Real estate professionals have experienced turbulence and change in the past, and we will do so again, even if we don’t know how yet, writes broker and owner Teresa Boardman.
May is Inman’s commission and payroll month. We’ll sort through the noise and misinformation and provide you with the latest facts and strategies on how to prosper after a commission settlement. And find updates directly in your inbox with Inman’s new weekly digest, The Committee Chronicle.
National Association of Realtors (NAR) proposed settlement to Entrusted cases Will change the way real estate agents do business. Settlement rules receive preliminary approval from Sizer | Judge Burnett believes the bill, which could go into effect on August 17, 2024, would decouple listing commissions from buyer’s commissions, remove commission displays from MLSs, and require An agent signs a contract with a buyer client before showing them a home.
This is not new information. We’ve known about the proposed settlement for more than a month. Unfortunately, we won’t really know how the new rules will impact a business or agent’s compensation until some time after the new rules are implemented and put into practice.
As a real estate industry veteran, I’ve experienced a lot of ups and downs, disruptions and even pandemics. One thing it taught me is that planning under uncertainty is a foolhardy undertaking. Here’s why:
When the epidemic comes, there is no plan
Back in 2020, before the COVID-19 pandemic began, we didn’t have time to update our business plan. No one has a blueprint for how to deal with the pandemic or how to sustain business.
exist March 13, 2020, the President of the United States declared a national emergency. Then came national and local stay-at-home orders. In some states, real estate is considered an essential service and we are allowed to work under a new set of safety rules.
March is a busy month for most real estate agents. I remember our house being on the market and talking to the client because we all had to figure out what to do next. Some homeowners didn’t want anyone inside their homes, and at one point many areas didn’t allow open houses.
Some homebuyers have stopped looking for a home, while for others, moving has become an emergency. In fact, in March 2020, Increase in the number of people moving.
Real estate agents are working from home as real estate companies are forced to close their offices. For some, this is a new experience; For many people, this is not the case.
things change quickly
One of my biggest frustrations is bank lines. The lobby was closed and we had to use the drive-up window. At the time, mobile deposit limits were too low, and wire transfers of funds weren’t as easy as they are now.
The shared office space we used for our offices was closed temporarily and then permanently. Sometimes, goods are delivered to the now-vacant building and signed for by some mysterious person.
Before the COVID-19 pandemic, we had no plans to address issues that arose during the pandemic. I had no plan for how to deal with mail, banking, or real estate transactions that couldn’t be completed in person. We learned how to meet with clients online and how to handle showings in partially closed apartment buildings.
We must learn how to make a living while protecting ourselves and our families from potentially deadly viruses.
We learned how to navigate a world where everything changed almost overnight. We learned to cope with a lot of stress and uncertainty. Does anyone have plans for March 2020?
Where are we now
Four years later, we are preparing for some changes that will impact the way we do business.
When it comes to commission lawsuits and settlements, the changes are dramatic. Under the proposed settlement, we will no longer be able to compensate buyers’ agents for our listings in the MLS.
This means the buyer’s agent must figure out whether the listing agent is paying the buyer’s agent a commission, whether the buyer’s agent will be compensated through seller offers, or whether the buyer must find other ways to pay their agent. who knows? Maybe buyer’s agents will die out and buyers will work with listing agents.
None of us have a crystal ball; we don’t know what unintended consequences the proposed solutions will have. We can’t predict how consumers will respond to changes in the way we do business, just like we don’t know how consumers will respond to the pandemic.
No one expected home sales to rise during the pandemic; It peaks in 2021 and then hits a decade low in 2023.
Many of us believe that home sales will be down in 2020 due to the pandemic and more real estate agents will quit. I know some people who have decided to retire, but we now know that the total number of real estate agents has increased and may peak at 1.5 million; Membership decline February fell below that number for the first time since May 2021.
We should discuss how to pay the buyer’s agent and handle various scenarios, including what to do if the buyer under contract refuses to pay because he or she does not have the funds.
By this time next year, we will all be doing things differently than we do today, and these changes won’t all be part of the plans we made ahead of time. There will be new opportunities that we have not yet imagined. There will be winners and losers; some real estate agents will quit and some will start.
The people who thrive after settling in will be those who are flexible and able to make new plans—agents and real estate companies with more of a sense of adventure than entitlement. Imaginative people are willing to try new things and take a risk or two. They can step outside the box of “we are essential and have to pay X amount because we have the right.”
We didn’t set out to be the losing party in the explosive Commission litigation, but here we are. Of course, it’s nice to have a plan, but I’m in no rush to make one.
