This article was shared here with permission from Mike DelPrete for Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
Between 2021 and 2023, the CEOs of real estate’s largest public companies had highly varied upside from the sale of company stock — ranging from $145 million to $0 — while their companies had massive financial gains and losses.
Why it matters: Executive compensation through stock sales is a worthwhile datapoint to consider when thinking about a CEO’s optimism about the future of their business — and how they are incentivized to lead that business.
And in reality, that compensation appears to be very loosely based on a company’s actual financial performance, if at all.
Dig deeper: Between 2021 and 2023 Opendoor experienced significant financial losses, with a combined net loss of $2.3 billion and an Adjusted EBITDA loss of $737 million — typically the most favorable financial metric (closely approximating cash flow).
During that time, Opendoor’s CEO sold $145 million in company stock through dozens of transactions — $112 million during the first two years (as CEO) and $32 million in 2023 (as president of marketplace) before leaving the company in January 2024.
Between the first sale in 2021 and the last sale in 2023, Opendoor’s stock declined 83 percent.
During the same three years, Zillow had a combined net loss of $787 million but a positive Adjusted EBITDA of $1.1 billion — significant cash flow.
The CEO of Zillow sold $86 million of company stock in March 2021, when Zillow’s stock price was near an all-time high.
Zillow’s stock has dropped about 58 percent since then, but there have been no subsequent stock sales.
The other publicly listed companies round out the list, revealing several interesting outliers – including CEOs that have sold no stock.
The CEO of Redfin, which was unprofitable, sold $19 million in company stock — and also purchased $300,000 of stock in late 2023, while the CEO of eXp Realty, which was profitable, sold $71 million in company stock.
Interestingly, the CEOs of Compass (unprofitable) and Anywhere (profitable) have not sold any company stock during this same period of time.
It’s hard to ignore the outliers.
The CEO of Opendoor, the most unprofitable company in the peer group, made the most from stock sales.
While the CEO of Compass, which went public about the same time as Opendoor, and the CEO of Anywhere, which was the most profitable, sold no stock.
The bottom line: There’s a before and after not included in this analysis: under what conditions a CEO was granted stock, why they decided to sell, and what they did with the money.
The focus here is the specific financial upside realized by the CEO — compensation for doing a job — how it compares to a peer set of CEOs, and how it relates to actual company performance.
The results are inconsistent and reveal a massive variance — more than I expected — and in that white space is an opportunity to learn more about incentives and intentions.
Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.
Agent optimism over future buyer pipelines fell from 44 percent before the deal to 27 percent afterward — one of the starkest monthly shifts in sentiment that Intel has recorded in the last year.
This report is available exclusively to subscribers of Inman Intel, the data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
Not much has changed. Nothing will ever be the same.
Agents say they are coming to terms with these conflicting realities as they face a depressed market that has seemed to barely budge alongside new policies that many believe could hurt their prospects of courting buyers in the future.
The National Association of Realtors settlement appears to have prompted an immediate downward shift in agent optimism toward their buyer pipelines, according to responses to the Inman Intel Index survey shortly after the deal became public in March.
Agents expressing optimism that their buyer pipelines would recover in the next 12 months plummeted from 44 percent in February to 27 percent in March.
Meanwhile, pessimistic attitudes toward future buyer pipelines spiked from 15 percent in February to 28 percent after the NAR deal was announced.
This represents one of the starkest monthly shifts in sentiment that Intel has recorded in nearly a year of surveying real estate professionals.
Read the full breakdown below.
Sea of change
Prior to NAR’s big news, agent attitudes toward future buyer conditions had become largely positive.
The market downturn in transactions appeared to have bottomed out in the eyes of agents. And by this time next year, far more expected things to get better than worse.
But in the chart below, we can see just how quickly that sentiment started to reverse after the NAR announcement in mid-March.
Chart by Daniel Houston
Above we can see that agent optimism toward their future buyer pipelines — represented in blue — swelled through the winter into early spring of this year.
Then, a sudden reversal occurred following NAR’s announcement in March, with orange-shaded pessimism creeping further into the picture.
From an agent’s perspective, this represents merely one slice of the business outlook: the buyer side, looking 12 months out from today.
Agents remain more optimistic about their listing pipelines in the year to come. Compared to the disruption to their buyer pipeline expectations, agents seem to think their prospect of attracting seller clients will be less hobbled by the new NAR rules.
Thirty-eight percent of agents told Intel in March that they expect their seller pipelines to be heavier or substantially heavier this time next year, down from 45 percent who said the same in February.
