NAR Settlement 2024: Hot Take by Brett Boettge

NAR SETTLEMENT: Hot Take: First, understand what happened in the NAR Settlement from a policy change standpoint is a massive departure from how real estate has been done. Next understand that every MLS, Agent & Brokerage will put 90% of their resources into workarounds to keep the status quo vs. looking for alternative models. Why? Because 5-10% of Buyer’s agents likely earn their commission and the other 90-95% feel entitled to that commission even if they didn’t earn it. There are some workarounds and some new models that will arise and over the next 24 months I see those workarounds fading and the new models going mainstream on the Buyer’s side of the real estate  transaction. So where do I even begin? I suppose we start with what changes: The MLS -- I still remember Day 1 in licensing school back in 2006 and the question in the quiz, “What is the MLS?” and that hungover guy in the front of the room (probably named Brock), would shout out when called upon, “It is a place where homes are listed.” Which of course it was, but that was not the answer… the MLS by definition was an offer of compensation, and cooperation between Brokers. This settlement removes the offer of compensation and cooperation and makes Brock’s answer 100% correct. The MLS is now simply a place where homes are listed and at least for now, it is the first place they are listed, but once syndicated to all other websites… the MLS and Zillow become indistinguishable. They both are sites where homes are listed for sale and that is all.  MLS Rules: The settlement puts quite a few MLS rules in jeopardy as once you remove an offer of compensation, a lot of what the MLS is becomes irrelevant. Let’s start with Procuring Cause: This is a rule that says, the agent that is the procuring cause for the offer on the property is the one that earns the commission…. But, with no offer of compensation there really is no procuring cause anymore. “Clear Cooperation” is also in the crosshairs, as the reason REALTORS voted that policy into place was to ensure Listing Agents weren’t getting “Both sides” of the commission… really this was just a grab for data in my opinion which they will have to finally admit because there will no longer be, “both sides” from the Seller. So what does this look like at the street level… Well, let's say a Buyer’s hires me to be their agent, they offer me $10,000 for my services…. What that doesn’t include is home showings…. So that Buyer calls the listing agents for showings, then, once my Buyer finds the home they love, I get the call, call the listing agent again for access and then complete my due diligence on the property for the Buyer and submit and negotiate the offer. The listing agent's job becomes much more labor intensive in this scenario which will create more opportunity for innovation around how home showings are conducted and I work for a flat fee because my job as a Buyer’s Agent becomes much less labor intensive.  Listing Agents: Y’all were smiling thinking this settlement didn’t affect you, but it does. Without procuring cause and you as the Listing Agent offering compensation to a Buyer’s Agent…. There is no set timeline when I as the Buyer’s agent enters the transaction and in an a la carte world, this could triple your hours serving a listing at a minimum. So, I’d start innovating how homes are shown since Buyer’s don’t have Supra Keys. Seller’s, you may not have saved “half” the commission post settlement as the Listing Agents job just got bigger, so now they will ask for more than half the commission just to list the home. Up until the showing of the property, the job truly hasn’t changed over here… Seller’s still need to hire a professional to market, negotiate and manage a sale in order to achieve top dollar.  Buyer’s Agents: Right, Wrong or Otherwise YOU are the biggest loser in this settlement. Many, MANY of the brightest minds in real estate are trying to figure out how to keep the status quo here, and it just isn’t going to happen. Sure, for now the workarounds will be popular like asking in every offer for the Seller to pay x% of closing costs to cover your commissions which are now a closing cost, but the INTENT of the DOJ is clear, they don’t want the Buyer side of the transaction to be paid based on a commission where the higher the sales price of the home, the more money you earn. This is going flat fee / a la carte when you represent a Buyer in the purchase of a listed property. My opinion, that is what is best for the consumer…. But let’s explore what this looks like: Showings: No procuring cause, no compensation from the Listing Agent, then I am happy to take a flat fee for every aspect of the job AFTER you, the Buyer identifies the perfect property. This is an argument of Sitzer… Buyer’s have access to all kinds of information… in some cases they even know more about the home than the agent showing them the property….if I didn’t have to show homes and Listing agents took the access job from me, that cuts 50-60% of the relatively unskilled labor hours from the job.  