The commission change mega-FAQ you need to start the historic week

by Kevelyn Guzman | Aug 19, 2024 | Industry, News Feed

Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.

After months of anticipation, we’re finally living in our New Normal, where buyer’s agent compensation is no longer offered via Realtor-affiliated multiple listing services, and all buyers need to sign some type of agreement before a buyer’s agent takes them to tour a property.

We’ve known for a while that the rule changes of the proposed National Association of Realtors settlement would go into effect on Aug. 17, but with all of the questions, concerns and confusion surrounding the implementation of the new rules, agents and brokers are still looking for clarity.

TAKE THE INMAN INTEL INDEX SURVEY FOR AUGUST

We wanted to put together some of the questions we’re still seeing, along with others we’ve encountered in conversations with agents and brokers all over the country. The goal is to create a compendium of the advice we’re hearing and the answers you need, so you’ll feel more confident and secure as you answer questions and change up your daily practices.

How did the system work before? How and why is it changing?

Previously, NAR-affiliated MLSs required some offer of buyer agent compensation when taking a listing, even if it was as little as $1. While there was not a set “standard” commission rate, many areas had more or less consistent rates of commission, usually ranging from 2.5 percent to 3 percent on each side of the transaction, with the seller paying both sides of the commission.

In October 2023, the Sitzer | Burnett lawsuit in Missouri saw a jury award seller plaintiffs $1,785,310,872 in damages, which, under the law, would be automatically tripled to $5.356 billion. The jury agreed with the plaintiffs’ assertion that NAR and various large franchisors conspired to keep commissions high via the trade group’s cooperative compensation rule, also known as the Participation Rule, requiring listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated MLS.

Just hours after the Halloween 2023 verdict in the Sitzer | Burnett lawsuit, a slew of copycat lawsuits began to be filed against the NAR, brokerages and real estate associations. These came from buyers and sellers in many different states and asserted that a conspiracy among industry participants had resulted in inflated consumer costs and violations of antitrust law.

On Mar. 15, 2024, NAR agreed to a settlement, which, among other things, promised to pay $418 million over the next four years and promised to make major changes to the way agents conduct business.

According to the terms of the settlement, NAR would no longer create rules that allow listing agents to set compensation for buyer brokers, and offers of compensation would no longer be displayed on the MLS.

In addition, buyers would need a signed agreement with an agent in order to tour a property..

What does the Department of Justice have to do with all of this?

At the same time consumers were challenging NAR’s policies, the Department of Justice was repeatedly questioning the way agents are compensated and how agent compensation was communicated. 

The DOJ has previously indicated that it doesn’t want to see offers of compensation from a listing broker made to a buyer broker anywhere. Those offers will be removed from multiple listing services as part of the NAR settlement agreement. 

However, some in the industry are still looking for workarounds that would allow them to advertise offers of compensation, with new companies springing up to offer agents and consumers options for advertising commission offers.

In a recent update, NAR President Kevin Sears confirmed that “the DOJ continues to keep a close eye on perceived efforts to create ‘loopholes’ or ‘workarounds’ to the intent of the settlement agreement” and “seems particularly focused on whether [buyer] agreements are tools for that.”

Is this going to bring home prices down?

Probably not. Rising home prices over the past few years have come from a strange brew of pandemic-era demand, changing work-from-home policies, low interest rates, subsequent high(er) interest rates, the ensuing mortgage lock-in effect, increased construction costs and climate-change-induced increases in homeowners insurance. 

The resulting combination led to a lack of supply and increased costs for financing that significantly drove up home values in the majority of markets.

Compared to all of these economic factors, the cost of a buyer’s agent will not necessarily make or break affordability, except, perhaps, for those who are already struggling to put together the down payment and closing costs involved in a home purchase.

Is this going to lower my commission?

According to a recent report from Redfin, buyer’s agent commissions have already begun falling in the days since the NAR settlement. In fact, even before the settlement, there were brokers and agents already looking for alternative commission models that brought buyer commissions below the industry average.

New consumer-focused guidance from watchdog Consumer Federation of America (CFA) encourages buyers and sellers to negotiate lower-cost services, including a fee-free showing contract and a 2 percent agent commission.

The truth is that we don’t yet know where the industry and consumers will land when it comes to commissions. It will probably involve a combination of market conditions — wherein a more experienced agent becomes more valuable during times of intense competition — and an ongoing effort by agents to better communicate the value they bring to the buyer transaction.

Will buyers need to use a real estate agent?

Buyers have never been and still are not required to use a buyer’s agent, but most have chosen to use an agent because they feel it is in their best interest to have someone negotiating on their behalf and shepherding them through the transaction process. Those reasons will remain after the settlement changes. 

If a buyer wants to use me as an agent, how much will that cost them out of pocket?

When they sign a representation agreement, you’ll have the opportunity to negotiate your commission with your buyer client. There is no fixed percentage or dollar amount assigned to buyer agency.

While the buyer may end up paying your commission out of pocket, they may also be able to ask the seller of the home they buy to pay your commission or provide a compensatory concession at closing as part of the offer negotiation.

Will more buyers use dual agency or buy without an agent?

Due to some of the early consumer-facing media coverage about the NAR settlement, buyers may believe that they’ll do better bypassing the buyer’s agent and going directly to the listing agent.

According to broker Cara Ameer, here’s why that might not be in buyers’ best interests:

“The listing agent works for the seller. […] Buyers need to understand that the listing agent was hired by the seller and signed a listing agreement that authorizes the listing agent and their brokerage to put the property into the multiple listing service and market their property based on certain terms, conditions and a listing price that has been agreed to.”

If more buyers do choose dual agency, it will be important for agents to make sure they’re complying with best practices for serving their clients.

From a compliance standpoint, compliance expert Summer Goralik writes, dual agency, or representing both the buyer and seller in a transaction, can impose a heavy burden on the agent caught between competing interests. 

“The dual agent is bound by fiduciary duties to each party, necessitating equal loyalty, care, honesty (including full disclosure of material facts), fair treatment, and confidentiality to both the buyer and seller,” Goralik writes.

Are sellers allowed to pay buyer agent commissions?

Yes, sellers are still allowed to pay the buyer’s agent commission; however, they can no longer advertise that fact or the amount they’re willing to pay in their MLS listing.

Many agents and brokers initially saw this as encouraging or even requiring a workaround — for example, posting compensation offers on a personal or brokerage website or communicating with buyer agents by phone or email. However, many are now discouraging any form of communication about the seller’s willingness to pay.

As the listing agent, your fiduciary duty is to your seller. Just as you wouldn’t, of your own volition, go to all of the buyer’s agents in your market and say that your seller is ready and willing to take a huge cut in their asking price, many say you probably shouldn’t go to everyone and say that the seller is willing to pay thousands of dollars in buyer’s agent compensation.

As Goralik puts it, “As an agent representing a seller, you must follow your seller’s instructions and always put their interests first. Ultimately, you will discuss these options with your clients and proceed according to their wishes.”

What if the seller is willing to pay a smaller amount of agent compensation than I have agreed to with my buyer client?

There are a few ways that this could end up being handled:

• The buyer may choose to pay the buyer’s agent out of pocket.
• The buyer’s agent may choose to waive the balance of the commission.
• The buyer may ask for additional concessions to offset closing costs, leaving them with more money to put toward the buyer’s agent commission.
• The buyer may discuss with their lender whether they can increase the sale price to offset an additional concession from the seller, which could then be put toward the down payment, closing costs or buyer’s agent commission.

In the case of VA loans, the U.S. Department of Veterans Affairs unveiled new rules just before Memorial Day that would temporarily allow veteran buyers to pay their buyer broker fee when buying a home under a government program intended to benefit them. Previously, VA buyers were banned from paying directly for broker compensation.

Should my listing clients offer to pay a buyer’s agent commission?

While much of the earliest mainstream reporting of the NAR settlement asserted that real estate would now be 3 percent cheaper, that has given way to a more clear-eyed assessment of the realities of real estate transactions. 

On the pro side, sellers may feel that offering a buyer’s agent commission is part of the cost of doing business and getting their transaction to the closing table. In a time of unprecedented challenges to affordability, expecting buyers to come up with additional thousands out of pocket to pay their buyer agent directly may prove to be an insurmountable obstacle for many.

On the con side, sellers in a high-demand, low-inventory market may feel that they can afford to hold out for a buyer who can and will pay the buyer’s agent out of pocket. After all, during the pandemic-era buying frenzy we saw buyers who were willing to offer tens of thousands of dollars above asking price or in additional incentives to get their offer accepted.

What happens if my client and I agree to a lower commission and the seller is willing to pay more?

According to the terms of the NAR agreement, which is scheduled to be finalized in November with terms going into effect on Aug. 17, “a Realtor or Participant may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.” If the seller is willing to pay more, the difference can be rebated to the buyer or become part of the overall purchase negotiation.

What happens if the buyer for my listing doesn’t have an agent?

While many industry experts believe dual agency, where allowed, may become more common after Aug. 17, listing agents may end up picking up the slack as “unofficial” dual agents, maintaining the flow of documents and deadlines without officially taking on the role of fiduciary to buyers.

This leaves essentially unrepresented buyers having to do their own due diligence, including determining fair market value for a property, finding an inspector, and juggling the requirements of mortgage approval and closing.

What do I do if a buyer agent calls me asking how much my seller is willing to contribute toward their commission?

There are different approaches to how such a request can be handled. NAR has advised its members to make such calls and continues to promote cooperative compensation from sellers or listing brokers to buyer brokers. 

On the other hand, according to NextHome CEO James Dwiggins, “There is zero reason sellers/seller agents should advertise buyer’s agent compensation, concessions, or anything in advance of an offer. The only thing agents should state and put in the MLS (which is legal) is the following: ‘Seller is willing to entertain any and all requests you put in your offer.’ The end.”

What do I do if I think an agent is breaking the new rules? 

The process for reporting agent misconduct is already well established. You may choose to speak to the agent, their broker, or the MLS in charge of enforcing the new rules.

Email Christy Murdock

What questions did we forget? Let us know in the comments and we’ll update this post as answers reveal themselves.

Michael Ketchmark: Every move you make, we’ll be watching you

by Philip Crescenzo Jr | Aug 19, 2024 | Industry, News Feed

Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.

Attorneys for homeseller plaintiffs in multiple antitrust cases will be keeping a close eye this week on how the real estate industry rolls out business practice changes to comply with the National Association of Realtors’ proposed settlement this week — and looking to make examples out of brokers and multiple listing services who violate the deal.

That’s according to Michael Ketchmark of Ketchmark & McCreight, lead plaintiffs’ counsel for a case known as Sitzer | Burnett, the only suit among about two dozen filed nationwide that has gone to trial. That suit resulted in a multibillion-dollar jury verdict in favor of the plaintiffs and against NAR and major real estate franchisors Keller Williams, Anywhere, RE/MAX and HomeServices of America.

TAKE THE INMAN INTEL INDEX SURVEY FOR AUGUST

In March, NAR filed a proposed settlement with the court, agreeing to pay $418 million and institute MLS rule changes, including a prohibition on listing brokers making offers of compensation to buyer brokers on MLSs, sellers no longer being required to offer buyer-broker compensation, and a requirement that brokers and agents sign contracts with buyers they are working with before a buyer tours a home.

NAR gave MLSs until Aug. 17 to implement those rule changes. Prior to the deadline, Inman caught up with Ketchmark to ask what his team is doing to prepare for the changes.

In a phone interview, he told Inman what plaintiffs’ attorneys would do against those seeking to go around the settlement’s provisions, responded to requests to sanction different interpretations of the deal’s business practice changes, set out his hopes for how the deal would affect Zillow’s referral-based business model, and revealed the “monster case” that remains if the NAR settlement receives final approval in November.

Inman: We’re gearing up for this Aug. 17 deadline and wanted to check in to see what you’re doing on that end. What is it that you have to get done by that deadline, if anything?

Michael Ketchmark: We’ve been monitoring what’s been happening in the industry with a lot of these webinars and training programs, just seeing how people are interpreting this and what their intention is. 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. If we get any sense that people or corporations are doing that out there as a way around this, we plan on taking swift legal action.

But from our standpoint, everything’s just been set in motion, and we’re sitting back waiting for it to take effect. We believe it’s going to take a while for the free market to adjust to this and for us to see commissions start coming down. But we fully expect that’s what’s going to happen.

What are you seeing in these webinars and forms that’s concerning?

There’s a huge desire with some of these large corporate brokers to continue this because there are literally tens of billions of dollars that have been fleeced out of the pockets of homeowners, and there’s a hope that they can continue to do it, but they’re not going to be able to. The agents and brokers we’re talking to understand this.

We’re starting to get reports back from agents and brokers in large cities that they’re already seeing the commissions are starting to drop. I remain hopeful that that’s exactly what we’re going to see happen, but it’s going to take a while. It’s been reported as this seismic shift in the real estate industry; the biggest thing to happen in centuries. It’s not something that just changes overnight. It’s going to take a little bit of time for the free market to adjust to this, but it’s going to happen.

STAY UP TO DATE WITH INMAN’S LIVE COMMISSION BLOG

In what ways do you think they’re trying to still continue?

People were talking about trying to set up third-party websites for commission-sharing or that they could create new kinds of forms that they have that they don’t put on the MLS, or kind of do things behind the scenes. The rubber is about ready to hit the road… and really that’s what’s going to be important to us. It’s not what people are talking about, what might happen, but what does, in fact, happen.

There just needs to be a loud and clear warning to everyone who’s out there, that they need to be careful because it’s not only going to be the settlement agreement that is going to have the force of law, but, as anyone can imagine, the Department of Justice is very interested in seeing how this is going to play out, and we fully expect the DOJ to be actively involved in shutting down any attempts to create new legal conspiracies.

I’ll get back to that. In terms of the forms you mentioned, are there any provisions you’re seeing that you’re concerned about?

Right now, I don’t have any concerns about what I’ve seen out there or what I’ve heard, but I hesitate to take any position on what actual forms are going to be there because I’ve seen so many different drafts. But you can imagine, there’s all of these different local MLSs with all of these competing entities that are out there.

Ultimately what’s going to matter to us are the forms that are actually used and replaced with, not what people are saying may be done or drafts of the ones that are done. When this comes into effect, if there are MLSs are out there that are using forms that we think are in violation of the agreement or that violate the law, we’re going to take swift action.

The California Association of Realtors took out broker-to-broker compensation on their forms. Is that an example of something you would like to see? Or is there still something concerning about their forms?

The back-and-forth that we’ve seen with some of these large associations, like provisions being in there, provisions being taken out, those are the types of things that I’m talking about. But until I actually see the new forms that are being used and the new documentation that’s being used, it would be irresponsible for me to comment in a vacuum because I have no idea if what I’ve heard about or what I’ve seen reported is ultimately what’s going to be there.

I think that there’s a large desire in the industry to have the plaintiffs’ attorney somehow bless this material or bless this information. We’re not going to do that until we see how it’s written and how it’s used in the real world. But if we find things that we think are in violation of the agreement, we’re going to take action.

You mentioned different interpretations of the new rules. What interpretations are you seeing?

Not a day goes by where somebody doesn’t send me some type of an Instagram or a Tiktok or a Facebook page or something on X or on social media where someone’s saying, ‘Hey, this means this,’ or ‘This means that,’ and that’s what I’m talking about. There’s a lot of that.

There have been some forces out there that have created some uncertainty as to what the requirements are, but the requirements are real straightforward: You can no longer use the MLS as a vehicle for sharing cooperation or for fixing prices. If anyone thinks that they can get around that they’re wrong. If we see anything out there where there’s an attempt to violate that fundamental premise of this settlement agreement, that’s what we’re going to take action against.

I don’t know if you saw an article I wrote about our Inman Connect conference where the panelists on stage were saying, ‘Don’t make pre-emptive offers of compensation. Just say your seller will consider all requests and wait for the buyer to put it in their purchase offer.’ Then somebody in the audience said, ‘Hey, are we doing it wrong? Because our buyer agents are calling the listing agents to ask what the sellers are offering.’ So, is that wrong?

We’re not going to weigh in on these hypothetical questions. My involvement in this for the last five years has told me that the resolution of the right or wrong is so fact-dependent upon what actually is happening.

I know when the plaintiffs’ attorneys say something, that the industry can rely upon that and they can use that or they can think that that guides their behavior, but the guiding behavior that they need to be worried about is they can’t violate the antitrust laws. They can’t use the MLS or those vehicles as a way for announcing that they’re sharing cooperation or setting the commissions, and if anyone’s doing that, it’s going to be a problem.

Whether or not specific behavior violates the terms of the settlement agreement is going to depend upon the circumstances of when it happens. We’re going to call balls and strikes when the ball crosses the plate, not ahead of time.

So pre-emptive offers of compensation are allowed under the settlement? If the seller decides, ‘I do want to offer to the buyer’s agent and I want you to not put it in the MLS, but you can put it on a flyer for my house or on the listing broker’s website or anywhere else’?

I don’t know. I’d have to look at what’s being done, how it’s being done, and apply it to the terms of the settlement agreement. I’m not going to just say yes or no on a question like that. It’s going to be dependent upon the facts.

The settlement says they’re not prohibited outside of the MLS and I just want to know if that means they’re allowed.

Even if something’s not prohibited, it doesn’t mean that the way that they’re doing it is okay. If a seller is being coerced or forced into making an offer of cooperation because of fear of steering, there’s all kinds of factors that could go into creating some type of illegal sharing provision. It’s just gonna depend upon the facts and how it plays out.

You mentioned you’re going to be looking at what happens. Are you doing anything this week or next in terms of of prepping for this deadline or deciding how you’re going to police it?

Sure. There’s a team of lawyers from all of the different law firms that are involved in this. Several plaintiffs’ law firms with entire teams of attorneys. We have weekly calls, and we are taking very aggressive steps to prepare for the launch of this. We plan on staying on top of it as it rolls out.

Can you elaborate on the steps you’re taking?

No, other than I would tell the industry that they better mind their P’s and Q’s and comply with the law because this is a hard-fought-for change. [A] tremendous amount of effort and energy went to obtain this on behalf of the homeowners and sellers in our country, and we’re going to make sure that it’s carried out the way it needs to be carried out.

I don’t think there should be any doubt in the industry of our sincerity when we say that’s what we’re going to do. But I’m not one to let other people know what our preparation is, other than we’re preparing.

How soon do you think we’ll see? Will that preparation be visible in some way?

Hopefully, the results will speak for themselves as we start to see these sales go through and as we start seeing commissions dropping, as we start to see the free market work and disrupters come in and change the industry. It will be more the fruits of our labor that we’ll see, instead of the actual labor.

Will there be any immediate repercussions for MLSs or brokers who break the rules?

Yeah. 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.

Hopefully, what’s going to happen is it’s not going to happen. Hopefully, we’re going to find that these MLSs start complying. I’ve always maintained, and I really believe, that it’s in the best interest of the real estate industry and it’s the best interest of these brokers to compete in the free market. When they do that, I think that the strong brokers who are bringing quality services and doing that, either on behalf of buyers or sellers, that they’re going to be rewarded and they’re going to be paid.

People have always been willing to pay for quality service and quality care. If you’re buying a home, they’re willing to pay for that. If a seller wants to negotiate with their agent in the free market, they can do so. Let’s just let the free market work. Hopefully, in the end, I think that the industry is going to realize this is a good thing for the industry.

You mentioned potentially making an example of brokers or MLSs who are breaking the rules. What kind of actions would you 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.

Would you have to do anything special in order to have it cross over into the criminal realm?

We would refer it to prosecutors if we believe that there’s something illegal, criminally, that’s happening.

So the prosecutor would have to file something as a criminal case?

Yeah, that’s not something we could do.

What do you anticipate the DOJ would do?

I don’t know. I would never presume to speak for the Department of Justice, and I would never make predictions.

But I have met with a lot of the high-level folks at the Department of Justice, as well as frontline attorneys, and this is a dedicated group of people who’ve given their lives to the enforcement of these laws. They really, truly want to bring about change here for the American homeowners. I fully expect that they’re going to be prepared to take actions even unrelated to the settlement, but change is going to come here, whether people want it to or not.

You think they’re going to be watching?

I would imagine so. But I’m not basing that on any inside information. It’s just my belief.

To go back to the actions you might potentially take if somebody’s violating this. Is there going to be some sort of grace period or like, a week later, if they’re breaking the rules, then-

Depends upon the severity of it. We have a whole arsenal of things we could do, as simple as sending out an email, making a phone call, sending a cease-and-desist letter, to filing a lawsuit. It just depends upon how severe the situation we believe is and what the appropriate response is.

But, by and large, my experience with the industry since the settlement came about is it is good, decent, hardworking men and women who truly care about doing the right thing. I’ve always maintained that the real estate agents have been the victims of what’s happened here at a higher corporate level, and large corporate brokers are the ones who set this up and pulled a lot of this money out of the pockets of the local real estate agents.

That’s what people forget, is that the vast majority of this money was stripped away from the local agents and was used by these large corporate brokers and companies like Zillow and others.

My belief is, when it returns to the local brokers and returns to local control, that it’s going to be better. I truly believe that these local agents are going to do the right thing, and they’re not sitting around trying to find out ways to violate the laws. They just need to be skeptical if you have large corporations coming in and pushing forms on them or pushing documents on them that are going to expose them to problems.

When you say the vast majority of these funds have been stripped away from the agents, what exactly do you mean?

I saw how this NAR rule was being used by companies like Zillow and others to say, ‘Hey, if you get a referral, you have to pay back a huge portion of the commissions back to these corporations’ and things like that. It really was being taken out of the pockets of the local agents.

You haven’t sued Zillow, as far as I know.

Nope. Our belief is that the changes that are taking place here are going to stop that. What Zillow was doing was going in there and using these local MLS rules, and they set their business model up on top of this illegal conspiracy. They benefited from this illegal conspiracy. Now hopefully we just cut the legs out from under that.

You mean for them to not be able to get referral fees from buyer agents?

Yeah. The whole system was set up so that commissions were being established at 6 percent, it was being split, and then the entire network was set up in order to benefit from that. I think this is disrupting all that and changing all that.

Have you had any issues with the settlement process so far?

No. There’s a lot of work associated with it. There’s a lot of hard effort that’s been put in by attorneys on all sides and and my dealings so far with all of the NAR attorneys and all the attorneys for the large corporate brokers, they’ve been working hard and trying to do the right thing.

I’m personally excited, and the plaintiffs’ attorneys are excited, to see this effect take place and for us to see how it plays out. Ultimately, the goal is to benefit homesellers in America and to bring down the cost of commissions in America. Time’s going to tell whether or not that happens or not, but I fully believe that it will.

How soon do you think it’ll happen?

I think we’ll start seeing anecdotal evidence of it relatively quickly. But to me, it’d be interesting to look back in a year and do a comparison. You don’t have to shift this very much for it to result in tens of billions of dollars of savings because there’s just so much money at stake. It’s going to take some patience and some time.

The hardest thing would be to predict exactly how long it’s going to take, but there’s no question it’s going to occur.

Any updates on brokerages yet to settle?

No, other than I know that every day I continue to see emails from our team and and new brokers that are settling.

Dozens have settled, right?

Oh yeah, a whole host of smaller brokers have reached settlements with us. In the coming months, you’re going to see a flood of filings for approvals of those. It just takes a while for all of the process to take place.

What are the biggest loose ends here still waiting to be tied up in all this litigation?

The next phase of this litigation after all this is over is going to be our ongoing case against Berkshire Hathaway Energy. That’s going to be the monster case. Trial is set for that [in] 2027. It’s always off, but into next year you’re going to start seeing litigation going on there. Our entire trial team is going to be turning our energy and attention to Berkshire Hathaway Energy and holding them accountable and liable for what’s happened here.

So just because HomeServices settled doesn’t mean that Berkshire Hathaway Energy has.

That’s right. In fact, a very significant part of the HomeServices settlement was carving out our lawsuit against Berkshire Hathaway Energy, and allowing us to proceed and go forward against them. That’s going to be the massive fight that remains.

You don’t think that will settle anytime soon?

No. It’s our position that Berkshire Hathaway Energy sat on top of this entire conspiracy and benefited from it. HomeServices and all the brokers beneath them benefited from that. They’re ultimately responsible and liable for this. We intend to prove that, and if we go to trial on that, the amount of damages will be in the hundreds of billions of dollars.

Email Andrea V. Brambila.

Like me on Facebook | Follow me on Twitter

Watch out for these 3 pitfalls to avoid pricey fines in your future

by Brad Inman | Aug 19, 2024 | Industry, News Feed

Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.

Everything is fine, or generating fines, as agents and brokers are discovering that their multiple listing services (MLSs) meant business about fines for violations around the commission language and rules created from the settlement lawsuits.

While fines are nothing new in the real estate industry, these fines are still seemingly catching agents off guard, caused by workarounds, misunderstandings, and what seems to be just poor planning and oversight. 

But it’s not just MLSs and consumer complaints you need to be ready for; you also need to be ready for the fact that your competition is about to be fierce. In fact, it may be a fellow agent turning you in for violations at the state and local levels as well. 

Why? Let’s face it, there is not enough business to go around, and top-producing agents who are determined to stay in business are tired and burned out from other agents who make their jobs more labor intensive — and make transactions a nightmare — because of negligence. 

So what is a broker, admin, or agent to do to make sure that unnecessary fines and violations don’t stack up like an unlimited pancake platter at IHOP? What can you do to possibly help prevent landing in a sticky situation? There needs to be a collective plan to make sure that everyone is on the same page, creating a consistent experience for all consumers involved. 

Here are three pitfalls that you may have missed in your preparations and some cleanup recommendations that may help avert disaster. 

Stop using your presentations and documentation from 2023 or older

Pitfall No. 1: Trying to make dated materials work by just throwing new materials into the mix

It’s time for a fresh approach, meaning you need all new materials, systems and presentations. I think where many folks will struggle is they try to adapt older packages and systems with new materials. In doing that, you may miss sections of language that may be out of context or contradictory to the new systems that will be falling into place.

Clean it up: Do a careful audit, and make sure to throw out all older materials. Craft fresh packages with the latest state-approved revised documents. Carefully document when and how you did this process in case it’s ever brought up in court or in front of a grievance committee. 

This also means making sure that you audit all listing descriptions and documentation of active listings that your team has held previously. 

Make sure that if you are a broker and you have gone through this audit system and provided guidance and materials to your team that you have written documentation that they understand the new process and that they have culled and removed materials. 

Stop creating a digital paper trail online of rants against consumers

Pitfall No. 2: Social media and marketing habits that give the wrong impression about commissions

Many agents are crafting an easy-to-find digital footprint of evidence that could be collected against them to support fines and violations because of their social media rants and activities. For example, depending on the context, ranting in “private” Facebook groups could be a huge problem for you. 

Creating and sharing videos about how you are going to treat clients if they pay you less (pretending to rush them or acting like you will do the least amount of work) is not only in poor taste but also implies that you are looking to obtain a certain commission rate and are not going to be open to negotiate.

What’s not a good look if you find yourself in a sticky violation situation or under investigation? Videos that:

• Make fun of misinformed or discount-seeking consumers
• Are overly aggressive with what services you will not perform if you work at a discount
• Are just silly and satirical

In other words, if you find yourself caught with a fine and have to explain yourself, your business, and your dedication to customer service, those videos are not going to do you or your brand any favors.

With the Consumer Federation of America (CFA) heavily invested in protecting consumers, now is the time to make content for supporting consumers, not for entertaining other agents or making fun of the industry. Professional agents are going to work to raise the bar, not polish their stand-up comedy routines. 

Liking and commenting on content from influencers and coaches who create hype videos promoting aggressive tactics to manipulate consumers into any type of commission structure leaves a digital trail that can be easily traced with a screenshot. In other words, be careful what you like and share because you never know where it will resurface.

Author’s note: If you don’t think anyone is paying attention, I will caution you this: When I was previously involved in grievances and fines discussions at the association level, it wasn’t the consumers you needed to be worried about. It was the agents who knew how to put a case together against you because you had either intentionally, or sometimes not intentionally, done something to cause them grief in a transaction. They came prepared with enough documentation to win. 

Clean it up: Get a handle on your personal and team social media hygiene habits. You will be standing next to them at board grievance investigations and likely have to accompany them to court. Also, beware of anyone who is promoting themselves as an expert to coach you in what to do. This is the Wild West, and there are no experts yet. 

Supercharge prospecting with disclosures and respect for the consumer

Pitfall No. 3: Stop over-complicating information for consumers

One thing that is critical moving forward with consumers is to have educational materials available to them with very low friction or incumbrances on their part.  They need to obtain information about new practices from reliable sources that are easy to understand and delivered in multiple formats to accommodate accessibility and different learning styles. Think like a fast food drive-through menu; they need to be able to glance at some options and point to what they want.

These could include short video explanations, FAQ pages, informative and professional educational posts in your marketing, and a dedicated area on your website to find disclosures and materials that are easy to understand and that are provided multiple times during your interactions with the consumer. 

I sell homes in a retirement community and have been working through some policy changes and purchase language updates. Our team devised a plan of carefully curated updates for our clients in a variety of formats, including a written letter, digital updates and in-person meetings.

What our team has found is that, even though we launched our plan many weeks ahead to give notice of the changes, it took a very personal, hands-on approach to help the clients understand what the changes were.

Many clients simply will not take the time to read the information, and many others are so busy they do not have time to retain the information. Clients will also question your expertise, and bring your materials to consultations to interview you line by line of what they are reading to see how prepared you are.

Perspective is key, and your clients will be interested in their personal outcome, not how you are paid. It’s important to keep the conversation focused on their goals and their desired outcome.

Clean it up: Be clear and concise. Be a good listener. Be willing to repeat and offer presentations often — even if you think your clients understand.

Much of the training and education around prospecting is about how to catch the attention and “convince” a consumer to work with you. There is a great deal of bad and high-pressure advice out there from coaches who are pushing tactics from 20 years ago. 

Much like throwing out old presentations, you need to throw out outdated prospecting tactics. You will have to untrain yourself from tactics that may be harmful to working with consumers in this new environment. 

Operating with professionalism isn’t necessarily about the suit you are wearing. It’s about your behaviors inside transactions with your peers. You will need to study and be prepared to work in this new environment with your team and other agents, and if you show up unprepared, you could be paying a steep price, where what you don’t know could potentially turn your business into a no-go with some serious debt.

Watch your back, stay polite, and be very careful with what you send in texts and emails.

One last piece of advice: Volunteer at your local association for grievances. This is going to give you the best education possible about pain points, pitfalls and areas where your business could be at risk, and it will potentially be the best new think tank for creating the “experts” we need to help navigate this moving target from now into 2025.

Stay in your lane, stay sharp, keep it clean on social media, and if you mind your own business, you should be just fine — when it comes to avoiding unnecessary fines.

Rachael Hite is a business development specialist, fair housing advocate, copy editor, and former agent. Rachael is currently perfecting her long game selling forever homes in a retirement community in Northern Virginia. You can connect with her about life, marketing and business on Instagram. 

Trending: VESTAPLUS MLS Software

by Philip Crescenzo Jr | Aug 18, 2024 | Industry, News Feed

Join Kelly Robinson, vice president of sales and marketing at VESTAPLUS, and Jonnathan Rivas, product manager at VESTAPLUS, for an exclusive tour of their top MLS products. Discover the innovative tools designed to elevate your real estate business, from advanced listing searches to seamless data integration. Learn how VESTAPLUS can enhance your workflow and client service today.

Dive into a wealth of insider tips and access an extensive library of content across different topics with Inman Access. Stay informed on the latest trends and expand your expertise as a real estate professional.

Join Inman Access

From Zero to $150K: This YouTube video strategy can deliver GCI wins

by Jeff Tucker | Aug 18, 2024 | Industry, News Feed

Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.

The passive prospecting of having YouTube videos marketing your business while you do other things is unmatched. In this article, Noah Escobar shares the easy-to-follow, step-by-step process he’s utilized to generate over $150,000 in GCI in the past 15 months.

Escobar is a 24-year-old agent who began his career by interning for me at Berkshire Hathaway HomeServices Beach Properties of Florida and has found early success utilizing three specific types of YouTube videos.

When asked why he decided to start recording and posting on YouTube, he said, “Before I came on as an intern for you, I was doing video production for my church, so I had a little bit of experience with a camera. Once I began my internship and began shooting your videos, I saw how powerful those videos were for your career. Based on that, when I graduated from college and started my sales career, I knew I wanted video to be a large part of how I built my business.”

Escobar started getting serious about video and his YouTube channel in the first quarter of 2023. “I wanted to utilize it to help me with the ‘know, like, trust’ sales funnel process of my business,” he said. “I focus on three specific types of videos. Each of these complements the others and helps me build an awareness of my business. The videos fall into these three categories: community videos, infrastructure update videos, and listing tour videos.”

Escobar has seen steady growth in his channel; his success proves you don’t need a large audience to generate business on YouTube. The key is to stay focused on the types of videos your ideal clients want and are searching for.

YouTube is now the second-largest search engine behind Google. This means most people who are viewing videos on YouTube come there looking for specific information. This is completely different from video views on Instagram or other social platforms that are not as search-driven.

“My first sale from YouTube came from a community video where I was discussing the new homes being built and planned in a specific neighborhood. I was at the beach with my girlfriend, and when we came out of the Gulf, I saw that I had a voicemail. The voicemail said, ‘I saw your video highlighting Watersound Origins. I’m coming to town in a few days, and I’d love for you to show us that neighborhood.’ Within five days of seeing my video, they came into town and were under contract for $1.2 million on a home that had been closed for cash two weeks later. I’ve since closed six homes in that one neighborhood,” Escobar explained.

The video his first client called on only had 600 views. This showed him that it isn’t about the number of views but the quality of the views. He started by shooting the videos himself but quickly pivoted and found a videographer who shoots and edits the videos for him now. He highlighted this fact to make sure anyone considering shooting videos realizes that it can be done, whether they have past video experience or not.

The following is a breakdown of each type of video he shoots and includes slides he provided that detail the flow for each style.

Community videos

The community videos are the top-producing videos for lead generation for him right now. These are videos where he highlights the amenities, location, types of homes, etc., for a specific neighborhood.

By focusing on the keywords people would use when looking for information about these specific neighborhoods, he has been able to rank at or near the top of organic search on YouTube for the communities he has highlighted. He’s found that multiple videos highlighting different phases of a community compound his ability to be seen as the expert for that neighborhood as well.

“When I have multiple videos for a specific neighborhood, the viewers typically watch more than one of my videos. The more time they are watching, the more opportunity I have to build virtual rapport with them,” Escobar explained.

The following is the flow he utilizes and his thought process in each section of these videos:

Infrastructure update videos

Infrastructure update videos have given him the ability to produce content on areas that are under development when most people are wondering what is coming. In these videos, he goes over the project, the amenities and how this project will affect the surrounding areas.

By being the first person to post videos on many of these projects, he has seen most of these videos open up at the top of organic searches for the neighborhood name. His subsequent follow-up videos, as the project develops, add to his authority in search for the new development.

He’s highlighted national builder communities by interviewing their onsite sales members building relationships that have led to referrals due to the value and exposure his videos bring to the builders and the communities. He’s done the same with local builders. These have given him exposure and additional searchable content. This win-win video type has led to listings with builders along with buyer leads.

The following is the flow and thought process he has for the infrastructure update videos:

Listing tour videos

Listing tour videos serve several purposes. The first is to professionally market the listing in a way that attracts a buyer. The second is to showcase himself as a professional marketer leading to additional listing opportunities. The third is to have these videos as examples of the type of marketing he does for clients who list with him. He shares these in his listing appointments to help him highlight his value and close more listings.

When Escobar first started, he had very few listings. To overcome this, he offered to pay for the listing videos for listing agents. He gave the listing agent credit when he introduced the home in the video and then highlighted the home.

This created a win-win-win situation for the seller, the listing agent and for him. The seller received additional, professional exposure of his home to potential buyers. The listing agent was able to provide additional marketing for his/her seller at no cost to them, and Escobar had additional content he could use to attract buyers and show potential listing clients.

The following is the flow he follows and the process he uses to produce these types of videos:

“When I first started in the business, I knew I couldn’t do business without actively prospecting. YouTube videos have given me a way to passively prospect on a consistent basis. Now that I have been doing this for over a year, my videos are being watched day and night.

The analytics YouTube provides show me that I’ve had 240.6 hours of watch time over the past 28 days. When I break this down to an average daily amount, it means people are watching my videos for 8.6 hours per day on average. That is exposure and prospecting that is promoting me and my business at a level I could not maintain if I was having to be on the phone that much,” Escobar said.

If you’ve been on the fence about leaning into producing YouTube videos for your business, now is the time to commit. Follow this blueprint, and you will have success.

To see Noah Escobar’s videos and model your local content after them, check out his YouTube channel. 

Michigan Realtors are mad as hell, and they’re suing: The Download

by Stephanie Alfonso | Aug 17, 2024 | Industry, News Feed