May is Commission and Compensation Month here at Inman. We’ll sort through the noise and misinformation and provide you with the most up-to-date facts and strategies about how to prosper in the wake of the commission settlements. And look for straight-to-your inbox updates with Inman’s new weekly digest, Commission Chronicles.
Big changes have rocked the real estate industry for months now with the antitrust commission lawsuits that have swept the country.
The National Association of Realtors’ and individual brokerage firms’ settlements may cause consumers to call into question the value of an agent, which means that agents need to be on top of their game more now than ever.
One way to accomplish this is for agents to be more strategic in how they think and to operate like a small business, says Jonathan Lack, an agent, coach and the founder and principal of MyBackOffice.RealEstate, who, before joining the industry in 2018, spent decades in management, strategic planning and marketing for high-end companies. Lack has worked with some of the top agents in the country to level up their businesses, including Compass’ Sally Forster Jones of Jones Fridman International.
In his most recent book released in January, You Can’t Scale Chaos: The Veteran Real Estate Agent’s Guide to Working Smarter and Selling More, Lack details a 90-day plan for how agents can grow their market share, sales, profitability and overall value, with breakdowns for what to do in the next 30, 60 and 90 days — and in a recent conversation, Lack shared some of those insights with Inman.
Jonathan Lack | Courtesy of Jonathan Lack
“[Real estate brokers and agents] are a small business, and they need to think like a small business,” Lack told Inman. “And that is a new concept for them. That was the genesis of the book, knowing that the high rates and the NAR settlement was only going to make things more complicated, not less complicated, and only make things more competitive in the market, not less competitive. The onus on agents is to work smarter, and that’s a full-time job for any small business person.”
Lack likes to keep in mind an acronym he developed, “SELL,” as an overall guiding principle, which stands for Strategic planning, Execution, Leverage and Leadership. What follows are some of the tips he shared with Inman for what agents can work into their businesses in the next 30, 60 and 90 days to increase their value and come out on top in the wake of industry shakeups.
30-day plan
At the core of Lack’s first 30 days of the business plan is nurturing relationships with clients.
“Owning the client is critical,” Lack said. “As an agent works longer in the industry, they want a higher percentage of their business as repeat and referrals, as opposed to having [to find] new clients every year.”
In the current market, where there are more agents than available homes for sale, Lack said it’s critical for agents to develop talking points that best position them within their market, whether that’s a geographical area or another niche of the market.
“Why should somebody pick me, or you, or anybody else [as an agent]?” Lack said. “Every agent should know what their talking points are, their value-add, in the context of the market today.”
Next, develop plans for how to reach out to past clients and schedule quality time that aligns with their interests, Lack added. Then, start initiating those types of interactions with new and potential clients as well.
“So you take care of your past clients first with activities, and then you say, Okay, what am I going to do for new clients? because I have to have new clients and that should be a plan that people should be thinking about within the next 30 days,” Lack said.
60-day plan
During those first 30 days and the next 30 (the 60-day portion of the plan), agents can start digging a bit into the data of their business for greater insights, Lack told Inman.
One crucial step they should take is to conduct a sales audit of their business, which means either creating a spreadsheet that includes every client they’ve ever worked with and the details of the sale they were involved in or updating their CRM to ensure all information on clients and their transactions is up-to-date.
“The goal is to go deeper with these folks and not have to chase new folks as much, but leverage the relationships they already have,” Lack said. “[But,] they can’t remember all the relationships they’ve had,” which is where the audit becomes helpful.
“As it becomes more competitive, agents are going to need to be more narrow in their scope and go deeper because they need to stand out more within the right target audience,” Lack added.
Similarly, agents should conduct what Lack called a competitive audit, or analyzing who the other agents are in your market that you directly compete with, and potentially, even collaborate with at times. Consider how they market and advertise, how much of the available marketing space they take up in your area, and how that tracks with the percentage of listings they hold in the area. Then, work toward matching or exceeding that share.