Unlike with buyers, where the drop in optimism coincides with a rise in pessimistic responses, more agents think the new rules and market conditions a year from now will leave their seller pipelines “about the same” as they are today.
The size of the group expecting little change in seller pipelines rose by 7 percentage points, while the pessimistic cohort of attitudes toward future seller pipelines remained about the same size month over month.
What’s more, this stabilizing outlook for seller pipelines mirrors more closely the trajectory of client pipelines in recent months — on both the seller and buyer sides.
Conditions on the ground
The analysis above reflects agent attitudes toward the future — specifically what agents expect to happen over the next 12 months.
But Intel also asked agents what conditions look like today, compared to what they remember from this time last year.
In that sense, the legal developments of the past year have yet to take a toll on pipelines, at least compared to last year’s disappointing market of the early spring.
Agents who expressed that their listing pipelines were either heavier or substantially heavier today than at this time last year dropped from 27 percent in February to 24 percent in March.
The share of agents who said their listing pipelines were “about the same” year over year jumped from 26 percent in February to 36 percent in March.
This also means fewer agents reported an actual decline in their listing pipelines over the past 12 months.
Perhaps more interesting is on the buyer side, where future outlooks have worsened even as actual pipeline conditions may be finding their footing.
Sixteen percent of agents told Intel in March that their buyer pipelines were either heavier or substantially heavier than at the same time last year, a decline from the 20 percent who said the same thing the month before.
But the share of agents reporting clearly worse conditions on the buyer side year over year was also in decline — dipping from 49 percent in February to 47 percent in March.
The takeaway on the buyer side? As with listings, the winnowing of clear directional observations from both extremes contributed to a rise in agents reporting buyer pipelines were “about the same” as this time last year.
Overall, the survey paints a picture of a housing market where conditions on the ground remain roughly stable for agents — even as the NAR news leaves many in the industry wondering for now where their future buyers will come from.
Methodology notes: This month’s Inman Intel Index survey was conducted March 20-April 1, 2024. The entire Inman reader community was invited to participate, and Intel received 1,009 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.
Each month, the trade group publicly reports the size of its ranks and other data on its official website. But as recently as this month, state-by-state and national data is nowhere to be found.
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Decades of membership data has been scrubbed from the National Association of Realtors’ website and is no longer available either to members or the public, though the trade group says the data will be available to members again at some point in the future.
Until at least March, NAR had posted monthly counts of its ranks by state and nationwide for years on its website, along with annual membership counts by state dating back to at least 1970 and national counts back to 1908. The data was previously available here, but now redirects to a generic web page on Realtor membership.
“NAR will continue to report its membership numbers directly to our members,” NAR spokesperson Mantill Williams told Inman in a statement. “We are recalibrating how those reports are produced to keep our members informed and retain our focus on doing what is most important to them – ensuring a smooth transition with the upcoming rule changes and preparing Realtors for continued success and growth.”
NAR did not respond to questions asking why the data was removed from the website, is not currently available to members, and will no longer be available to the public at all. “Any suggestion that our members will not have visibility into membership data is inaccurate,” Williams added.
“This is why members get so ticked off with the NAR,” Inman contributor Teresa Boardman, broker-owner of Boardman Realty, told Inman. She has been a NAR member more than 22 years.
On Tuesday, Boardman saw that the monthly reports, which she uses for her real estate blog, were gone from the site.
“Instead of coming up with a conspiracy theory as to why the numbers are gone, I decided that maybe it was a mistake or if not, I could just ask what happened to the numbers,” Boardman said.
She contacted NAR and asked where she could get membership data now that the numbers were no longer on the site. She was told “I’m sorry, but the Monthly Membership Report is no longer available on nar.realtor. Membership at NAR still stands at 1.5 million.” Boardman provided Inman with copies of the email thread between herself and NAR.
“The one-sentence response is a great example of the kind of communication that causes distrust in the organization,” Boardman said.
“Now I am sure there is a reason why the numbers are no longer being published on the site. NAR is trying to hide something.”
“My best guess is that membership is declining so rapidly they can’t keep track,” Boardman added.
NAR did not respond to Boardman’s inquiries as to why the data was removed or where she could access it, except to say it was no longer available.
In a February presentation, NAR Chief Economist Lawrence Yun predicted further membership declines at a local, state and national level over the next 24 months, “given the reduction in business opportunities over the past two years” and “the lag effects of past housing cycles.”
NAR is not the only industry player who has chosen to keep data it normally publishes from the public. Last month, real estate consulting firm T3 Sixty announced it would not publish its 2024 ranking of the U.S.’s 1,000 largest brokerages, dubbed the Mega 1000 list. The company also said it would not publish its list of the “nation’s largest real estate enterprises, franchise brands and franchises.”
Jack Miller, the firm’s president and CEO, said the decision was “due to current and pending lawsuits, and at the request of numerous privately owned brokerage companies involved in those lawsuits” who asked to be excluded from the rankings after NAR’s proposed settlement of the suits left some 90 large brokerages out of the deal based on their transaction volume as recorded in T3 Sixty’s Almanac.
AtInman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed.Join us.
The National Association of Realtors’ proposed settlement in its commission cases, which has been preliminarily approved by the court, has left agents and brokers struggling with exactly how they will answer their clients’ questions going forward.
On Tuesday, Judge Stephen R. Bough, who presided over Sitzer | Burnett, granted preliminary approval to NAR’s proposed settlement, making it more likely that the rule changes surrounding compensation in the multiple listing service (MLS) that NAR agreed to will come to pass. The judge set a hearing for final approval in November.
According to the trade organization’s website, “NAR has agreed to enact a new rule that would require MLS participants working with buyers to enter into written agreements with their buyers. NAR continues, as it has done for years, to encourage its members to use buyer brokerage agreements that help consumers understand exactly what services and value will be provided, and for how much. These changes will go into effect in mid-July 2024.”
Rather than getting bogged down in long, confusing explanations, Jeff Lobb, CEO and president of Sparktank Media and Coach 52, recommends keeping it simple, asking plenty of questions to determine if you and the lead are a good fit, and creating a strong value proposition that illustrates the value you bring to the buyer side of the transaction.
Lobb has been working on crafting the conversations that both listing and buyer agents can use to address their buyers’ and sellers’ questions in today’s highly confusing environment. Watch the full interview, or read on for examples, scripts and objection-handling tips that you can use now to help you navigate difficult discussions with your clients.
Avoid long explanations: Keep it simple
The biggest source of confusion currently is about our fees and how they have been paid in the past. Before you go into a full-blown discussion about your commission, Lobb urged agents to ask more questions to uncover what their clients’ real motivations are.
“You have to educate them about how we work and how the industry works,” Lobb said. “If they bring up anything about your fee, tell them that you will be happy to talk about fees later, but let’s see if we will be able to work together first.”
Lobb recommends that when you are on alisting appointment, it’s important to explain that commissions have always been negotiable and to describe how we earn our fees. Keep it simple, and avoid getting in the weeds with long explanations.
Lobb said a frequent mistake most agents make is how they present their value proposition.
“A lot of people think their value proposition is a bunch of things that they tell the seller they will do,” Lobb said. “It’s not what you do, but why you do it. As Simon Sinek says, start with ‘Why.’”
This process involves asking lots of questions, such as what they’re looking for or what is motivating them to move. Lobb also urged listing agents to be more consultative and to educate clients about how agents work as well as how the industry works at large.
When clients want to talk about commission fees up front, Lobb recommends that you say the following:
Agent:
I’m happy to talk about fees. But first let’s see if we’re a match, whether I can help you accomplish what you want to accomplish, and that we’re confident about getting your home sold. At that point, I’m happy to talk about my fee structure and how it works.
Listing agents: How to handle incoming phone leads who ‘just want to see the home’
Starting in July, when NAR puts the new rules into effect, most buyers will be required to sign a broker representation agreement before you can show them a home. Lobb described what many callers are likely to say when they call on your listing:
Inbound buyer lead:
Hey, I’m interested in your listing. I was told I had to sign a buyer agency agreement by somebody I called from Zillow or Realtor.com. I didn’t want to do that. I want to deal directly with you.
If they’re calling you, they’re probably willing to have aconversation with you. Lobb recommends that you do a 5- to 10-minute consultation on the phone.
“I’d be asking questions on the phone. ‘Tell me about the house you’re looking for,’ or ‘Would you mind taking a few minutes to really let me know what you want, so I can find the right house for you based upon what you’re looking for,’” Lobb said. “You always must make it about them and the value to them.”
At that point, ask to schedule a Zoom meeting to get a better idea of what they want and to discuss the changes ahead.
Lobb suggested a second approach that you can also use to get a face-to-face consultation, whether in person or on Zoom.
After asking them some quick questions about what they’re looking for, key features they want, price range and location, Lobb said to follow up with this question to set yourself up for getting a face-to-face meeting: “Have you heard about the recent changes in the real estate industry?”
Lobb explained that they’re likely to say that they have heard some stuff or that they really don’t understand it. You can then reply by saying:
Great! I would love to spend five or 10 minutes with you. It’s really important. Do you have time to jump on a Zoom call later tonight, maybe with your significant other? I’m still happy to show you the home, but you need to understand how this works before we go out and see properties.
Lobb warned that you can’t just hit them with the changes.
“It’s extremely important that you ask them about what they have heard,” Lobb said. “We have to help them understand it. We can’t just tell them.”
Caveat: If the buyer contacts you directly as the listing agent, you’re now in a dual-agency situation since you have a signed listing and agency agreement with the seller. Consequently, you must disclose that you are the exclusive agent of the seller.
My recommendation is to check with your broker, attorney and/or state association legal hotline about any changes you may need to make regarding how you should handle this situation in light of the new NAR rules that go into effect in July 2024.
How to handle buyer pushback on paying the commission
When the buyer says “No way” to signing a buyer representation agreement or asks, “Help me understand why I have to pay a fee,” Lobb’s recommendation was to give a brief explanation that commissions have always been negotiable. This hasn’t changed.
Second, since most buyers don’t understand how buyer agents were compensated in the past, you must address that issue.
My recommendation is to tread carefully here because you can never say, “The buyer’s broker commission was free to the buyer.” That has been a huge part of the litigation and must be avoided at all costs.
What you can say is that the lawsuits now require buyers to negotiate the buyer’s commission independently of the listing agent. Here’s how Lobb addresses this situation:
When you hire me as your buyer’s agent, not only is my role to show you the home, but to negotiate any and all fees, whether it comes from the seller’s side, or from the proceeds of the sale, or your funds. You’re hiring me to negotiate these fees from all the other parties.
“It softens the blow of what fee or percentage I’m putting into that agreement,” Lobb said. “My job is to negotiate that.”
Other types of value you bring to the buyer
My advice is to check the current listings on bothRealtor.com andZillow that meet the buyer’s search criteria. If down payment assistance is available on a specific property, both portals now show a list of all the down payment assistance programs available. You can then show the buyers what’s available on one or two of the homes you might show them.
Editor’s Note: Agents should use caution recommending mortgage programs if they are not a licensed mortgage professional. Find a trusted local mortgage partner to help you help your clients. Remember to be the source of the source.
Given that the average amount of down payment assistance in 2023 was $17,000, according to DownPaymentResource.com, sharing that data provides buyers with a pathway to pay you and have money left over to put toward their down payment or other costs.
Another approach would be to share the “Home Ready” programs that allow buyers to purchase with 1 percent down plus an additional 2 percent grant of the loan amount from the lender (provided they meet credit score andincome requirements).
Currently, a number of lenders are working on various ways to roll some or all of the commission into the purchase price. Given how important this situation is, look for more innovative solutions soon.
Sadly, most agents are woefully unprepared to have the conversations required to persuade the buyer to sign a buyer representation agreement. Agents who master thesedialogues, however, will have a huge competitive advantage over almost all other agents.
Create your transaction closing checklist
After you have shared the information above, it’s important to support your contention that you are there to negotiate on their behalf. If you and/or your brokerage have not put together a list of all the steps required to close a transaction, make it a top priority to complete that checklist immediately.
Once you have put that checklist together, Lobb urges agents to “share it with the buyers so they understand what else you do to negotiate on their behalf. Because agents have seldom discussed all these steps in the past, most buyers will be surprised by how much is necessary to close the transaction.”
From my perspective, I would probably point out several of the key items on that list where I, as their buyer’s agent, would be negotiating on their behalf.
Lobb’s final piece of advice
In today’s market, you have to be good at going out and gettinglisting appointments. Unless you get an appointment, this information makes no difference. This means getting back to the core basics of being accountable, constantly learning and having the right people teach you how to do the business.
“It’s what we do for a living,” Lobb said. “It’s never going to go away. This is something that always evolves and changes, with or without you.”
Bernice Ross, president and CEO of BrokerageUP and RealEstateCoach.com, and the founder of RealEstateWealthForWomen.com is a national speaker, author and trainer with over 1,500 published articles.
At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
Pulse is a recurring column where we ask for readers’ takes on varying topics in a weekly survey and report back with our findings.
Now that a judge has preliminarily approved the National Association of Realtors’ commission lawsuit settlement, brokers and agents are trying to figure out how to get ahead of the curve. Some are offering discounted commissions with no buyer agent split or low flat fees. Others are anticipating a bit of a Wild West period before a return to business (more or less) as usual.
We want to know what you’re seeing now: Will listing agents have the upper hand in a post-NAR settlement world? Will dual agency become more prevalent, or will buyer agents still be in the mix? What are clients saying, and what questions are they asking? How do you see it all shaking out? Share your boots-on-the-ground perspectives below:
We’ll compile a list of the top responses and post them on Inman next Tuesday.
Conrad Miller shares what the right brokerage can do for your professional growth and personal satisfaction at every stage of your real estate career.
At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
Whether you are venturing into the world of real estate for the first time or simply desiring a change, selecting the right brokerage is no easy feat. Throughout our 28 years in the industry, my partner, Brandon Holland, and I have experienced firsthand the significant impact that a good brokerage can have on career growth.
Each brokerage is unique in its own right with a set of pros and cons, but the most important factor when selecting a brokerage is which one is right for you.
So, how do you determine which brokerage is right for you? Detailed below are elements that we have considered throughout the span of our career as we learned which brokerage was the best fit for us.
Boutique vs. large brokerages
Deciding between aboutique or large brokerage is the first step in determining which will be best for you long term. Both types allow you to give your clients what they need, but it’s a matter of understanding your own needs when comparing the two types.
While joining a larger brokerage entails more direction and support, a boutique brokerage tends to provide an independent atmosphere. If you are a team player and thrive in a group environment, larger brokerages are the place to be.
As a member of a double-agent team, a larger brokerage suits our needs in different ways than a boutique brokerage would be able to. However, brand recognition holds significant weight when you’re part of a team, so it’s worthwhile to consider how important that is to you before going all in with a larger brokerage.
There may also be times during your career when you switch between both boutique and larger firms, and Holland and I have done this over the years. By experiencing both, you’ll have a better understanding of what best suits your long-term needs.
We are currently a part of a large brokerage that offers the best of both worlds. We have access to an internationally renowned reputation and the resources of a large brokerage, in addition to the creativity and flexibility that a boutique brokerage typically offers.
Brokerage culture
We have found that larger brokerages often convey a stronger reputation — a factor influential in shaping work culture. Yet reputation, whether born from size or service quality, consistently plays a pivotal role in defining the professional environment.
Our exploration of both superior large and small brokerages reveals a common denominator: the wealth of resources designed to empower and support you. Agents must be equipped with an array of supports, ranging from marketing aids to technological tools, to navigate the industry successfully.
Holland and I particularly value this foundation as we forge our team’s identity. Strong support allows everyone to succeed and meet their individual goals.
Resource access provides great support when achieving one’s goals, but we have come to learn that the key to a supportivebrokerage culture is ultimately the people. People build a brand.
Leadership evaluation
As real estate agents, we are responsible for establishing our own brand and representing the brand of our brokerage. However, it is leadership that is responsible for giving us the tools to do so. An agent’s relationship with their brokerage is supposed to be a symbiotic one that embodies a partnership.
Finding a brokerage that you have a strong relationship with often shows off their strong leadership. The leadership should be there when you need them, helping to maintain both your brand and their brand.
The partnership should build businesses up. When selecting a brokerage, it is important to be dedicated to your own career but also remember thevalue of support.
One size doesn’t fit all
The type of brokerage plays a large role in determining which one is right for you, but at the end of the day, one size doesn’t fit all. While our brokerage is considered a larger brokerage, Holland and I selected them because of their unique qualities.
Being a part of both boutique and larger brokerages, we have found that experiencing both was necessary for realizing which is the right fit for our team.
Final thoughts
Overall, don’t be afraid to take your time when determining which type of brokerage you want to join. Take all the factors and supports into consideration when making your decision. Most importantly, make sure to consider your clients, and which brokerage will be able to support you the best while you support them.
Conrad Miller is a top-performing real estate agent with Berkshire Hathaway HomeServices California Properties. He is one of two members of the Palm Springs Home Team. Connect with Conrad on Instagram.
Between 2021 and 2023, the CEOs of real estate’s largest public companies had highly varied upside from the sale of company stock — ranging from $145 million to $0 — while their companies had massive financial gains and losses.
During the same three years, Zillow had a combined net loss of $787 million but a positive Adjusted EBITDA of $1.1 billion — significant cash flow.
The other publicly listed companies round out the list, revealing several interesting outliers – including CEOs that have sold no stock.