Offers & Due Diligence: In this world, me, as the Buyer’s Agent will be going head to head with lawyers in this brave new world to handle contract drafting, property and community due diligence, negotiation, contract to close and concierge services. Listing Agents: I’d argue, especially in a Seller’s Market with multiple offers, a Buyer going directly to a Listing Agent is not just their best value, but their best option for securing the property. In the event this happens, the Listing Agent has to be prepared to handle all aspects of the transaction for the total commission listed in the agreement. Let’s say that commission is 50-70% of what has been historically “total commission” the argument becomes, is the Buyer property represented? Well maybe, but if not, they could on their own pay a REALTOR or Attorney a consulting fee. Next, who is really saving the money that used to be commissions? The Buyer or the Seller…. That is a sticky question and leads to an entirely different topic… Appraisals: I am NOT an appraiser, but I for one have always de-coupled my commissions and in all my years of appraisers calling me to verify the facts about my sold listings as they serve as comparables for new values, NOT ONE TIME HAS AN APPRAISER ASKED WHAT COMMISSION WAS OR WHO PAID IT. So now, with a variable so great a value cannot just be assumed, I would imagine that this must now become a sworn statement  to appraisers as they investigate the facts of each comparable sale. This, after all, is the only way to determine who benefitted from any of that $30B in commissions the FED believes will be saved in commissions. A New Buyer’s Agent: So is the Buyer’s Agent screwed? No, but a Buyer’s Agent that refuses to adapt will die a slow death…. So how does a Buyer’s Agent earn the same commission serving a Buyer…. That answer is easy, EARN IT. You won’t be able to chaperone a Buyer to an open house and collect a 5 figure check in the future. and you shouldn’t. My vision for a full fee Buyer’s Agent of the future is more of an INVENTORY SPECIALIST…. These are agents in the marketplace that understand communities and the homes inside of them at the highest level. They have written agreements for compensation with their Buyer’s and are free to target off market listings with extraordinary enthusiasm… They know when John and Mary are pregnant, they are likely going to need to get a larger house and note in their files that their home 3 bed, 2..5 bath 1900 sq. ft. is likely a match for one of their retired downsizing clients. They have their fingers on the pulse….they have mastered their markets and  their inventory. They search using tax records, not the MLS or Zillow….. This is what a Buyer’s Agent should have always been, the cream of the crop of REALTORS, far more powerful than a listing agent and far more valuable. This Buyer’s Agent is a THREAT to listing agents as they get the calls when someone is just thinking about selling because of their massive stable of Buyer’s. At the very least, this new breed of Buyer’s Agent will balance the power that Listing Agents thought they just took. Further, as an a la carte model takes offer, Listing Agents will face increased workloads / labor per listing. Future of the MLS & NAR: It doesn’t look great. What’s left I guess is DATA, data that is freely given to thousands of sites. Sure there is the other stuff….. But the meat and potatoes of the REALTOR value proposition landed squarely on Cooperation and Compensation. A $418M fine, even paid over time, is likely to cripple their power and for the first time in forever, the industry’s trade association could face real competition, think American League vs. National League. It could unleash the full potential of creativity from the brightest minds around the Country as they EMBRACE this moment for change vs. fighting to retain the status quo. I saw this coming. I joined the MLS Committee locally FOR THIS FIGHT, not for picking which input fields are mandatory….. This will matter and the answer isn’t clear, and any path won’t be easy.  Litigation: Despite this Settlement I would imagine this is blood in the water, large brokerages are still at risk, exempt from the settlement and different types of litigation will arise all surrounding commissions well beyond 2024.  Stocks: Publicly Traded Companies will see a slow decline as institutional investors realize the ripple effects the policy changes in this settlement could have. Especially with the FED study out there saying $30B or 30% of the commission revenue could be taken off the table….. Imagine if you said 30% of any industry's revenue is at risk and what that would do to stocks… of course, long term it nobody knows, but near to mid-term this news isn’t great for stock values of real estate companies.  Agent Count: It will go down. An industry rule was always…. “I’ll use my friend to help me buy a house regardless of their experience, but when it comes to LISTING a house, I’d prefer someone experienced.” In this new world, mediocrity will not thrive. Pet Peeves: REALTORS up in arms across the country (Buyer’s Agents) consider for a second you ARE overpaid. Consider for a second that compensation is currently set up where you earn more for selling a higher priced home? Consider for a second the CONSUMER is your guiding light and take the opportunity to rebuild a role, a job description and a compensation model that SERVES THE CONSUMER to the highest level and then maybe we won’t revisit this all over again in a decade.  