“Once you know where you’re going to focus, you should know who else is focusing in that same area,” Lack said. “That area can be geographic or a social segment, but it should be targeted and you want to know who else your competitors are. Because some of those competitors you’re going to collaborate with, and some of them you’re going to take market share away from, and you have to know who they are by actual metrics. Those are easy to come by from doing searches and reports on any MLS system.”
In Lack’s experience, it’s rare that the top agent in any given market holds more than 20 percent of listings, which means that there’s still ample opportunity for competing agents to grab hold of a fair share of the market as well, if they target their efforts.
“That is today’s age in real estate,” Lack said. “You have to leverage data. It’s your friend; it’s not something to be afraid of.”
Those agents who are not very data-savvy should also look to a qualified executive assistant, transaction coordinator, or the like, to help them parse out and make sense of these figures, Lack said, which can also save the agent time to focus on their strengths instead.
90-day plan
Over the course of the entire 90-day plan, agents should be thinking more big-picture about their business and its future, Lack told Inman.
“The big picture is, ‘What is your goal?’ depending on how old the agent is and where they are in their life,” Lack said.
“What are their personal, professional and financial goals? It is a business, and [agents] need to understand that the business is a means to an end. But they need to be clear on why they’re doing it and what they need to get out of it on the financial part.”
During the 90-day period then, agents should take steps like conducting a brand audit to determine how their brand reflects their business and value, as well as meeting regularly with a bookkeeper to understand their different expenses and whether or not they are paying out long-term.
“They can say, ‘Oh, we spent too much on that,’ or, ‘too little on that,’” Lack said. “So then they can start refining their spending and budgeting, which helps them understand the in-flows and out-flows of their business.”
After developing an understanding of those regular expenses, it’s time to create 12-month business development and marketing plans, Lack said.
“It’s on a rolling, 12-month basis,” Lack told Inman. “[Don’t] just think month-to-month, but think through a whole calendar year. And think more long-term — that helps mitigate the bumps in the market. Whether we were expecting rates to drop, but they’re going up, whether it’s the NAR settlements, whether it’s the limited inventory, whether it’s buyers being inconsistent, or the consensus now that buyers will be signing contracts [with one agent] … They’re going to work with the one agent that they think can provide the best value to them based on their needs.”
“The NAR settlement is going to weed out a lot of agents who are not competitive and it will force the ones that want to stay in the industry and be competitive to work smarter,” Lack added.
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The class action lawsuit filed by plaintiff James Lutz alleges that HomeServices and other members of the National Association of Realtors fixed commissions, which misled buyers and resulted in buyers paying inflated home prices.
May is Commission and Compensation Month here at Inman. We’ll sort through the noise and misinformation and provide you with the most up-to-date facts and strategies about how to prosper in the wake of the commission settlements. And look for straight-to-your inbox updates with Inman’s new weekly digest, Commission Chronicles.
In a departure from most commission lawsuits filed in recent months by homesellers, a new class action lawsuit was filed on Monday in Florida against HomeServices of America by homebuyers who allege that HomeServices and other members of the National Association of Realtors fixed commissions, which misled buyers and resulted in buyers paying inflated home prices.
A similar case known as Batton 1 was filed against the firm in Illinois in February by homebuyers, but HomeServices was dismissed from the case because none of the company’s constituents are Illinois-based and plaintiffs did not submit a claim that would assert nationwide authority in the case.
The lawsuit filed on Monday in the U.S. District Court for the Southern District of Florida names James Lutz as the plaintiff who bought a home in Key Colony, Florida, in 2021 using a buyer agent who is affiliated with Berkshire Hathaway HomeServices, one of HomeServices of America’s franchisees. The lawsuit is seeking class-action status that will include buyers nationwide who bought MLS-listed homes starting on December 1, 1996.
