by Maeda Palius | Sep 3, 2024 | Industry, News Feed
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Aug. 17 came and went, and while it seemed like real estate’s Y2K moment, it was largely uneventful and anti-climactic. Maybe it was the months of preparation, endless training and webinars leading up to this point, along with a slow march to the implementation date. I know I was more than ready to move on as it seemed like all I did was consume content, prepare content and talk about the practice changes 24/7. Real estate life goes on.
In typical fashion, the market didn’t stop, and things started to get busy for me around the time of the transition. With a little over one week into real estate’s brave new world, it has felt like a game of red light, yellow light, green light with all the protocols and procedures that have to be followed when conducting business.
Here are observations thus far:
Florida
Showings
Initially, showings seemed a bit slower on my listings. I’m not sure if that was due to the time of year or the implemented practice changes. I only had one showing on one of my listings in Florida that had good activity in the weeks leading up to Aug. 17, and as of this writing, activity still seems to be slower than it should be.
This property falls in first-time homebuyer territory, so it’s possible there is some hesitation with first-time buyers who could be reluctant to sign a buyer agreement for fear of a financial obligation to their agent.
The seller is offering compensation to a buyer’s agent. I also had two buyers who had been referred to me in the two weeks leading up to the deadline. One was considering building from scratch, and the other was relocating.
Buyer conversations
While I was excited to receive the buyer referrals, the wheels in my mind immediately started turning. I had to remember to “have the talk” and was a bit apprehensive about how I was going to present it to the buyer.
When you first talk to a buyer, there is so much ground to cover as it is. One of my team members was going to be working with me to service these clients, so we met ahead of time to go over what we would discuss.
I was feeling a bit out of my element, and this was déjà vu. I was channeling those newbie agent vibes from 23 years ago.
New builds
Buyer No. 1 wants to build a new home and would like to move in the spring or early summer of 2025. They started exploring new construction options, but felt overwhelmed and needed help.
That was refreshing to hear.
But when we talked to the buyer, they revealed they had been talking to a particular builder. My team member and I then had a “yellow light” moment and asked the buyer if they had registered with the builder. Of course, they had.
The new process is a truth serum for buyers, which is a good thing because it forces them to get clear about their intentions upfront. — Cara Ameer
We said we would need to check with the builder as we were approaching new protocols that would be going into effect in the next couple of weeks. We had not gotten any formal guidance from builders in our market at the time of the call.
This was a natural segway to address the need for a buyer representation agreement, why it was required and the practice changes that were going to take place, which added an additional 20-plus minutes to the conversation.
The buyers seemed to understand. After the call, I sent a follow-up email to the buyer with the information I had at the time, which was the NAR consumer explainer pieces.
We contacted the site agent at the builder the buyer was interested in, and were told we’d need an agreement if the buyer went into contract on a home. Whew. Bullet dodged, and the light turned green.
Relocation buyer
Flash forward, we now have the relocation buyer who was referred to me by another client who works for the same employer. I have worked with a few of their employees as recently as last year. Of course, none of these procedures were in place then, so we wanted to make sure the buyer understood that there are different protocols than last year.
I asked my relocation director if they were aware of any specific policies or procedures with regard to buyers whereby a relocation company was involved as it related to signing a buyer representation agreement.
They were not aware of anything and suggested I reach out to the buyer’s relocation company representative. I wanted to make sure this was set up correctly from the beginning and to gauge the relocation company’s awareness about the need to sign a buyer representation agreement and all that was involved.
There seemed to be some awareness but no policies in place, such as needing to approve the buyer agreement before the transferee signed, etc. I asked what would happen if a seller would not be willing to pay all or part of the compensation, and because many transferees get closing costs paid as part of their relocation, I asked whether any benefits had changed with respect to the new rules.
Thus far, I’ve been told that nothing is in place about that. They said they are simply going to monitor things, and they would leave explaining the new rules and buyer agreements up to the agents.
I found it interesting that relocation companies had not been tracking the practice changes as well as planning for the shift in the way business was done.
A big part of the relocation business is expectation management, and it would be prudent if the relocation companies at least gave a heads-up to their buyer and seller clients about the new ways of doing business.