Next, this is NOT the time to stand on a chair and promote your company as “insulated”, “protected” or “positioned” to best serve agents. Fear mongering bullIshit is a bad look. Put your head down and solve the real problems instead of exploiting fear and grossly overpromising. In Conclusion: I don’t have all the answers, but I think the lawsuits were a cry for reform and the DOJ made it clear, this time, exactly what they want with an understanding of what gets them there and what doesn’t. No half measures. Now the mythic entities the real estate industry were built on will need to reinvent themselves and representation at the consumer level, for the first time could see innovation and exciting change. I welcome the reform. I welcome the innovation and I certainly won’t be sitting on the sidelines of the industry, I’ll be in the trenches helping forge what’s next. Agents, get involved… and while doing that, start crafting Ritz Carlton level experiences for Buyer’s that you can articulate and MASTER inventory both on and off market. Consumers, our industry is slow to change, so if you think listing your property this weekend for half the commission is going to serve you, it won’t…. This Summer/Fall is where the settlement becomes official and the policy effective….. Between here and there the Streets won’t have caught up to the Settlement and you could be shooting yourself in the foot…. Be smart about your listings, chat with someone you trust. 

Understanding The Jupiter, FL Real Estate Market Metrics

Understanding Months Supply of Inventory (MSI) in Jupiter, FL Real Estate In the vibrant world of Jupiter, FL real estate, understanding key metrics like "Months Supply of Inventory" or MSI is essential for both buyers and sellers. MSI provides invaluable insights into the local real estate market's health, particularly focusing on the balance between supply (available properties for sale) and demand (potential buyers) in this beautiful coastal town. In this blog, we'll explore what MSI is, how it's calculated, and why it plays a pivotal role in Jupiter, FL real estate transactions. Months Supply of Inventory (MSI) Months Supply of Inventory (MSI) is a vital metric used in Jupiter, FL real estate to quantify the relationship between the number of properties available for sale and the number of properties being sold within this unique market. MSI estimates how long it would take for the current inventory of Jupiter, FL homes to be completely sold out if no new listings were added, assuming the current rate of sales continues. Calculation of MSI:MSI = Total Active Listings in Jupiter, FL / Average Monthly Sales 1. Total Active Listings in Jupiter, FL: This represents the number of homes available for sale in Jupiter, FL at a specific point in time. 2.  Average Monthly Sales in Jupiter, FL: This is the average number of homes sold per month in Jupiter, FL's real estate market. Understanding MSI in Jupiter, FL:- A low MSI (e.g., less than 5 months) indicates a seller's market in Jupiter, FL, where demand outstrips supply. This often leads to rising property prices and the potential for multiple offers on Jupiter, FL homes.- A balanced market in Jupiter, FL typically has an MSI of 5-7 months, indicating a relatively even balance between buyers and sellers.- A high MSI (e.g., over 7 months) indicates a buyer's market in Jupiter, FL, where supply surpasses demand. In such cases, sellers in Jupiter, FL may need to adjust their pricing or marketing strategies to attract buyers. Why MSI is Crucial in Jupiter, FL Real Estate? 1. Informed Decision-Making in Jupiter, FL: Both buyers and sellers of Jupiter, FL properties can use MSI to make well-informed decisions. Buyers can assess whether it's a favorable time to invest in Jupiter, FL real estate, while sellers can gauge the competitiveness of their pricing strategy. 2. Pricing Strategies in Jupiter, FL: MSI helps sellers in Jupiter, FL determine the right pricing strategy for their property. In a buyer's market with a high MSI, setting a competitive price is crucial to attract potential buyers quickly. 3. Negotiating Power in Jupiter, FL: Understanding MSI can give buyers or sellers in Jupiter, FL an advantage in negotiations. For instance, in a buyer's market with a high MSI, buyers may have more room to negotiate on price. 4. Investment Analysis in Jupiter, FL: Real estate investors can use MSI to identify potential opportunities in Jupiter, FL's market. A low MSI might indicate a thriving Jupiter, FL real estate market with the potential for future value appreciation. Understanding Months Supply of Inventory (MSI) is fundamental for success in Jupiter, FL's unique real estate market. This metric empowers both buyers and sellers to navigate Jupiter, FL's real estate landscape with confidence, make informed decisions, and adapt their strategies accordingly. Monitoring MSI provides a clearer picture of the current market conditions, making it an indispensable tool for making sound investments in Jupiter, FL real estate.