“For decades, homebuyers across America have been unwittingly paying too much for, and receiving too little from, services offered to them by Defendants and other real estate agent members of National Association of Realtors (‘NAR’),” the complaint states. “Despite agent representations (which NAR permits and encourages) that such services do not cost homebuyers anything, homebuyers in fact pay a hefty cost for these services — namely, supracompetitive commissions at levels fixed by the Defendants, NAR; and other real estate brokers, which in turn lead to higher home prices paid by buyers.”
The suit goes on to allege that the cost to consumers, as a result of the so-called fixed prices, was “enormous,” claiming that “experts have suggested that the amount of ‘annual broker fees consumers might save if there was effective price competition is as much as $30 billion or more annually.’”
Chris Kelly (Credit: Ebby Halliday)
Meanwhile, HomeServices has denied any wrongdoing or anticompetitive behavior and argued that the alleged damages contradicts those asserted in and accepted by the jury in the Burnett case, Real Estate News reported.
“While we are just beginning to analyze this buyer antitrust case that was filed immediately on the heels of our settlement of the Burnett action, we maintain our position that HomeServices’ conduct and business practices were at all times lawful and procompetitive,” HomeServices of America Executive Vice President Chris Kelly told Real Estate News.
“We also note that Plaintiffs’ theory of damages in this follow-on lawsuit is directly at odds with the damages theory accepted by the jury in the Burnett case and could potentially result in a duplicative recovery that would be unfair, unjust and violative of HomeServices’ rights,” Kelly added.
NAR’s “Free Service Rule,” which in the past, had allowed buyers’ agents to represent their services as free of cost, and which the lawsuit also takes issue with, was eliminated in 2022. NAR’s policy change at that time stated, “MLS participants and subscribers must not represent their brokerage services to a client or customer are free or available at no cost to clients, unless the participant or subscriber will receive no financial compensation from any source for those services.”
The court has granted plaintiffs’ motion for preliminary approval of settlements proffered by Compass, The Real Brokerage, Realty One Group, At World Properties and Douglas Elliman in the Gibson commission lawsuit.
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In the antitrust commission lawsuit known as Gibson, the court has granted the plaintiffs’ motion for preliminary approval of settlements proffered by several major firms involved in the suit, including Compass, The Real Brokerage, Realty One Group, At World Properties and Douglas Elliman, according to a court filing submitted on Tuesday.
The court found the specified brokerage firms’ proposed settlements “fair, reasonable and adequate,” court documents stated, positioning the firms one step closer to finalizing their lawsuit settlements.
Preliminary approval of the settlements is still subject to approval at a final hearing, however, which will take place no later than Nov. 26, 2024, the date for the final approval hearing of the National Association of Realtors’ proposed settlement in the Burnett case, the court filing specified.
If the court approves the settlements at a final hearing, Compass can expect to pay $57.5 million, Real can expect to pay $9.25 million, Douglas Elliman can expect to pay up to $17.75 million, and Realty One Group and At World Properties will pay the undisclosed amounts that they put forth in their proposed settlements made in roughly the last week.
The firms would also have to make substantial changes to their business practices, especially surrounding buyer-broker compensation, which were laid out in their proposed settlements.
Compass and Douglas Elliman declined to comment on the preliminary approval. Real Brokerage and Realty One Group did not immediately respond to requests for comment. At World Properties (which owns @properties and Christie’s International Real Estate) pointed to comments the firm made when it announced its settlement last week.
Said @properties and Christie’s International Real Estate co-CEO Mike Golden at that time, “Settling these claims today allows us to move beyond a very costly litigation process and focus our full time, energy and resources on what matters most: our agents, affiliate brokerages, staff and clients.”
In the shorter term, the preliminary approval means that Compass will deposit 50 percent, or $28.75 million, of its proposed settlement amount into a settlement fund within the next 30 business days, Elliman will pay $7.75 million into an escrow fund within the next 30 business days, and Real will deposit its full $9.25 million settlement amount into a settlement fund within the next 30 days.
Since Realty One Group and At World Properties did not disclose their settlement figures, it is not known what they will be required to pay in the next month or so.