Demonstrating value
After scheduling the call with the buyer and going through all the wants, needs, budgets and timeframe, we had to drop the bomb, or at least it felt that way. Honestly, it felt awkward telling a buyer who didn’t know me or my team member, other than we had helped their boss relocate and buy a home, what would be involved and why.
My team member and I presented the information in the most comfortable, approachable way possible. Again, adding another 20-plus minutes to the conversation. The buyer accepted what we shared and didn’t question anything.
We did explain we would seek compensation from the seller if it was a resale, and if the property was new construction, the builders in our market were all paying compensation to agents. And going into the last quarter of the year in a softer market, builders were highly motivated to unload inventory.
The buyer shared he had been to the area and did some driving around a couple of weeks ago (and before he had ever been referred to us) and had visited a particular builder in a couple of different communities.
Another heart-stopping moment. He had registered, so once again, a yellow light moment. We advised that we would reach out to the builder and determine what their procedures were and if we could assist them should they want to explore those communities.
We started doing some legwork for the buyer with research and identifying options with various builders as well as resales and provided all of this to him along with community information, commute times, insight about builders who had inventory that fit his criteria, links to various community websites, etc.
We wanted to demonstrate our value in advance of their visit in a few weeks. We continued to exchange information, and we advised how we would be setting up the tour for the week and what areas would be covered on which days, etc. They liked that approach and thought the proposed itinerary sounded good.
Flash forward, the weekend before he was due to come to town, we sent our first buyer agreement for signature. We proposed an exclusive agreement because this was going to be an intense week of house-hunting, and we were prepared this could be an ongoing house-hunt if they didn’t see anything they liked that first week.
Thankfully, the builder they had visited was willing to work with us and registered the buyer with us. Relationships matter, along with longevity and professional reputation.
After a diligent week of house hunting, the buyer came to town and bought a new construction spec home that best suited their needs. The builder they went with was less versed in the settlement and buyer agreements and didn’t have any procedures or requirements in place for us to provide a copy.
We found that most site agents at various builders didn’t really know much at all about the settlement. Some companies required buyer agreements to be presented at the time of the first visit or at the time of the contract, and others not at all.
California
Meanwhile, back on the West Coast, I was trying to determine if my new listing’s traffic was impacted by the practice changes. I started to wonder if maybe a good portion of buyers who have come through listings in the past were never true buyers.
As a listing agent, you never really know how the buyer’s agent and their buyer are connected. This property is more of a redevelopment or fixer-upper opportunity, so the buyer audience is more specific. But given the market dynamics of the neighborhood it’s in, sales have been brisk.
It’s too early with the rule changes to know just yet. Because the home is owner-occupied with older sellers, open houses are not well suited for the situation. In some ways, this is an interesting experiment because uncommitted buyers might come through an open house, and it would be hard to know how truly serious they are or if they had an agent.
Thankfully, inquiries started to come in — one from an agent who wanted to arrange a showing and asked if the seller was offering compensation, to which I enthusiastically responded that they were willing to consider agent compensation and to put what they wanted in their offer.
A few days later, I received a call from a prospect who lived near the property and wanted to see it. He was a young first-time buyer. I asked if he had heard anything regarding the class action litigation or the new practice changes that went into effect. He had not.
Agents have to set and manage expectations with prospective buyers from the outset, which is a good thing for all involved. Overall, I have noticed a kinder, gentler spirit amongst agent interactions lately. — Cara Ameer
When I explained it, he asked good questions. He said he wanted to do some research and would get back to me. I asked if he would text his email address, so I could send him some information. He never did, so I texted him a few links and the NAR consumer explainer guides.
A few days later, a different agent reached out to schedule an appointment. I had a feeling her client was the buyer who contacted me. Flash forward to the showing — it was. The buyer probably was going to use their own agent anyway, so this saved me from going over the various options of buyer agreements as well as the trips to show the home, only for them to get their own agent anyway.
The new process is a truth serum for buyers, which is a good thing becuase it forces them to get clear about their intentions upfront.