Buyer Representation - An Agent's Guide - Jupiter, FL

Buyer’s Agents, you have a hard job. You have to know the area you serve, the schools, the hospitals, the neighborhoods, the rules for those neighborhoods, the general construction types, general home deficiencies, the details of each home you show including who the neighbors are. You have to determine your Buyer’s needs, match them to available inventory, find off-market opportunities, schedule the showings with Listing Agents that don’t respond, get the access codes, gate codes and keep the tour on track once it starts with trains, bridges and bathroom breaks. You show the house, keep the kids from disassembling the Seller’s kids lego collection, keep the cat in the house, point of the features, the benefits, turn off the lights and make sure the doors are locked before heading to the next house you have never been in before only to do the same. Buyer’s agents have to be able to quickly determine value, competition, opportunities and marry that with in-depth contract knowledge to draft an offer that is protective of your client, but not too protective that your offer is no longer competitive. You need to grasp the lending side of the transaction so expectations are managed property, the insurance side of things, the title side of things and estimate the cost of all the Buyer’s planned or future renovations and advise if they will provide an ROI or if it is just for them. You need to enroll the Listing Agent and their personality in the success of the sale and be the director for all other parties involved to keep the transaction on track for a successful close. You need to know the best, worst and most probable scenario for each step of the transaction and you need to use your will to push the outcomes into “Best Case” more often than not. There are thousands of things not listed that a Buyer’s Agent must be prepared to handle, and a thousand things that have never happened before in the history of real estate that you need to use the sum or your experience to solve. I say all this for a specific purpose today…it is because I believe many, many real estate agents don’t understand the value they bring, or are expected to bring to the table so they feel the need, based on limited experience or personal insecurities to brandish confidence or assertiveness where it doesn’t belong, or hinders vs. helps your client in securing a home. So where does this show up? Fabricating Facts & Possibilities: The larger the area you serve, the harder it is to know every neighborhood, every rule, every best practice and every local nuance. On a tour of 5 homes, you likely know a little bit about each, while a listing agent SHOULD know everything about the specific home they listed, so use them as a tool whether on site at a showing accompanied by a listing agent, or give them a quick call with your FAQ’s for each listing or your clients specific FAQ’s based on your experience with them. If you don’t know the construction of the house, don’t make it up, an instant answer is not required. This goes for EVERYTHING… provide facts, not guesses. It is OK to say, “I don’t know, but I wrote your question down and I’ll have an answer by the end of our tour.” If you find yourself saying that to every question… do a better job of anticipating your clients questions and securing the facts ahead of time.  “I could never let my client…….”: This is the sound of an agent making a decision for the client without consulting them, or amplifying the risk in the consultation (usually based on an agents personal experience) guiding the client towards an impasse in the transaction. Many a great home were missed by Buyer’s because of a Buyer’s Agent opinion regarding road noise, construction type, hurricane protection, mold and that opinion may not have been shared by the client. This is digging in at the wrong time. I accompany every single showing on my listings and the amount of alternative facts and misinformation confidently served by Buyer’s Agents is shocking. If the listing agent accompanies showings on their listings, USE THEM AS A RESOURCE as I do when I act as a Buyer’s Agent. I get that you want to be the expert, but there is rarely a scenario where a Buyer’s Agent knows more about the home than the Listing Agent. Here are some scripts I use as a Buyer’s Agent to prepare my clients for a listing agent accompanied showing.  “Great news, the listing agent is going to be at the next home we are seeing today. Let’s use them as a resource for any questions I may not have an answer for and remember, they were hired by the Seller, so keep your poker face on.” “Great news, the listing agent is going to be at the next home we are seeing today. My job is to help you find the right home, their job is sell a specific home, that said they may have more detailed information about this property, so let’s use them as a resource while we have them in front of us, but remember the Seller hired them, so keep your poker face on.”   