The two separate cases known as Gibson and Umpa were consolidated under Gibson on April 23. The lawsuit alleges that firms violated the Sherman Antitrust Act by enforcing rules requiring listing brokers to offer compensation to buyer brokers in order to submit a listing to a multiple listing service, which, they claimed, artificially inflated broker commissions.
Several brokerages named as defendants in the Gibson lawsuit have yet to publicly propose settlements, including eXp Realty, William Raveis, Engel & Völkers, Long & Foster and others.
Even if the Gibson case progresses smoothly from now until the final approval hearing, the U.S. Department of Justice could still reopen its investigation into NAR’s cooperative compensation rule, which it launched five years ago, and which could potentially complicate these settlements.
The Upper East Side apartment has sold more than a year after hitting the market. The late writer and her husband, John Gregory Dunne, bought the property in 1988.
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An Upper East Side apartment previously owned by writer and journalist Joan Didion has sold more than one year after hitting the market for $5.4 million, the New York Post reported on Monday. The buyer’s identity was not known.
The Lenox Hill property was first listed for $7.5 million in January 2023, a little over a year after Didion passed away at the age of 87.
The property saw a price cut in May 2023 to $6.5 million and then a switch in representation from Sotheby’s International Realty to Douglas Elliman in October 2023 when the price was reduced again to $5.75 million. It went under contract in January 2024. Jennifer Stillman, Erik Ternon, Noble Black and Marion Magnuson of Douglas Elliman represented the sale.
Didion and her late husband, the writer John Gregory Dunne (who passed away in 2003), purchased the four-bedroom home on E. 71st Street in 1988 and used it as their primary residence. Didion was reportedly an active member of the co-op’s board over the course of the couple’s extended tenure in the building.
The prewar unit features a wood-burning fireplace with carved mantel, herringbone floors, oversized windows that display views of St. James’ Church, an oversized den or library, office, eat-in kitchen and a staff room with an en-suite bathroom. The building itself is just about a block away from Central Park and includes amenities like a 24/7-attended lobby, fitness center, bike storage and other private storage.
The 3,600-square-foot unit is accessible from a “semi-private elevator landing,” which leads to a gallery that serves as the home’s main corridor.
Didion, who was born in Sacramento, California, was considered a pioneer of New Journalism, a movement that sought to insert a subjective perspective into journalistic reports, and chronicled American politics and culture throughout her life by way of essays, journalism, novels and screenplays. She won the National Book Award for nonfiction for The Year of Magical Thinking (2005), a memoir written in the wake of Dunne’s death. The couple’s joint archive was acquired last year by the New York Public Library and is expected to be processed and accessible to the public by early 2025.
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Eighteen of the 50 largest U.S. metro areas witnessed rents rise on an annual basis in March, especially in the Northeast and Midwest, where a lack of rental supply is common and owning a home is costly.
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Renters have fared better than homebuyers in recent months as the cost of owning a home continues to remain elevated. But 18 of the 50 largest metros also saw rents rise on an annual basis in March, Realtor.com reported Tuesday.
Chicago saw rents rise the most in March 2024 with a spike of 4.3 percent year over year. That increase made the median monthly rent $1,846, up by $76 from March 2023.
New York City, Kansas City, Boston and Indianapolis rounded out Realtor.com’s list of metros with the greatest rent increases in March, reflecting a lack of supply in these areas, which is driving rents, Realtor.com economist Jiayi Xu said.
Rental demand also comes out of challenges to homeownership affordability in these markets, Xu added. “The high housing prices in these expensive markets, plus elevated mortgage rates, may force people to stay in rental markets longer” as they put off buying a home, she said, increasing demand for rentals.
Kansas City and Indianapolis remain relatively affordable compared to Chicago, Xu noted. Those cities also have lower unemployment rates, though, which can also drive rental demand and prices.
“For Kansas City and Indianapolis, in addition to affordability, both of them have strong labor markets, with unemployment rates of 3.6 percent and 3.7 percent [respectively] in February,” Xu said.
These are the five metro areas that saw the greatest rent increases in March 2024:
