August 17th came and went. Now what?
Well, we lived through August 17th. I know all of you have been preparing your agents and staff for months. Your vetted forms are hopefully locked in, and while we are still in a bit of a trial-and-error phase, it is time to let the consumers do their thing based on how they react to the new requirements and options. And how they react will largely be based on how your agents convey the message. Some might say we are just at the beginning of this monumental shift.
Agents and brokerages will learn from each other in a good way and a bad way. Some will stumble, and some will soar. Buyers will push back, and so will sellers. Negotiation prowess is one of the most crucial skill sets an agent can possess. While buyer’s agents are adept at negotiating the price and terms around the purchase of a property, a different skill set and mindset are needed to negotiate our own compensation.
Compensation discussions can make people feel uncomfortable, particularly when we know that many buyers struggle to have enough down payment to even enter the real estate market. And since the media and the plaintiff’s attorneys have spent a lot of time regaling how ‘overpaid’ real estate agents are, it adds an extra ‘ick’ to the entire discussion. No one wants to start a conversation in defense mode. Buyer’s agents have got to get comfortable talking about how they get paid and why. It’s about clearly articulating the value they bring. Do you think attorneys have a problem sharing their incredulous hourly fees? According to NAR, the median income of a US real estate agent is $56,000. Not exactly as they portray on real estate realityTV, huh?
Expect the unexpected.
While the downline effects on the relocation process will take some time to manifest, as long as the relocation staff and agent team are trained to maneuver through the new changes and the sources of business respond to the changes, we will figure it out.
Corporations will eventually grow tired of the incessant requests for exceptions to policies and unhappy transferees. This will inevitably lead them to incorporate changes to their policies, reflecting the evolving nature of the industry and the need for a solid roadmap that can adapt to these changes.
Relocation Management Companies (RMC) need to prioritize the training of their consultants to articulate the basic information around the settlement changes and what it means to the transferee personally in accordance with their benefits. The first time hearing how their policy does or doesn’t support them cannot be from the assigned agent. Relocation Directors and their agent teams are repeatedly told to NEVER discuss policy with a transferee.
Brokers will need to ensure their relocation staff is equipped to clearly articulate value and options to the buyers and sellers being given to them as referrals. This support and preparation will be critical to laying the basic groundwork before assigning them to an agent.
Brokerages and agents will experience a loss in revenue through commission compression. I, unfortunately, can say this with confidence. This means looking for revenue in other places through partnerships and new sources of business.
Unfortunately, I can also confidently say that RMCs will experience a loss in revenue from reduced referral fee amounts that are based on what are likely to be lower commissions. Btw, raising referral fees is not the answer; the brokerage’s margins are already razor-thin. Figure out a new way to generate revenue.
Survey scores may suffer, and we may see failed relocations based on the transferee's overall experience. If there are surprises when they are already knee-deep in househunting, it won’t end well for anyone.
They’re watching.
Some brokerages and agents will try to skirt the rules. In an interview with Inman News, Sitzer-Burnett class action lawsuit attorney Michael Ketchmark said, “If anyone’s breaking the rules or violating the agreement, we’re going to look for the opportunity to make examples out of anyone who’s playing fast and loose with the law. The last thing that they’re going to want to be is the person that does that or the corporation does that. I’m happy to have somebody serve as an example of what happens to people who violate our antitrust laws.” He also said when asked about what kind of action they would take, “Litigation. Lawsuits; court orders; injunctions; get the Department of Justice involved, if they’re willing to do so. What people need to realize is that antitrust laws, they’re not just civil, but they’re also criminal in nature, and at some point, this behavior can cross over into the criminal realm.”
Keep a sharp eye out for those steering and discriminating. It will be incumbent upon the industry to self-monitor to a certain extent. While no one likes to be a tattle tale, we have a fiduciary responsibility to the consumer and to our industry to do so.
Do not fall prey to the lure of posting buyer’s agent commission amounts on other vehicles (even if the seller directs it) now that it is not allowed on the MLS. Just because it is not expressly forbidden doesn’t mean they won’t go after the entity facilitating it and those who participate.
Brokerages or agents might be tempted to accommodate requests from sources of business to skirt the compliance issues regarding the settlement. However, the sources of business aren’t the ones who will lose their license, get sued, or go to jail. This is why highly skilled and trained agents and brokerages must lead the charge. If it doesn’t feel right, it probably isn’t.
This, too, shall pass.
A few years from now, we will look back and wonder why we stressed so much about everything happening right now. New norms will settle in, but as that is happening, some agents and companies won’t be able to rise to the occasion. That’s ok. Our industry needs a bit of a house cleaning. We need to get rid of the hobbyists and those who don’t have the same level of professionalism the buying and selling public and transferees deserve. It is not time for workarounds; it is time for the cream to rise to the top.
“If anyone thinks they’re going to be able to avoid the application of this settlement agreement and the law by creating some new forms or hiding this cooperation on new websites, they’re wrong.”~Michael Ketchmark, Ketchmark & McCreight, lead plaintiffs’ counsel for the case known as Sitzer | Burnett, quoted from a phone interview with Inman News.