Are they going to sound smarter than you about that house, probably, but remember it isn’t your job to know the most about a single house, it is to help your client find the RIGHT house out of many. It also helps to think of the listing agent as a team member and resource, not us vs. them.  Generally speaking I think most mistakes made by Buyer’s agents aren’t “Errors & Omissions” claims about to happen, they are subtle mistakes nurtured by insecurities or their feelings of not providing value equivalent to the commissions they earn. To help with the latter, I encourage you to open your eyes and observe other agents on the job…. Stop trying to justify the commissions  for the job out of thin air, and start with “This is the commission for the job, out of 1,000 agents what would it take to do this job better than 995 of those agents.” It is a subtle distinction, but a powerful one as you are launching or relaunching your real estate practice.  To end, I’ll reiterate… being a Buyer’s Agent is hard work. There is less concrete produced material to show your work and a monumental amount of behind the scenes work that goes into a single showing let alone a successful, 5 Star closing. Most of us are driven by a need to, “Look good and be right.” but in that pursuit, don’t allow your needs to jeopardize the representation of your client. 

Choosing A Real Estate Brokerage

As the real estate industry continues to evolve, so do the ways in which brokerages are attracting and retaining top-performing agents. One of the latest trends is the offer of stock awards to agents, a practice that is shaking up the traditional real estate model. Gone are the days when traditional brokerages like RE/MAX, Century 21, Coldwell Banker, and Keller Williams Realty dominated the industry. These long-established companies still hold significant market share, but they are facing growing competition from newer, more innovative brokerages that are disrupting the status quo. One such company is eXp Realty, which has made headlines for its unique business model that offers agents the opportunity to earn stock in the company in exchange for productivity and growth. eXp Realty is a cloud-based brokerage that operates entirely online, with agents working remotely from their own homes or offices. By offering stock options, eXp Realty is able to incentivize its agents to work harder and achieve greater success, as they have a direct financial stake in the company's growth. This approach has proven to be highly effective, with eXp Realty growing rapidly in recent years and attracting top talent from other brokerages. Real Broker, LLC is a newer real estate brokerage that has quickly gained attention for its unique approach to agent compensation and support. In addition to offering stock awards to agents, Real Broker, LLC provides a generous revenue sharing program that allows agents to earn a share of the company's revenue based on their team productivity. The company also fosters a collaborative, team-oriented culture that encourages agents to work together and share ideas. This approach has proven to be highly effective, with Real Broker, LLC attracting top-performing agents from other brokerages and achieving rapid growth in recent years. For agents who are looking for a more innovative and supportive real estate company, Real Broker, LLC is certainly worth considering. Fathom Realty has made a name for itself by offering its agents a flat fee commission structure, which allows them to keep more of their earnings while still benefiting from the company's growth. These newer brokerages are challenging the traditional real estate model, which often involves agents paying high commission fees to their brokerages in exchange for access to resources and support. By offering stock awards and other incentives, these companies are flipping the script and empowering agents to take ownership of their careers and build long-term wealth. Of course, traditional brokerages still have their place in the industry, and many agents continue to find success with these companies. But for those who are looking for a more innovative, forward-thinking approach to real estate, the newer brokerages that offer stock options and other incentives are worth exploring. As the industry continues to evolve, it will be interesting to see how these trends play out and which companies emerge as the leaders of tomorrow. But one thing is clear: the real estate landscape is changing, and those who are willing to adapt and embrace new ideas will be the ones who come out ahead. Contact Brett & Jody Boettge at 561-859-1839 or Brett@PropertyReveal.com for a 30 minute consultation on what model may serve you best.