Realtors are not travel agents

You probably saw the NAR settlement announcement yesterday. If not, climb out of the rock you were under and check it out. It’s sure to get your heartbeat racing.

My brokerage office had a Buyer Agency class this past week. One of the things they said about the lawsuits was “...not likely that commissions will be de-coupled.”  Oops.

When I first read the announcement, the typical human emotions were present: fear, scarcity, terror, frustration, anger, etc.

After about 15 minutes those all washed over and I realized that this is an amazing opportunity to up our game. Our industry is going to get better, and it is going to be better for us as professionals in the long run. Maybe not right away. However this is what is going to happen, so why not make the best of it?

As for buyer written agreements - many states, like mine, already require buyer broker agreements. The difference now is that my compensation ultimately will be what I write in the agreement - not what is offered by a sometimes incompetent discount agent in the MLS. Now I can be clear about what I am worth, and what I will be paid.

To be fair, for many realtors, this is new(er) and can be an awkward conversation - at first. As time goes on, those who are paying attention, working on their craft, and getting clear on the true value they provide their clients - will have no problems discussing their fees with clients.

Most definitely for the next 3, 6, 9+ months, things will be...a mess? It will take some time for things to be sorted out. Do you remember what it was like when you had to sign documents manually? (Most of you do not!) Okay, sure, this situation is a little different. Over time things will work themselves out, yet, in the near term we will be quite a bit of uncertainty:

• - When do we stop offering Co-Op commission in the MLS?
  
  
• - How do we factor in our commission (on the buy side) when not in the MLS, but the seller is willing to have buy-side commission wrapped up in the sale price?
  
  
• - How will the lenders, appraisers and such adjust?
  
  
• - How do we look at “comparables” where sellers aren’t paying any commission to the buy side vs. those that are?

Plus a hundred other questions. Who cares? I mean, yes, of course, I care, but those things will get worked out.

The people who hate our industry, and hate us - can’t wait to see this “standard, and coupled commission” thing go away. They argue that this “standard 5%-6%” thing has been a burden. First off, we know that many agents don’t charge that much. Second, no one works for free.

In my mind, most realtor-haters think we make too much money because they see a few incompetent and unprofessional people doing a big deal and making “easy” money. The bar to entry has been too low.

They believe the solution is alternative pricing models, like flat fees for buyer representation, or maybe hourly fee agreements. Or maybe “Carvana-like” business models.

Good luck. What these realtor-haters forget is that we are signing a legal contract with clients, representing them as their fiduciary. We take on ALL that legal liability. Who wants to do that for $20/hr, or even $50? Seriously?

Sure, a flat fee might work for some. Again, what kind of valued, competent professional works for less? In what other industry do you get top representation for less?

I am not here to mitigate all the points of what’s been thrown around in the news. However, there was one quote that made me laugh at the ridiculousness of these realtor-hater arguments.

“The opening of a free market for Realtor compensation could mirror the shake-up that occurred in the travel industry with the emergence of online broker sites such as Expedia and Kayak.”

Hmmmm....buying a home requires making a $400,000, $700,000, or $1mm+ financial decision - often tied to a 30-year commitment of debt payments. That is the same decision as buying a plane ticket for your kid to go to Florida for spring break?

Nevertheless, my point is not to refute what others are saying. - although comparing home selling to travel is horribly naive. By the way, there are still travel agents! If you are looking to do something other than travel home or go on a simple vacation, travel agents still exist to plan and handle expensive, more complicated trips.

My point is that what we do when done well, provides tremendous value to our clients. I am asserting that clients will want our help when making these types of financial decisions. It is up to us to demonstrate we are worthy of their trust - and money.