Open houses
Speaking of open houses, I hosted two over the first two weekends post-practice changes, and I was very curious about the public’s awareness, what they knew or did not know, and what they might be confused about. I had prepared packets with my information along with consumer-oriented explainers from NAR to provide to people.
I had done several open houses on the same property before Aug. 17, and comparatively, traffic was noticeably down the first weekend as the practice changes went into effect.
Misconceptions
One couple who came in from out of town shared that they were denied entry to an open house the day before by an agent who insisted they sign the California Association of Realtors Open House Notice Advisory Form (known as the OHNA); otherwise, he would be fined $2,500 if they failed to do so.
They were quite put off by the insistence and walked away. I enlightened them that they did not have to sign anything to attend an open house and showed them the OHNA form that I had as a sign-in sheet. I clarified that the $2,500 fine was a California Regional Multiple Listing Service (CRMLS) penalty that had to do with offering compensation, any words indicating such in CRMLS, showing a property to a buyer without a written buyer agreement and several other actions that could lead to a violation.
They appreciated my insight, and I provided them with an information packet with the facts should they encounter any resistance with other open houses they were going to.
I have heard anecdotes of agents feverishly trying to get buyer agreements signed on the hood of a car before going in for a private showing and the chaos that ensues.
Blindspots
As a result of my experiences in real estate’s brave new world thus far, consumer awareness is largely hit and miss. These issues won’t be on a consumer’s radar until they are in the process of buying or selling a home. Or maybe a family member or friend is going through it, and they’ve heard about what’s involved in seeing properties, signing agreements, compensation, offers, etc.
Although many think that consumers will be more versed in these changes as time goes on, I think buyers will be totally blindsided.
Mainstream media headlines have largely focused on sellers no longer having to pay a commission to buyer’s agents. As the deadline approached, only then was there a flurry of news pieces surrounding buyer representation and what was required to see a home, but not all of the content that the media put out there was accurate.
I see huge gaps in much-needed education on the practice changes for builders so they have a clear understanding of what is required by buyer’s agents and their brokerages. Some builders have communicated policies as to what is required on their end, and others are kind of shrugging the whole thing off with little to no awareness of the issue. Yet, just about all of the builders in my respective markets list a lot of their properties in the MLS, so there’s that.
The relocation sector is another area that needs to get up to speed on the changes and how they could impact the clients they serve. They need to be prepared for all of the situations their clients might face:
- What if a buyer doesn’t want to sign an agreement?
- Or commit to non-exclusive, limited agreements that would make house-hunting harder?
- What happens if a seller won’t pay all or part of the buyer’s agent’s fee?
- Will the transferee look to their relocation benefits to cover the difference?
- Will that become the new expectation?
Moving forward
People have been asking me how I’m navigating the changes, including a 91-year-old dear family friend who is like a Great Aunt to me. She’s sharp as a tack, and that was the first thing she asked me when I saw her the weekend the changes went into effect. I couldn’t believe it!
Other than that, I have been fielding a few calls from agents asking about offers of compensation on my listings in both California and Florida before they arrange showings. As a result, agents are talking to each other more and having conversations, which is a good thing.
Agents have to set and manage expectations with prospective buyers from the outset, which is a good thing for all involved. Overall, I have noticed a kinder, gentler spirit amongst agent interactions lately.
The removal of compensation from the MLS has been humbling because your potential paycheck is up for negotiation. While commissions have always been negotiable, this hits differently. You don’t know how much or if you’ll ultimately get compensated.
While you can establish your fee as a buyer’s agent in a buyer agreement, ultimately, there are no guarantees as to the outcome, and there are more factors in a negotiation that could jeopardize your ability to earn your fee. It’s hard enough for buyers to scrape it together, which means buyer agents and brokers have to know how far they’re willing to go.
It does feel like we are walking a tightrope while playing a game of Red Light, Green Light. Right now, we are experiencing more yellow and red lights with all that must be communicated before we get the green light to show properties and transact.
Here’s hoping for shorter wait times at the red and yellow lights in the future.
Cara Ameer is a bi-coastal agent licensed in California and Florida with Coldwell Banker. You can follow her on Facebook or on X, formerly known as Twitter.
