
  SPEAKER_02: You know, we have assist to sell type opportunities where, you know, properties get into the MLS for very little money, and maybe there is a very small co-op offered or no co-op offered at all.
• 12:38
  SPEAKER_02: And that, you know, so the average, of course, is uh, you know, I'm assuming is much higher than 2%.
• 12:44
  SPEAKER_02: But yeah, you could easily sell your house in the United States for less than 2%.
• 12:47
  SPEAKER_02: Those choices are out there in the world.
• 12:50
  SPEAKER_02: And of course, you can always go in alone.
• 12:54
  SPEAKER_02: The other thing that I learned in Great Britain was in many cases, sometimes there's a flat fee involved in the commission, or instead of a commission, or it's a combination of commission and flat fee.
• 13:07
  SPEAKER_02: So I think that's kind of interesting.
• 13:09
  SPEAKER_02: And when you think about you know, some of the brokerages that charge you know a listing fee, a commission, there's also some sort of administration fee or some sort of additional flat fee on there.
• 13:18
  SPEAKER_02: So, you know, if somebody's advertising or saying that they're going to sell your house for X percent, oftentimes at many brokerages there's an additional fee that goes on that.
• 13:27
  SPEAKER_02: So it's you know, 7% plus$1,000 or whatever.
• 13:30
  SPEAKER_02: So, anyway, that's Great Britain.
• 13:32
  SPEAKER_02: Australia, this is interesting from what I saw typically in Australia, commission rate typically range from 1.5 to 3% of the final selling price, with the rate varying depending on this, you know, the same thing that we talked about in you know here in Great Britain.
• 13:47
  SPEAKER_02: This was interesting.
• 13:48
  SPEAKER_02: In Australia, some agents receive a salary and bonuses, but these are typically only offered to experienced agents with a track record of success.
• 13:56
  SPEAKER_02: So, you know, it's funny you mentioned I didn't know your family was in the car business, but I've often thought about that model as I understand it is you know, you it's almost a draw against commission, right?
• 14:07
  SPEAKER_02: A salesperson at a car dealership is a W-2 employee, I believe, and they get a salary, and then when they hit a certain number, they also draw a bonus.
• 14:16
  SPEAKER_02: Is that correct?
• 14:17
  SPEAKER_01: I would have to ask my brother.
• 14:18
  SPEAKER_01: It's a family car dealership, so I think they have a little more control over their pay structure, but that is typically how a car dealership works, yes.
• 14:27
  SPEAKER_02: Exactly.
• 14:28
  SPEAKER_02: And you know, I it sounds like in Australia, anyway, you know, it it's a profession where, you know, you can be on a salary with your broker, which I think is an interesting model that is somewhat like I understand, car dealerships.
• 14:41
  SPEAKER_02: In Canada, it's almost identical to the United States.
• 14:44
  SPEAKER_02: They said the rates can go as low as 1.5 up to six percent.
• 14:48
  SPEAKER_02: And again, it depends on the agent, the brokerage, the area, the price of the house, and so forth.
• 14:53
  SPEAKER_02: I even went and looked in in uh other parts in Germany and other parts of Europe.
• 14:58
  SPEAKER_02: I thought this was interesting.
• 14:59
  SPEAKER_02: It says the compensation structure for residential real estate agents in Germany is primarily a fixed fee system.
• 15:06
  SPEAKER_02: Agents are typically paid a percentage of the property's value, but the percentage is relatively low, around two to three percent.
• 15:13
  SPEAKER_02: The system is designed to ensure that agents are not incentivized to overprice properties.
• 15:18
  SPEAKER_02: So I think that's interesting.
• 15:20
  SPEAKER_01: But it's that is really interesting.
• 15:22
  SPEAKER_02: And it looks like all of Europe, every country in Europe is different, almost like every state in the United States is different.
• 15:29
  SPEAKER_01: Right.
• 15:29
  SPEAKER_01: Yeah.
• 15:29
  SPEAKER_01: Well, I was just thinking about how, you know, and we can talk about this later, but I don't want to forget it.
• 15:34
  SPEAKER_01: Is, you know, ideally, it's kind of like when somebody says, you know, I don't want to win the lottery because I'd have to pay most of it in taxes, right?
• 15:41
  SPEAKER_01: Like, but you end up with all that money that you didn't have before anyway.
• 15:45
  SPEAKER_01: So like it really doesn't, if you won a million dollars and you had to pay, you know,$999,999 in taxes, you'd still have one more dollar than you had before.
• 15:56
  SPEAKER_01: And I think about, you know, ideally, with the help of a of an agent, you sell your home.
• 16:01
  SPEAKER_01: There's value add, right?
• 16:03
  SPEAKER_01: You sell your home for more than you would without an agent.
• 16:07
  SPEAKER_01: And that's enough to cover the right.
• 16:10
  SPEAKER_01: So that's the value conversation.
• 16:11
  SPEAKER_01: I don't know why that just occurred to me while you're talking about this, but and that's those facts are absolutely true.
• 16:17
  SPEAKER_02: And again, because of the way you know the antitrust lawsuit was structured, that those discussions weren't allowed.
• 16:24
  SPEAKER_02: That defense wasn't allowed to be made in the courtroom, and we're gonna have to wait for appeal.
• 16:29
  SPEAKER_02: I also think it's interesting, you know, it's like you said, you even if you have to pay tax, you're still ahead.
• 16:34
  SPEAKER_02: You know, if you're in a situation where you're on some sort of salary and bonus, and maybe that's less than your gross commission, but don't forget the other side of the equation.
• 16:44
  SPEAKER_02: You're not having to put all that money into marketing or office supplies or this and that.
• 16:50
  SPEAKER_02: You know, if you're an employee, and you know, that stuff is provided by your employer.
• 16:55
  SPEAKER_02: So there's, you know, trade-offs either way.
• 16:58
  SPEAKER_02: And it's funny you talk about taxes.
• 17:00
  SPEAKER_02: People say, well, I get to write all this off.
• 17:02
  SPEAKER_02: Well, that's great, but you only get to write it off if you have any income to write it off against.
• 17:07
  SPEAKER_02: Sometimes we forget how that math works.
• 17:09
  SPEAKER_02: But anyway, in Asia, in China, the compensation structure for real estate is more diverse.
• 17:14
  SPEAKER_02: Commission-based compensation is common.
• 17:17
  SPEAKER_02: There are also trends towards fixed fees and salaried positions.
• 17:22
  SPEAKER_02: And this is because of the government being so directly involved in um and oversight and regulation.
• 17:28
  SPEAKER_02: In Japan, it's primarily a fixed fee system.
• 17:31
  SPEAKER_02: They're paid a predetermined fee for each successful sale, regardless of the property's value.
• 17:37
  SPEAKER_02: This the system is designed to promote fairness and transparency.
• 17:40
  SPEAKER_02: And that's an interesting argument, right?
• 17:42
  SPEAKER_02: I mean, does it really, yes, it may take more expertise or different expertise to sell a million-dollar home?
• 17:49
  SPEAKER_02: No question about it.
• 17:49
  SPEAKER_02: You've got to be able to relate to the million-dollar buyer.
• 17:52
  SPEAKER_02: But from an actual task and work perspective to get that done, to fill out a contract to get it on the MLS, is the work any greater than$100,000 property, right?
• 18:04
  SPEAKER_02: Is it 10 times greater?
• 18:05
  SPEAKER_02: And when you have set percentages or traditional percentages that that are applied by price, though you I can see the argument where you know there's a predetermined fee for a successful sale.
• 18:17
  SPEAKER_01: Yeah, definitely.
• 18:18
  SPEAKER_01: That's what's I there's a meme here.
• 18:20
  SPEAKER_01: There's a t-shirts that are popping up on my TikTok feed from tradesmen and women who, and it says, You're not paying me for you know the two hours it takes me to do the job, you're paying me for the 20 years of experience that I bring to the table.
• 18:35
  SPEAKER_01: Right.
• 18:36
  SPEAKER_01: So when you think about an hourly rate, and the same thing happens with marketing, you know, in a marketing position, I think about how attractive it is for me and how many times in my life, my, you know, in well into my career, I've chosen less pay in exchange for a stake in, you know, the success of whatever, you know, company I'm working with.
• 18:59
  SPEAKER_01: And that's based on, you know, the kind of the value.
• 19:02
  SPEAKER_01: So, you know, if I'm going into a small business and their goal is to grow from, you know, five customers a day to 10, then this, you know, maybe I'd rather just get paid hourly and we can move forward.
• 19:15
  SPEAKER_01: But when I'm looking at a franchise or something that's trying to grow, or then I would much rather take less now and have a stake in what I see as the potential success of that business.
• 19:25
  SPEAKER_01: So yeah, I do think that it's a different mindset and it's one that's not as prevalent here.
• 19:31
  SPEAKER_01: I think we kind of see the value of folks and kind of the hours they work, right?
• 19:38
  SPEAKER_02: And that goes back to, you know, the whole idea of the new real estate professional.
• 19:42
  SPEAKER_02: We, you know, your value is based on, you know, what the not just the service, but the expertise and wisdom that you provide.
• 19:52
  SPEAKER_02: And, you know, a professional is always looking to grow that expertise and wisdom.
• 19:57
  SPEAKER_02: And as a professional, they deserve to get paid.
• 20:00
  SPEAKER_02: One other Asian country, it says Singapore, this was interesting.
• 20:03
  SPEAKER_02: The combinations is the compensation structure for residential real estate agents is a hybrid of commissioned and fixed fee.
• 20:11
  SPEAKER_02: Agents typically receive a commission on the sale of the property, but the commission rate is capped at a certain percentage.
• 20:17
  SPEAKER_02: The system is designed to balance the interests of agents and consumers.
• 20:21
  SPEAKER_02: So it does sound like in Asian countries, anyway, the whole, and I don't know if they have a concept of agency, but the idea of agency and actual compensation seem to be a little bit better aligned than our system.
• 20:33
  SPEAKER_02: The other thing that I believe influences our compensation structure or maintains our compensation structure is Zillow.
• 20:42
  SPEAKER_02: Yeah, I feel like Zillow has become a symbol of everything that's right and everything that's wrong about the real estate industry in the United States.
• 20:51
  SPEAKER_02: And then this is interesting too.
• 20:52
  SPEAKER_02: You know, Zillow is basically, I want to say only in, but their broad strength is in the United States and Canada.
• 21:00
  SPEAKER_02: They haven't expanded into Europe or elsewhere in the world.
• 21:02
  SPEAKER_02: So Zillow is a product of the United States, how the United States real estate market is structured.
• 21:11
  SPEAKER_02: But I also think that Zillow is has a huge vested interest in maintaining the current status quo, right?
• 21:20
  SPEAKER_02: And my guess is if Zillow had been named in this suit, they would have decided to fight it, just like you know, Keller did and home services did, because they, I think it's Zillow, quite frankly, has as much or more to lose than the mega brokerages, the mega franchisers, and uh the National Association of Realtors.
• 21:37
  SPEAKER_02: So, you know, it's more homogeneous, I think is the word I'm looking for in the United States and Canada, whereas in Europe, for instance, it's fragmented.
• 21:44
  SPEAKER_02: There's different countries, different regulations, customs.
• 21:47
  SPEAKER_02: They have their own individual portals and countries in Europe.
• 21:51
  SPEAKER_02: Their privacy regulations are much more strict in Europe than they are in the United States.
• 21:56
  SPEAKER_02: And that alone makes it hard for Zilla to take their footprint and expand.
• 22:00
  SPEAKER_02: Expanded all over the world.
• 22:01
  SPEAKER_02: But I do believe Zillow is the biggest contributor to the status quo in this country.
• 22:05
  SPEAKER_02: And, you know, clearly, I think their influence is beyond from a financial perspective.
• 22:13
  SPEAKER_02: And I would say that their influence is certainly beyond any single mega brokerage.
• 22:19
  SPEAKER_02: I mean, Zillow is a money-making machine.
• 22:22
  SPEAKER_02: Problem with Zillow is we as broker owners are not making that money, but we're making it possible, right?
• 22:28
  SPEAKER_02: You know, they get our listings for free and then they sell them back to us at a profit.
• 22:32
  SPEAKER_02: And their dominant share was solidified during COVID.
• 22:37
  SPEAKER_02: I mean, the fact is, I mean, we did have people looking at Zillow, and regardless of the quality of the pictures or the videos and making decisions to buy homes, you know, all over the country sight unseen.
• 22:49
  SPEAKER_02: And I think the negative result of that, the buyer's remorse that came later, is another thing that has happened to the real estate profession that's made us, you know, look bad.
• 23:00
  SPEAKER_02: Because if they made a bad buy, you got to blame somebody.
• 23:04
  SPEAKER_02: And it might as well be, you know, the guy you brought your house from.
• 23:08
  SPEAKER_02: But I do believe, you know, Zillow will fight to the death to keep things as they are.
• 23:12
  SPEAKER_02: And think about Zillow, right?
• 23:14
  SPEAKER_02: At least in my world, and I think anybody who owns a house, you know, it's like Kleenex or Xerox, right?
• 23:21
  SPEAKER_02: Zillow, you say Zillow, you know exactly what you're talking about.
• 23:25
  SPEAKER_02: It's it's a brand name that is just crazy.
• 23:28
  SPEAKER_02: And it, you know, people ask me, Lacey, how I came up with the name with Roost.
• 23:32
  SPEAKER_02: And my pat answer is Zillow was already taken.
• 23:35
  SPEAKER_01: Well, that's it's smart, honestly.
• 23:37
  SPEAKER_01: Yeah, I mean, Zillow is, but how much confidence does the average consumer have in Zillow, right?
• 23:44
  SPEAKER_01: Somebody who's as outside of the industry, how much confidence does the average consumer have that they that the information there is accurate?
• 23:52
  SPEAKER_02: Well, you know, I I I think most brokerages and agents worth their soul, as well as the National Association of Realtors, and of course NAR's allegiance, if there is any, is to Realtor.com.
• 24:04
  SPEAKER_02: But I think that we've all done our best to this sounds terrible, Lacey, but to discredit those estimates.
• 24:12
  SPEAKER_02: Because if you know our listing expertise is only confined to getting the price right, I think that we're feeling pretty devalued, right?
• 24:24
  SPEAKER_02: So I do think that maybe there's a stalemate there between whether Mr.
• 24:30
  SPEAKER_02: or Mrs.
• 24:31
  SPEAKER_02: Seller trusts Zillow more than their agent.
• 24:34
  SPEAKER_02: I here's the thing, right?
• 24:37
  SPEAKER_02: Zillow estimates get better year after year.
• 24:42
  SPEAKER_02: And with all of the data they've accumulated over the past, what is it, almost 20 years, and with all of the you know, general artificial intelligence tools that we all have access to, but certainly you know, a billion-dollar company does, is just making that much better.
• 24:59
  SPEAKER_02: It's hard to say, right, that those numbers aren't good.
• 25:04
  SPEAKER_02: What you need local expertise and where you need us, quite frankly, is what is the actual condition of the home, interior and exterior.
• 25:15
  SPEAKER_02: If it's an older home, it's not a cookie-cutter home, you know, a tracked home, you know, what is the what are the design elements, right?
• 25:23
  SPEAKER_02: Is it conducive to today's living standards, or is it the functionally obsolete, right?
• 25:29
  SPEAKER_02: You know, so many beautiful older homes.
• 25:31
  SPEAKER_02: Maybe they don't have a kitchen that's quite like what we want kitchens to be today, or you know, maybe there's a pass-through bedroom, you know, there's any number of things.
• 25:40
  SPEAKER_02: And I do think Zillow is getting better at, you know, taking into account surroundings because, you know, let's face it, Google Maps, everybody else's maps, you know, you can basically look at a satellite image or a street view and get a pretty good handle on you know what the surrounding area looks like.
• 25:59
  SPEAKER_02: And I think that, if it hasn't already, will ultimately factor in to those Zestima calculations.
• 26:06
  SPEAKER_02: So, you know, I know this is unpopular, but Zillow in that respect is doing a great job.
• 26:12
  SPEAKER_02: And the other thing that's happened with Zillow is, you know, I remember when we had to spend, you know,$1,000 a week putting listings in the newspaper.
• 26:20
  SPEAKER_02: Remember those?
• 26:21
  SPEAKER_02: And now Zillow puts them up for free.
• 26:23
  SPEAKER_02: But like I said, I think it's been a Faustian bargain, so to speak, in that we've got all this for free.
• 26:30
  SPEAKER_02: And, you know, they've basically taken what we do and have done it better, and then they're selling it back to us, you know.
• 26:36
  SPEAKER_02: To one degree or another, we're all working for Zillow, and that makes me a little bit nervous, or at least I see it as an existential anxiety.
• 26:45
  SPEAKER_01: Sure.
• 26:45
  SPEAKER_01: Yeah.
• 26:45
  SPEAKER_01: Well, the reason I ask is because, you know, you mentioned Kleenox, Kleenex and Xerox, and those, you know, brands are synonymous with trust.
• 26:54
  SPEAKER_01: And, you know, you trust that Kleenex is by far the best tissue, right, that you're going to get fair nose.
• 27:00
  SPEAKER_01: I, but I'm not going to pay for Kleenex.
• 27:02
  SPEAKER_01: I typically will buy puffs or whatever.
• 27:04
  SPEAKER_01: You know what I mean?
• 27:04
  SPEAKER_01: Xerox is well, we can, I guess, not well, we won't talk about making copies in the digital age, but you know, it's just a lot of the value of those brands are because they have earned the trust of consumers.
• 27:20
  SPEAKER_01: So I just don't know where Zillow is at in that process.
• 27:22
  SPEAKER_01: And I think that, you know, until Zillow is there and has that kind of trust, then, you know, maybe it we're not quite ready for Zillow to take over the real estate world.
• 27:32
  SPEAKER_01: But if they are there, then it seems like it would be a lot closer.
• 27:36
  SPEAKER_02: I think it's I don't know this for sure, but I'm thinking it's generational.
• 27:40
  SPEAKER_02: So being in the industry, I didn't trust Zillow.
• 27:43
  SPEAKER_02: Watching what they've done over the years, I'm starting to trust them more.
• 27:47
  SPEAKER_02: There's estimates.
• 27:48
  SPEAKER_02: I my guess is that, you know, baby boomers, you know, like myself, even some Gen Xers, maybe we have less faith in that newfangled technology.
• 27:58
  SPEAKER_02: But I would guess, I would bet, and we're going to talk about guessing and betting on our next episode, but I would bet that the younger folks that grew up with technology and the internet and so forth, they have a lot more faith in this estimate, maybe than some of the older folks do.
• 28:14
  SPEAKER_01: Yeah, really interesting point.
• 28:15
  SPEAKER_01: As a Zenial who is an elder millennial who grew up on the cusp, right?
• 28:20
  SPEAKER_01: I think I still have a healthy degree of you know skepticism, but also highly comfortable with it.
• 28:27
  SPEAKER_01: So that's maybe why I'm also in the middle of do we trust them or don't we?
• 28:31
  SPEAKER_01: So yeah, that makes sense.
• 28:33
  SPEAKER_02: But I'm not taking it at base value.
• 28:35
  SPEAKER_02: I'm taking it because I'm in it and I look at it and I watch it and I'm amazed at how much better it's gotten.
• 28:41
  SPEAKER_02: So again, I'm gonna get hate mail for saying that at all.
• 28:44
  SPEAKER_02: So we'll leave that there for the time being.
• 28:46
  SPEAKER_01: Any mail is good mail, Chris.
• 28:47
  SPEAKER_01: Any mail is good mail.
• 28:48
  SPEAKER_01: That means somebody's listening, you know.
• 28:51
  SPEAKER_02: So what I think is I think what we're probably gonna see is, you know, some tweaking to the this whole cooperative compensation model.
• 28:59
  SPEAKER_02: I do think when it's all said and done, that, you know, I we're gonna be okay.
• 29:04
  SPEAKER_02: But one way that I've read and seen that our compensation structure may be preserved, but slightly tweaked, is that there's a distinction between what's what is an offer of compensation versus offering a referral fee, right?
• 29:23
  SPEAKER_02: And in the real estate industry, we use both terms, but the terms and they're often used interchangeably, but there is a distinction between the two.
• 29:33
  SPEAKER_02: And I think this gets into the ultimate uh resolution of the antitrust questions.
• 29:39
  SPEAKER_02: So an offer of compensation is a broad term that encompasses any form of payment that a listing brokerage offers to a buyer brokerage in exchange for bringing a buyer to the property, right?
• 29:50
  SPEAKER_02: This is a this could be, because it's negotiable, a percentage of the sales price, a flat fee, or a combination of both.
• 29:57
  SPEAKER_02: That's how we've been living the past few years.
• 29:59
  SPEAKER_02: That's what the clear cooperation standard is all about.
• 30:03
  SPEAKER_02: Burrow fee is a more specific term that refers to a fixed fee that is paid to a buyer brokerage for referring a client to the listing brokerage.
• 30:14
  SPEAKER_02: The fee is typically paid regardless of whether or not the transaction closes.
• 30:18
  SPEAKER_02: That's an interesting thought, too.
• 30:20
  SPEAKER_02: You know, that implies that there's some amount of money, probably not a lot of money, that's going to be paid just for the just for referring the buyer, and maybe more money is paid if the buyer actually follows through with the transaction.
• 30:36
  SPEAKER_02: So you could argue that if I'm, quote, a buyer's agent, do I care if what I'm getting is called a referral fee or an offer of compensation?
• 30:44
  SPEAKER_02: I may not, right?
• 30:46
  SPEAKER_02: But from an antitrust perspective, I think that's a distinction that may matter.
• 30:51
  SPEAKER_02: And we may see that this is how it plays out.
• 30:54
  SPEAKER_02: So when you think about it, all referral fees are offers of compensation, but not all offers of compensation are referral fees.
• 31:02
  SPEAKER_02: It's referral fee is simply one type of offer of compensation.
• 31:07
  SPEAKER_02: Does that make sense?
• 31:08
  SPEAKER_02: Or if I just talk circles around the whole day?
• 31:10
  SPEAKER_01: No, it does, but it's a little scary that if we're that it could go from offers of compensation that broad term to a referral fee, right?
• 31:19
  SPEAKER_01: Is that what you're saying?
• 31:20
  SPEAKER_01: Because a referral fee, especially the part where whether or not a transaction closes, it's like you're paying for leads, right?
• 31:26
  SPEAKER_01: Like you're, you know, it's like you pay Zillow a referral fee for your leads, right?
• 31:30
  SPEAKER_01: Technically, that's what it is.
• 31:32
  SPEAKER_02: Well, we're actually paying for a stream of leads from Zillow, and and those aren't exclusive leads either.
• 31:37
  SPEAKER_02: But I I you have to think about this though.
• 31:40
  SPEAKER_02: If there's some adjustments and some definitions and legal terms, would that be a better outcome for the realtor community?
• 31:51
  SPEAKER_02: Would that be better than an outright decoupling?
• 31:55
  SPEAKER_02: Right.
• 31:55
  SPEAKER_02: Where, you know, suddenly, like we talked about in the first episode, buyers and sellers hire and pay their own agents individually.
• 32:04
  SPEAKER_02: I mean it's completely separate.
• 32:05
  SPEAKER_02: So would we rather have a quote adjustment that essentially preserves what we have today?
• 32:11
  SPEAKER_02: Or would we prefer to, you know, have it go completely the other direction and and end up with an out and out decoupage.
• 32:19
  SPEAKER_01: I think it all depends on again, it goes back to how you know morally how good are these agents, right?
• 32:28
  SPEAKER_01: So if you've got agents who hold themselves to a high standard of professionalism, then you don't have to worry about any of this being taken advantage of, even the way it's currently done, right?
• 32:37
  SPEAKER_01: The way that's under scrutiny right now.
• 32:40
  SPEAKER_01: Uh, but as soon as you start to get agents who maybe don't hold themselves or or who are in dire situations themselves, right?
• 32:47
  SPEAKER_01: Like you talked about trying to pay their own mortgage this month.
• 32:50
  SPEAKER_01: Then are we referring buyers to sellers and to listing agents who aren't really qualified or you know who maybe aren't even interested in that home?
• 33:00
  SPEAKER_01: I think you'll talk about it when we talk about buyer agent agency, right?
• 33:04
  SPEAKER_01: But it does it's a it just opens up a whole new can of worms, right?
• 33:09
  SPEAKER_01: To address.
• 33:10
  SPEAKER_02: Well, regardless whether, you know, in the next year or two, three, whatever it is, if we end up with some quote, tweaks to the existing model, or we end up with a completely new model based on decoupling.
• 33:24
  SPEAKER_02: The one thing that I think is absolutely clear to me is that exclusive buyer agency agreements are the way forward.
• 33:34
  SPEAKER_02: And I think we're gonna see them be adopted honestly all over the country, at least far more so than we do today.
• 33:41
  SPEAKER_02: You know, as I've said before, I have always resisted buyer agency agreements, you know, for 22 years.
• 33:48
  SPEAKER_02: But it was easy for me to do that because they weren't really common where I practiced in Ohio.
• 33:53
  SPEAKER_02: A few people used them, but you know, I never did.
• 33:55
  SPEAKER_02: And even the people that used them sort of did it to protect themselves from, you know, a buyer, you know, going off and buying a house with another agent, right?
• 34:06
  SPEAKER_02: And that's what they were used for.
• 34:08
  SPEAKER_02: And you know, as I've said, I was always, and for that reason alone, I always took the approach that, you know, if right or wrong, if I wasn't providing the value that buyer agent needed or deserved, then they had every right to go work with somebody else.
• 34:23
  SPEAKER_02: So I wasn't trying to force somebody into sticking with me right contractually.
• 34:30
  SPEAKER_02: So for whatever reason, I always resisted it.
• 34:33
  SPEAKER_02: I've always been an advocate of NAR's clear cooperation policy and I structured my personal practice that way and my brokerage that way.
• 34:41
  SPEAKER_02: We created roost real estate basically, with you know, in line with the clear cooperation policy.
• 34:47
  SPEAKER_02: So the thing is, if we do end up going that way where, you know, we do end up contracting with buyers directly and they're paying our fees, or whether it doesn't go all the way, but we start to adopt buyer agency agreements, exclusive or otherwise, the fact is we have got to get comfortable with being able to articulate our value as buyer agents, just as we've been able to do so with sellers, you know, for years with exclusive right to sell agreements.
• 35:16
  SPEAKER_02: So I think it's doable.
• 35:18
  SPEAKER_02: I think that the best among us will make that transition just fine.
• 35:22
  SPEAKER_02: And quite frankly, it'll probably strengthen the reputation of the industry, restore some of that honor we talked about last time.
• 35:29
  SPEAKER_02: So, anyway, so what's the upside, right?
• 35:32
  SPEAKER_02: If if there to using a buyer agency agreement, well, it'll it's it it using a buyer agency agreement, the ultimate outcome is that agency law becomes aligned with compensation.
• 35:45
  SPEAKER_02: The other upside is sellers will probably pay less in commission and pocket the cash, right?
• 35:51
  SPEAKER_02: Again, if we go back to the idea that a standard listing rate, and again, this is just what we see on the internet, is 6%, and half of that goes to the firm that brings the buyer.
• 36:01
  SPEAKER_02: I think it's perfectly reasonable to expect that sellers would pay 3% instead of 6%, and they would pocket the difference.
• 36:10
  SPEAKER_02: So good on sellers.
• 36:12
  SPEAKER_02: I think it would be potentially great news for real estate investors, because I think it would push first-time buyers and people of limited means out of the market, and that those folks will continue to rent, whereas they otherwise may have been able to buy their first home.
• 36:30
  SPEAKER_02: So it's a plus for real estate investors if this happens.
• 36:34
  SPEAKER_02: The other upside again, and I know I sound like I'm repeating myself, but this is going to force us to articulate and justify our value as buyer agents.
• 36:42
  SPEAKER_02: And again, it's not that hard.
• 36:44
  SPEAKER_02: I mean, if I really want to, you know, piss people off, Lacey.
• 36:47
  SPEAKER_02: To be honest, I think it's the list side of the transaction that is right for commission compression, far more so than the buyer side.
• 36:56
  SPEAKER_02: But I also believe that the new real estate professional, you know, the people that that we aspire to be and the people we aspire to support and work with, I think that we will ultimately create a career that's based on what I'm thinking of as real estate consult consultancy.
• 37:14
  SPEAKER_02: I think that perversely, the use of buyer agency agreements is probably going to start to blur the distinction between what a listing agent does and what a buyer agent does.
• 37:24
  SPEAKER_02: And I do think technology will have a lot to do with that.
• 37:27
  SPEAKER_02: And I think quite frankly, Zillow will have a lot to do with that.
• 37:30
  SPEAKER_01: And that's really that's a very cool idea to I'm excited to kind of map that out and explore that with you moving forward because you know that's what the new real estate professional does.
• 37:41
  SPEAKER_01: The listing agent, being a market maker, right, is part of it.
• 37:44
  SPEAKER_01: And the lines, the distinction between listing and buying and is blurred because the whole point is I want to find, you know, I want to sell this house for my seller and I want to find the right house for my buyer.
• 37:55
  SPEAKER_01: And if those, if I can align those, then you know, I'm a market maker.
• 38:00
  SPEAKER_01: And the motivation is very pure in that way.
• 38:04
  SPEAKER_01: And so I think that you're right.
• 38:05
  SPEAKER_01: This is a really, you know, you say the new real estate professional is gonna be fine and they're gonna, you know, really have a lot of opportunities moving forward, but that's a really kind of tangible thought for for maybe the first time is that market making, while all this time I've been thinking, well, market making seems like it's gonna take a hit.
• 38:24
  SPEAKER_01: Actually, it seems like the opposite.
• 38:26
  SPEAKER_02: Market making is going to become the thing that sets the new real estate professional apart from everybody else.
• 38:33
  SPEAKER_02: The number one responsibility of the new real estate professional is to be a market maker.
• 38:38
  SPEAKER_02: Anyone who sells, who who hires us to sell their home expects us to sell it.
• 38:45
  SPEAKER_02: The days of sticking a sign in the yard and and waiting for the offers to roll in from every other agency in town are, I'm gonna say, over.
• 38:52
  SPEAKER_02: At least they're over for me.
• 38:55
  SPEAKER_02: But yeah, that's the number one thing is market making.
• 38:58
  SPEAKER_02: And, you know, what used to be a big deal doing uh a comparative market analyses, that's what Zillow is all about.
• 39:05
  SPEAKER_02: You know, I don't want to get too deep in this, but if you trust that the zestim is a great number, all things being equal, and your job is to get a really good handle on the condition of the property, and your expertise is down to discounting the zestima in keeping with the actual hyperlocal market, that street basically, what's selling and what's not, and the condition of that property, the design of that property, that's critical, no question.
• 39:34
  SPEAKER_02: That's great.
• 39:35
  SPEAKER_02: But it's not, and here I am, I'm gonna get in trouble, Lacy.
• 39:39
  SPEAKER_02: But I don't know if that's worth what we've been paid for that in the past.
• 39:43
  SPEAKER_02: So, right, what's the downside to uh working with uh buyer agency agreements and if and decoupling, right?
• 39:51
  SPEAKER_02: Many buyers are not gonna be able to avo representation.
• 39:54
  SPEAKER_02: But having said that, if it does go this route, I think that if it does happen, that we will see new regulations allowing new types of buyer closing costs to be included or allowed as seller pay closing costs, right?
• 40:11
  SPEAKER_02: Right now there's different caps for Fanny and Freddie on exactly what type of closing costs and how much those closing costs can be that a seller is allowed to pay, which of course has always been negotiable.
• 40:22
  SPEAKER_02: And it could very well be that a buyer agent fee becomes an allowed closing cost that is still negotiated with the seller, but credited to the buyer from the seller, so that the buyer has less out-of-pocket cost, right?
• 40:40
  SPEAKER_02: So it just reiterates the fact that it's absolutely negotiable.
• 40:43
  SPEAKER_02: I think the other thing that could happen is, you know, housing is just critical to the United States economy.
• 40:48
  SPEAKER_02: Nobody's gonna do anything or allow anything that's gonna mess with that.
• 40:51
  SPEAKER_02: So if it does end up that this decoupling happens, which, you know, I think a full decoupling, I think is less likely that you may even be able to see more buyer side closing costs, you know, be allowed to be rolled into mortgages, especially for first-time buyers.
• 41:08
  SPEAKER_02: So that's just pure speculation on my part, but I think it's grounded in reality.
• 41:14
  SPEAKER_02: And again, every commission and every referral fee is negotiable.
• 41:18
  SPEAKER_02: It's when we forget that or we stop saying those words that we as real estate brokers and and real estate professionals get in trouble.
• 41:26
  SPEAKER_02: None of this means that we ever will work for free, but it does mean that we're gonna work for people who pay us.
• 41:32
  SPEAKER_02: And, you know, we're professionals, and it and there will be more and more people in the market.
• 41:37
  SPEAKER_02: My guess is that if this really goes against us, that you know, we'll choose to go it alone.
• 41:42
  SPEAKER_02: And maybe that means that there's you know fewer transactions and so forth.
• 41:49
  SPEAKER_02: But I think that also means that just like there's people that decide that we're of no value and they want to do it themselves, I think ultimately they're gonna hurt themselves.
• 41:57
  SPEAKER_02: And I think it means that the people who appreciate what we do are always gonna be willing to pay for it.
• 42:01
  SPEAKER_02: We have to guard against the old days of buyer beware.
• 42:05
  SPEAKER_02: I didn't take Latin in high school, but I think that's caveat and right.
• 42:08
  SPEAKER_02: We can't go back to the battle days before agency law, you know, where you know the buyer was just on their own and the seller held all the cards.
• 42:20
  SPEAKER_02: You know, that's why we have agency law today.
• 42:23
  SPEAKER_02: You know, if it does go all the way back to the battle days, let the buyer beware.
• 42:26
  SPEAKER_02: You know, I think you're gonna see more and more people forego home ownership altogether.
• 42:30
  SPEAKER_02: And that's clearly a downside.
• 42:32
  SPEAKER_02: And again, housing is critical to the United States economy.
• 42:36
  SPEAKER_02: Home ownership has always been promoted as a path to wealth.
• 42:38
  SPEAKER_02: No politician is gonna mess with that.
• 42:42
  SPEAKER_02: And I do think, and and I I have this as a downside, Lacey, but I think many of the diehard realtors that we've talked about, the disillusioned and the deal makers, you know, there's gonna be a lot of us that are gonna be unwilling or unable to make the shift.
• 42:55
  SPEAKER_02: And we are going to see more and more, you know, realtors leave the business.
• 43:01
  SPEAKER_02: From a practical standpoint, when I went to this broker meeting in Columbus a couple of weeks ago discussing the lawsuit, it was interesting because we talked about the whole buyer agency agreement.
• 43:11
  SPEAKER_02: And like I said, I always looked at the buyer agency agreement as a way to handcuff the buyer to the agent, right?
• 43:18
  SPEAKER_02: And I always felt a little odd about that.
• 43:21
  SPEAKER_02: But you know, if you sign a buyer agency agreement, and again, I'm I don't mean to say that you know, I don't want to violate any trust law, but let's say you sign a buyer agency agreement and just for kicks, let's say that it's four percent that you know you a buyer sells their signs a let's say this is two thousand dollars.
• 43:41
  SPEAKER_02: Let's just do that.
• 43:42
  SPEAKER_02: A buyer signs a agreement with me as quote their buyer agent, and once I successfully you know get them in contract and they close, they're gonna owe me or my brokerage two thousand dollars, right?
• 43:55
  SPEAKER_02: But then let's say that the house that they choose.
• 44:00
  SPEAKER_02: To purchase actually is offering a referral fee or a co-op to the firm that brings the buyer.
• 44:07
  SPEAKER_02: And let's just say that's$1,000, right?
• 44:10
  SPEAKER_02: So in that situation, the buyer has signed a contract saying that we, as the buyer agency, buyer broker agency, are going to get$2,000.
• 44:18
  SPEAKER_02: They are going to get$1,000 from the seller.
• 44:20
  SPEAKER_02: So they're out of pocket and additional closing costs is only another$1,000.
• 44:24
  SPEAKER_02: So it does protect us as agents from, you know, a lot of potential commission compression, I think, because it doesn't necessarily mean, and this was sort of enlightening for me when I realized it, it doesn't necessarily mean that, you know, every buyer is going to have to pay 3% or 4% or 5% or$2,000 or whatever it is.
• 44:44
  SPEAKER_02: But it may mean that it's going to be the difference between whatever co-op or whatever referral fee the seller has chosen to offer through their listing brokerage.
• 44:58
  SPEAKER_01: Right.
• 44:58
  SPEAKER_01: But with protection comes.
• 44:59
  SPEAKER_01: Yeah.
• 45:00
  SPEAKER_01: Well, but with protection comes some limitations, right?
• 45:03
  SPEAKER_01: So in, you know, in this world that we live in right now, right this minute, you can get your$2,000 and then you could get your$1,000, right?
• 45:11
  SPEAKER_01: But if that automatically goes towards the$2,000, then you're capped, right?
• 45:15
  SPEAKER_01: So you're protected.
• 45:16
  SPEAKER_01: You definitely get paid, right?
• 45:18
  SPEAKER_01: But you're also capped.
• 45:20
  SPEAKER_01: Whereas, you know, and what happens if, you know, maybe they're offering more, the buyer gets to pocket that great for the buyer, right?
• 45:27
  SPEAKER_01: That's fantastic for the buyer, but it's capped you as an agent.
• 45:30
  SPEAKER_01: So, you know, in exchange for that protection, there is some limitation that I see.
• 45:35
  SPEAKER_01: And honestly, you know, if you're negotiating an agency contract with a buyer and you know that the buyer's budget is in the you know,$100,000 range, let's go back to the 1980s or whenever, then you're, you know, are you going to charge$2,000?
• 45:51
  SPEAKER_01: And then if they're, you know, their price range is in the$500,000 mark, are you going to charge, you know, what would equal two or three percent of that?
• 45:59
  SPEAKER_01: Right.
• 45:59
  SPEAKER_01: So there's still it doesn't necessarily solve anything.
• 46:04
  SPEAKER_01: I think it it definitely just right, which is not necessarily a bad thing.
• 46:08
  SPEAKER_02: What you just illustrated was the fact that these fees always have been, always will be negotiable, period.
• 46:15
  SPEAKER_02: Right.
• 46:16
  SPEAKER_02: It it's it's it's completely up to how that buyer or seller wants to work with their agent and how the buyer and seller, you know, come to terms on a purchase price.
• 46:24
  SPEAKER_01: So when ultimately the ball has like the responsibility has always been in the buyer or the seller's court to do their due diligence to find the right agent for them, right?
• 46:37
  SPEAKER_01: That charges something they're comfortable with, that you know, offers the services they want or need that, you know, that their personalities match.
• 46:47
  SPEAKER_01: It's really no different.
• 46:48
  SPEAKER_01: You know, it just it still falls on the buyer or the seller to do the work up front to find the right agent for them, is what I'm taking away from all of it.
• 46:59
  SPEAKER_02: No, I I agree.
• 47:00
  SPEAKER_02: I agree with you completely.
• 47:02
  SPEAKER_02: So let's talk about potential changes to state individual state licensing laws.
• 47:07
  SPEAKER_02: I think that we're gonna see more states force changes to MLS rules that will make it easier for non-NAR licensees to list properties on the MLS.
• 47:16
  SPEAKER_02: And we have several states, as we discussed last week, that have done just that.
• 47:20
  SPEAKER_02: You're gonna see state antitrust laws change in response to whatever happens at the federal level, right?
• 47:26
  SPEAKER_02: Now, you know, they're just like there are federal antitrust laws, or each individual state has different antitrust laws.
• 47:33
  SPEAKER_02: And as the states exert more authority and control, that could lead to changes that may limit the power of the National Association of Realtors.
• 47:41
  SPEAKER_02: We'll likely see new consumer protection laws come up at the state level.
• 47:45
  SPEAKER_02: If this really goes south, I think you're gonna see more and more regulations and disclosure requirements, which isn't necessarily all bad, but you know, governments are governments, bureaucracies are bureaucracies, so they may be more in the way than we would like.
• 47:58
  SPEAKER_01: Yeah, red tape is red tape.
• 48:00
  SPEAKER_02: Yeah, I think there's gonna be changes in uh pre-licensing and continuing education classes, you know, to with more of an emphasis on antitrust laws and and consumer protection regulations.
• 48:13
  SPEAKER_02: You know, we've always talked not in depth about antitrust issues, other than saying that, you know, we're not gonna collude, we we're not around to do this and so forth.
• 48:22
  SPEAKER_02: But I think that's gonna become more pronounced regardless of how this plays out.
• 48:27
  SPEAKER_02: The other thing that's interesting is licensees are probably gonna be required to disclose to the to their client if they are members of NAR.
• 48:36
  SPEAKER_02: You know, and that's a weird thing because you know, we've always total shift.
• 48:41
  SPEAKER_02: We've always grown up that yeah, we're real tours, you know, and you've it's a badge you wear proudly.
• 48:48
  SPEAKER_02: And potentially maybe the NAR um affiliation isn't the badge of honor that it used to be.
• 48:56
  SPEAKER_02: And if they lose in the court of public opinion, we may not to be.
• 49:01
  SPEAKER_02: I can see it possible that you know, as practitioners, we may not want to wave the NAR flag.
• 49:06
  SPEAKER_02: And it may be a requirement that we have to disclose in writing if we're quote members or not.
• 49:10
  SPEAKER_02: So I think that's interesting too.
• 49:12
  SPEAKER_02: That might be a little bit too out there, but it's on the table.
• 49:16
  SPEAKER_02: It's not improbable.
• 49:17
  SPEAKER_02: So I want to sort of foreshadow what we're going to talk about in the last episode the next time we get together.
• 49:22
  SPEAKER_02: But you know, just for a little bit here, let's kind of get to the fun part.
• 49:26
  SPEAKER_02: You know, what new business opportunities, you know, could might present themselves in the years ahead.
• 49:33
  SPEAKER_02: How's that sound to you?
• 49:34
  SPEAKER_01: Oh, yeah.
• 49:35
  SPEAKER_01: This is the good stuff now.
• 49:37
  SPEAKER_02: Yeah.
• 49:37
  SPEAKER_02: Well, this is a preview of the really good stuff that I really want to find.
• 49:41
  SPEAKER_01: But I'll try not to skip too far ahead.
• 49:44
  SPEAKER_02: With increased scrutiny of traditional commission-based models, real estate brokers and owners would may explore alternative pricing models that are more transparent and competitive.
• 49:54
  SPEAKER_02: This could include flat-free listings, tiered pricing plans, performance-based compensation.
• 49:58
  SPEAKER_02: And it's so funny that this is, you know, quote, a new business opportunity, because we have seen different agents and different companies want do these types of things.
• 50:08
  SPEAKER_02: And, you know, we realtors have always ended up referring to them as quote, discount brokerages, which is actually contrary to NAR rules, by the way.
• 50:17
  SPEAKER_02: But it's not like these ideas haven't existed before.
• 50:21
  SPEAKER_02: I think that the reality is coming out of this, maybe that they get traction for the first time, that they become a meaningful percentage of the business.
• 50:34
  SPEAKER_02: So, you know, one way to combat commission compression is to, you know, compress your own commission out front.
• 50:42
  SPEAKER_01: So, you know, do it before they can, right?
• 50:45
  SPEAKER_02: Yes, yes, yes, yes.
• 50:46
  SPEAKER_02: Do it before they can do it to you.
• 50:47
  SPEAKER_02: So I do think that uh we're gonna see different business models and gimmicks approaches.
• 50:54
  SPEAKER_02: Yeah, I think there's gonna be some gimmicks.
• 50:55
  SPEAKER_01: And I feel like it's gonna be very from a marketing standpoint.
• 50:58
  SPEAKER_01: I feel like it's gonna be very gimmicky.
• 51:00
  SPEAKER_01: And like right now, I could, gosh, there's probably 10 billboards I could throw a rock and hit uh that say, you know, we'll get you an offer on your home today, right?
• 51:10
  SPEAKER_01: Like if you don't want to take it, we'll still sell it for you, but like we'll get you an offer today.
• 51:14
  SPEAKER_01: Well, in my mind, I'm like, well, that's a gimmick.
• 51:16
  SPEAKER_01: And they're gonna offer me way less than what my house is worth just to get me an offer today, right?
• 51:20
  SPEAKER_01: It's not gonna be a real offer.
• 51:22
  SPEAKER_01: And so that's I look at it with a lot of skepticism, and I don't see that as a you know, a valid option.
• 51:28
  SPEAKER_01: Do you think that's gonna change?
• 51:30
  SPEAKER_02: I think we could see more of things like that, quite frankly.
• 51:33
  SPEAKER_02: I really do.
• 51:34
  SPEAKER_02: I think we're gonna see, and it's hard to imagine what these might be, but you know, there's talk out there that we're gonna see brokerage models that aren't bound by traditional national association of real-tor rules.
• 51:46
  SPEAKER_02: And remember, one of the reasons we discovered that, you know, REMAX and Anywhere chose to disassociate with NAR and not make it a requirement that their franchisees and agents join, was that they didn't want to have to abide by NR rules.
• 52:04
  SPEAKER_02: So this could also mean that we're gonna see some different ideas, whether from the mega brokerages or from some independents, that offer more flexibility and choice to both agents and clients.
• 52:16
  SPEAKER_02: And, you know, I think as we start talking about where can we get some efficiencies out of the process.
• 52:24
  SPEAKER_02: And we talk about you know, artificial intelligence and scale and process and things like that, I do think we're gonna see some changes.
• 52:35
  SPEAKER_02: And it's a question of who gets to market first.
• 52:38
  SPEAKER_02: Increasing importance of technology, you know, we've been talking about technology and the internet since I've had a license, but as it's always been, those broker owners who embrace you know technological advancement are going to gain a significant advantage.
• 52:53
  SPEAKER_02: Some of this stuff, you know, has stuck, some of it happened, hasn't, but I do think that virtual reality tools, tours, you know, are we going to see more and more of those.
• 53:03
  SPEAKER_02: I think the price is going to go down.
• 53:05
  SPEAKER_02: I think the technology to actually take those pictures is going to go down, become more efficient.
• 53:10
  SPEAKER_02: And the beauty of those tours is for me, Lacey, is personally, I don't like to sit and watch a video that an agent makes, you know, going all the way through the house.
• 53:20
  SPEAKER_02: My feeling is I want to jump to the kitchen, I want to jump to this living room, I want to see the basement, I want to see the office, I want to see the media center, right?
• 53:27
  SPEAKER_02: So I think that there is some wonderful technology out there that allows you to look at a floor plan of a house, you know, click on the room you want to see, and then see that 3D tour of that individual room.
• 53:39
  SPEAKER_02: I think that kind of thing is very useful.
• 53:41
  SPEAKER_02: And I think it's going to become more prevalent.
• 53:44
  SPEAKER_02: The reason the realtors have not embraced that is it it does indeed make the house the star of the show, as it should be, or as a lot of the realtor videos, the realtor is the star of the show.
• 53:56
  SPEAKER_02: So I think that's going to continue because it really is about adding value and it's about reducing friction.
• 54:02
  SPEAKER_02: And you've got a great virtual reality tour.
• 54:06
  SPEAKER_01: It does make it more likely and more confident for somebody to buy a house, you know, sight and scene, you know, from so I shouldn't tell the realtors that when I have to watch a video that they've made, I turn my volume all the way down and put it on like three times speed and try to just pretend like they're not even there.
• 54:24
  SPEAKER_02: That would hurt their feelings, it sounds like you're not going to hurt my feelings, but yes, you will hurt some of our feelings.
• 54:28
  SPEAKER_02: And that's exactly what I do too.
• 54:31
  SPEAKER_02: So Dana Analytics tools, you know, that whole idea that you know I went to the National Association of Realtors convention, I guess it was two or three years before COVID, and the buzzword was Dana and Data Analytics, you know, predictive analytics is what it was.
• 54:48
  SPEAKER_02: It was, you know, looking at big data sets of county records and making an informed, data-driven guess at who's likely to move this year versus last.
• 55:01
  SPEAKER_02: I think that some of that I think was pie in the sky.
• 55:04
  SPEAKER_02: But I do think with artificial intelligence and the massive data we've accumulated from so many different sources that we can't even we can't imagine what may be coming our way.
• 55:14
  SPEAKER_02: Marketing platforms, you know, it's getting easier and easier, you know, thanks to Zillow, Realtor, so forth, you know, to get really good professional looking advertising out there in the world for our listings.
• 55:27
  SPEAKER_01: Yeah.
• 55:28
  SPEAKER_01: So one of the things I think about is how who can be first to make this process, buying or selling a home, easier, right?
• 55:36
  SPEAKER_01: And we think about that as, and we've talked about this before.
• 55:38
  SPEAKER_02: Let me interrupt, and I apologize, but I don't want to lose this thought.
• 55:42
  SPEAKER_02: It's not just easier, Lacey.
• 55:45
  SPEAKER_02: I think what we all need, including realtors, buyers, and sellers, is making the process more predictable.
• 55:51
  SPEAKER_02: And right now, you know, you've got a million agents that all put their own spin on it, and that creates not just uncertainty, but that unpredictability creates anxiety.
• 56:05
  SPEAKER_02: And I'm not saying that we should all be McDonald's and the hamburgers should taste the same everywhere, but we do need a bit more formidity, I think, as scary as that may be.
• 56:14
  SPEAKER_02: So anyway, no, that's my exact point.
• 56:17
  SPEAKER_01: Up to this point, I've thought about it as who's going to be the first to put a buy now button on Zilla, right?
• 56:22
  SPEAKER_01: And just make the process, like the logistics of it easier.
• 56:25
  SPEAKER_01: But there's this human element right now, where, you know, what if your agent misses a house that would be perfect for you?
• 56:32
  SPEAKER_01: Or, you know, as an example, right?
• 56:34
  SPEAKER_01: But with AI and predictive data and all of those advancements technologically, like who's going to be the first that can look at an agent profile, partially that they've filled out themselves, partially that they've imported some kind of readily available data and match them to their perfect home that's for sale in their area they're looking for, in the price, like within their price range, right?
• 57:01
  SPEAKER_01: And spit out this is your, you know, this is the home that's most likely going to be the one that you're gonna buy.
• 57:09
  SPEAKER_01: And it turns out they're right, right?
• 57:11
  SPEAKER_01: Like, and so you take out all of the appointments all of the time.
• 57:16
  SPEAKER_01: So it's not just the logistics, it's really that right.
• 57:19
  SPEAKER_01: This is looking further ahead.
• 57:20
  SPEAKER_01: This might be a next week's conversation, but yeah, but but here's the other thing.
• 57:24
  SPEAKER_02: You know, you and I have talked about this, you're a content creator, right?
• 57:27
  SPEAKER_02: You're a writer, you're a researcher, and we've talked about how you know we both are learning to use Chat GPT and Google's Bard as tools to make us more productive, not to do our jobs for us, but it provides resources and structure that allows us to add greater value to those we work with.
• 57:48
  SPEAKER_02: And I think the new real estate professional is going to embrace all these tools, whether it's Zillow or Predictive Analytics or ChatGP or whatever, and they're going to 10 times, you know, their capability, their efficiencies, their personal expertise, and in turn exponentially increase their value to the clients they choose to work with.
• 58:09
  SPEAKER_02: That I think is ultimately where this goes.
• 58:12
  SPEAKER_02: But, you know, spoiler alert, that means that agents who embrace that mindset are going to do a heck of a lot more transactions than they do today.
• 58:25
  SPEAKER_02: And it's going to mean that we need fewer realtors in the system, right?
• 58:29
  SPEAKER_02: You're going to lose some realtors because of the buy button.
• 58:31
  SPEAKER_02: And then you're going to lose some realtors because a handful among us are going to get really good at what we do and we're going to be able to scale.
• 58:38
  SPEAKER_02: So I think that's the that's what's going to happen.
• 58:41
  SPEAKER_02: It's just hard to say exactly what the steps are going to be one by one, but I think that's where we're going.
• 58:46
  SPEAKER_02: I think you're going to see the opportunity.
• 58:48
  SPEAKER_02: I think you're going to see fewer generalists, right?
• 58:50
  SPEAKER_02: And more specialists by market segment.
• 58:53
  SPEAKER_02: You know, our friend Dean talks about being hyper-local.
• 58:56
  SPEAKER_02: I think hyper-local is valuable, right?
• 58:59
  SPEAKER_02: If you're looking to move to Provo Utah, you want the person in Provo Utah that knows not just Provo Utah, but the subdivision and the street that you live in.
• 59:07
  SPEAKER_02: So local expertise and focus are are going to be critical.
• 59:11
  SPEAKER_02: And I think one, the idea of one target market at a time is critical.
• 59:20
  SPEAKER_02: Your primary focus as a professional is market making, right?
• 59:24
  SPEAKER_02: So when, you know, some of the stuff we're working on for next year, you know, we've got the Space Coast condo guide launching.
• 59:31
  SPEAKER_02: And, you know, we want to become, we want Rena to become the absolute go-to specialist for oceanfront condos on the space coast of Florida.
• 59:41
  SPEAKER_02: You know, that's a niche market.
• 59:43
  SPEAKER_02: It's a small, it's not broad, it's one thing, but we can go incredibly deep into that and become the experts.
• 59:50
  SPEAKER_02: Another thing that we're looking at launching next year is Champaign County.
• 59:54
  SPEAKER_02: It's a rural area near Springfield and Dayton.
• 59:57
  SPEAKER_02: And we are going to become the absolute go-to experts on any piece of land that is larger than 100 acres, right?
• 1:00:07
  SPEAKER_02: So in these rural areas, land turns, but land turns within quote the market, just like commercial real estate used to.
• 1:00:14
  SPEAKER_02: So, you know, it's not like you can just uh put a deal together by you know being a realtor and sticking it in the MLS.
• 1:00:21
  SPEAKER_02: You've got to become a uh a market maker.
• 1:00:24
  SPEAKER_02: So hyperlocal expertise and focus, one target market at a time.
• 1:00:28
  SPEAKER_02: Go deep, build your business in those niches one at a time.
• 1:00:31
  SPEAKER_02: And I think that's gonna be the wave of the future.
• 1:00:35
  SPEAKER_02: I think in general, you know, with increased competition and compression, you know, brokers and owners have to prioritize customer satisfaction.
• 1:00:43
  SPEAKER_02: And, you know, we got to attract, you got to retain clients, you've got to earn their referrals.
• 1:00:47
  SPEAKER_02: So, you know, one thing that I've been thinking about is, and you know, we're gonna talk about this next week and all into next year, you know, we do property management as well as you know, helping people buy and sell houses.
• 1:01:00
  SPEAKER_02: And I think the concept that is really driving my thinking next year and well beyond is have I earned a five-star review today?
• 1:01:08
  SPEAKER_02: You know, if your if your whole culture, thought process, actual processes revolve around have I earned a five-star review today, I think that positively influences everything we do and how we do it.
• 1:01:23
  SPEAKER_02: You know, real estate brokers and owners, you know, are going to be looking for ways to expand their reach.
• 1:01:28
  SPEAKER_02: So they're gonna be collaborating with new people in the market, could be online platforms, it could be homeowner counseling organizations.
• 1:01:35
  SPEAKER_02: But I think what's going to happen is if we do get to a point where there's extreme decoupling, and I could tell you that any mortgage company, any banker is going to be far more comfortable lending money to a first-time buyer who has quality representation versus somebody who's going out there and doing it on their own.
• 1:01:58
  SPEAKER_02: That is going to be a better loan for a bank to make for an educated buyer than a non-educated buyer.
• 1:02:06
  SPEAKER_02: So, you know, I think that's something that may become, you know, a lot of you know, great realtors have, you know, productive relationships with one or two lending professionals.
• 1:02:16
  SPEAKER_02: But I do think, especially in the case of decoupling, that we're gonna see more of that.
• 1:02:22
  SPEAKER_02: I mean, I can't imagine lending money to somebody who's a first-time buyer who is on their own.
• 1:02:26
  SPEAKER_02: I would be much more likely and think that loan is gonna perform a hell of a lot better on average if they've had representation.
• 1:02:32
  SPEAKER_02: I think you're gonna see lots of consolidation.
• 1:02:34
  SPEAKER_02: Brokers are gonna go out of business, their agents are gonna go elsewhere, brokers are gonna be bought out.
• 1:02:39
  SPEAKER_02: I think services are gonna become, you know, it's nice for us because we do property management as well.
• 1:02:45
  SPEAKER_02: So we've got a rehab and maintenance company that for me as a broker, you know, it's another stream of income, it's another opportunity to add value.
• 1:02:53
  SPEAKER_02: It helps us with sales, it helps us with management, management helps us with sales, and vice versa.
• 1:02:59
  SPEAKER_02: So I do think that you're gonna see a lot of different things come together that we haven't thought of before.
• 1:03:06
  SPEAKER_02: But at the end of the day, the whole industry is gonna get way, way more productive.
• 1:03:11
  SPEAKER_02: Sort of like we just talked about.
• 1:03:12
  SPEAKER_02: The best among us are gonna do way more units.
• 1:03:14
  SPEAKER_02: So for me, it's always been units closed per agent is the critical metric, not dollars.
• 1:03:22
  SPEAKER_02: So we we're gonna focus on units, but it also means we're gonna be focusing on metrics like return on relationship.
• 1:03:28
  SPEAKER_02: And you know, that's what Dean Jackson's been, you know, teaching for years and years.
• 1:03:32
  SPEAKER_02: It makes perfect sense if you work by referral.
• 1:03:34
  SPEAKER_02: Knowing that metric is key.
• 1:03:36
  SPEAKER_02: And I think it's key for broker owners as well, not just individual agents.
• 1:03:40
  SPEAKER_02: You know, the most dangerous in the agents in the world, Lacey, are those that do one or two deals a year.
• 1:03:45
  SPEAKER_02: That's where our liability is.
• 1:03:46
  SPEAKER_02: You know, the the agents that do two, three, four deals a month, whatever it is, they're the ones that are in the thick of it learning every single day.
• 1:03:54
  SPEAKER_02: That's not where our liability is.
• 1:03:55
  SPEAKER_02: Our liabilities are with the people who don't produce.
• 1:03:59
  SPEAKER_02: Anyway, I'm going on and on.
• 1:04:01
  SPEAKER_02: We're getting ahead of ourselves.
• 1:04:02
  SPEAKER_02: One other thing I just want to say, you know, this has been a tough year for broker owners, but honestly, it's been a tough few years for broker owners.
• 1:04:11
  SPEAKER_02: And I think that we are finally going to get tired, I know I have, of taking on legal liability for less than the compensation that we deserve.
• 1:04:20
  SPEAKER_02: And everything for me has to come down to providing greater and greater value to our agents so they can make more and more money and live the lifestyle they want.
• 1:04:29
  SPEAKER_02: If they get paid, you know, we as brokers get paid.
• 1:04:33
  SPEAKER_02: And if that's not the way of now and it should be, it's gonna be the way of the future.
• 1:04:37
  SPEAKER_02: And the last thing is, you know, if NAR does start to fade away as, you know, I guess as our voice to the world, we as individual brokers, and I don't know what this is gonna look like, but we are gonna have to step up and do what we have allowed NAR to do for us all these years for ourselves.
• 1:04:58
  SPEAKER_02: And, you know, we're gonna talk more about that next time.
• 1:05:01
  SPEAKER_02: But you know, these are things that could come down the pike.
• 1:05:03
  SPEAKER_02: That's not necessarily a fun one.
• 1:05:05
  SPEAKER_02: I think the fun one is what is the business, what are the business opportunities going to look like, and how can we help people seize those opportunities?
• 1:05:12
  SPEAKER_02: So I feel like I'm going on and on and I can't stop, Lacey.
• 1:05:15
  SPEAKER_02: So let's get close to that.
• 1:05:17
  SPEAKER_01: Let's wrap it up.
• 1:05:18
  SPEAKER_01: Well, I think that what the last really the last thing I've taken from this is the return on relationship.
• 1:05:24
  SPEAKER_01: If you're gonna be a market maker, you know, in rural Ohio, then you're gonna have to know the folks who could potentially be selling their land before they decide to sell their land, right?
• 1:05:35
  SPEAKER_01: You're gonna really have to be a member of a community.
• 1:05:39
  SPEAKER_01: If you're gonna, you know, have a niche in the space coast, you're gonna have to be involved in that community.
• 1:05:45
  SPEAKER_01: And it just really drives home, I think, again, in a very tangible way, why relationship driven professionals are gonna be at an advantage when this happens.
• 1:05:56
  SPEAKER_01: If that's the thing that you're gonna do to succeed, if that's what needs to happen.
• 1:06:00
  SPEAKER_01: If that makes it easier, right?
• 1:06:02
  SPEAKER_01: Then all of the things that you have in place, like being a member of your community, supporting your community financially, pop buys for past clients, and just people in your Rolodex, you know, reaching out individually to those folks once a month or sending them a postcard to remind them that, hey, you know, we're still here whenever you're ready, right?
• 1:06:21
  SPEAKER_01: Whenever you're ready, here's how we can help that you're just really well positioned for this, which is is huge.
• 1:06:29
  SPEAKER_01: And I think it's gonna be huge.
• 1:06:30
  SPEAKER_01: I think you're gonna see when you talk about other brokers, you know, kind of finding their own way.
• 1:06:36
  SPEAKER_01: I think that you're gonna see a lot of other brokers do what Roost is already doing, if if that's the way forward.
• 1:06:42
  SPEAKER_01: So that's exciting.
• 1:06:44
  SPEAKER_02: But here's five things, uh specific things that I really urge everybody listening to start doing today.
• 1:06:51
  SPEAKER_02: Okay.
• 1:06:52
  SPEAKER_02: So the first one is if you're not already familiar, get familiar with exclusive buyer agency agreements.
• 1:06:57
  SPEAKER_02: I believe this is the way.
• 1:06:59
  SPEAKER_02: I've resisted these, but it's time to get on board.
• 1:07:02
  SPEAKER_02: The second thing is show your value.
• 1:07:04
  SPEAKER_02: And if you feel you've been doing that, what's the next level?
• 1:07:08
  SPEAKER_02: Right?
• 1:07:08
  SPEAKER_02: How are you gonna better show your value?
• 1:07:10
  SPEAKER_02: Better yet, how are you going to add additional value?
• 1:07:13
  SPEAKER_02: You've got to be able to articulate what you bring to the table.
• 1:07:16
  SPEAKER_02: It's gonna be a lot easier to get a signature on a buyer representation agreement or a buyer agency agreement if you can show your potential client exactly why they shouldn't go it alone.
• 1:07:25
  SPEAKER_02: Number three, educate.
• 1:07:27
  SPEAKER_02: And it's not just educating the client that's across the kitchen table from you.
• 1:07:31
  SPEAKER_02: We have to educate customers as well as clients, and specifically, we have to educate them about the manner in which we get paid.
• 1:07:40
  SPEAKER_02: Transparency is key.
• 1:07:43
  SPEAKER_02: Here's another great practical tip: don't pre-fill your listing documents with any numbers or any percent percentage, especially a cooperative percentage.
• 1:07:54
  SPEAKER_02: Okay, all commissions are negotiable.
• 1:07:57
  SPEAKER_02: If you have a pre-filled number in there when you put it in front of or send it to dot loop to a seller or a buyer, that absolutely changes the perception that commissions are negotiable and it makes it look like they're fixed.
• 1:08:09
  SPEAKER_02: Don't pre-fill anything.
• 1:08:12
  SPEAKER_02: Never ever, this is the last one today.
• 1:08:14
  SPEAKER_02: Never insinuate to a seller that failure to agree to a certain co-op percentage or a certain dollar will result in fewer agents showing their property.
• 1:08:27
  SPEAKER_02: You can't do it.
• 1:08:28
  SPEAKER_02: That's contrary to what NAR says, and it's contrary to state law, I believe in every single state, right?
• 1:08:34
  SPEAKER_02: It is contrary to your fiduciary legal duty to a buyer to not show a property that would be perfect for them if the buyer co-op is the amount of money you think you deserve, right?
• 1:08:48
  SPEAKER_02: And this goes back to that discussion of being able to search listings based on the co-op and potentially having an agent only show the ones that pay the most.
• 1:08:57
  SPEAKER_02: Yes, that could happen.
• 1:08:58
  SPEAKER_02: Yes, it's wrong, but I also was want to stress the fact that it is concentrate, it's contrary to state licensing law.
• 1:09:08
  SPEAKER_02: So never ever insinuate that a seller's failure to pop 3% or 4% or whatever it is into that co-op figure on your listening agreement is going to result in fewer realtors showing the property because that is a clear and present violation of antitrust law.
• 1:09:27
  SPEAKER_02: So please don't do it.
• 1:09:29
  SPEAKER_01: Love it.
• 1:09:30
  SPEAKER_01: Practical tips are a great way to end it.
• 1:09:32
  SPEAKER_01: I think that this is the day-to-day, this is the way, like you said.
• 1:09:35
  SPEAKER_02: Well, those are the five things that we can all do right now, regardless of how this whole thing turns out.
• 1:09:40
  SPEAKER_02: And you know, we've done four of these so far.
• 1:09:43
  SPEAKER_02: And those are the things that I've definitely changed in my business already, having you know, dug into this.
• 1:09:51
  SPEAKER_01: Well, it sounds like you might need to host a seminar.
• 1:09:54
  SPEAKER_01: So on the practical aspects, we can talk about philosophy all day long, but when it comes down to it, it's what are the what is this checklist, right?
• 1:10:02
  SPEAKER_01: That I need to do every day to to make sure that that I'm on everything stays on the up and up.
• 1:10:07
  SPEAKER_01: So thanks again for taking the time, Chris, to get into all of this because I know it's a lot of time uh and sharing it, uh sharing your takeaways with the folks who maybe don't have or or can't make that time right now.
• 1:10:20
  SPEAKER_02: Always a pleasure, Lacey.
• 1:10:22
  SPEAKER_02: Thank you.
• 1:10:22
  SPEAKER_01: See you next time.
• 1:10:25
  SPEAKER_02: And there we have it.
• 1:10:26
  SPEAKER_02: Thanks for listening in.
• 1:10:28
  SPEAKER_02: If you want to continue the conversation, go to www.connectpracticgrow.com.
• 1:10:35
  SPEAKER_02: That's connectpracticreckgrow.com, where we have additional information about the podcast, archived episodes, and an option you can select to be a guest on the show.
• 1:10:46
  SPEAKER_02: We'd love to hear from you.
• 1:10:47
  SPEAKER_02: So that's it.
• 1:10:48
  SPEAKER_02: We'll be back next time with another episode of the Connect Practice Track and Grow podcast.