NAR Settlement: The End of Real Estate as We Know It (and Why That's a Good Thing)
I really tried not to write about the NAR settlement, but I just can't stop thinking about it. There's so much to unpack! If you want to see the crazy headlines that consumers are reading, just Google 'NAR settlement', and if you want the facts, go here.
Some of the high points:
A seller offer of buyer agent compensation is no longer mandatory
Buyer agent compensation will no longer be allowed to be displayed in MLS
Buyer agents must have signed the buyer agreement
All of it is still subject to court approval.
The message the consumer is sending is that they don't think we're worth what we've been getting paid. Considering the median gross income for REALTORS® in 2022 was $56,400, people must not think much of us. And it's our fault. Last year, 90% of the agents in my market did two or fewer deals. One could make a strong argument that someone who only does one deal per year is unlikely to deliver as much value as one who does 20. For decades we've bemoaned the low bar to entry and lack of professionalism in our industry, but we haven't done anything about it. This settlement and its accompanying shock waves might be just the jolt we need to level up and start delivering a more consistently high-quality service to the consumer.
Most of the real estate industry is freaking out. Take a look at some of the unhinged conversations happening in real estate Facebook groups right now. Boy howdy. Some of you are just making a stronger case against yourselves. And, not for nothing, but y'all need to remember that among the quiet members of these groups are consumers, brokers, lawyers…and they're seeing all of it.
To be clear, when I say 'freaking out,' I mean 'afraid.' Buyer agents are afraid they will have to work for free, and listing agents are afraid of the ethically dicey prospect of negotiating compensation and purchase price in the same breath. Lenders are afraid of the borrowers they will lose among the already struggling first-time home buyers and veterans. Appraisers, attorneys, title companies – all of us – fear the unknown.
But remember, one of the things we all love about being in this business is the freedom to forge our own path. Most of us in the business have already lived through one industry disruption, whether it was the pandemic, the 2008 recession, the advent of the internet, etc. All of those events had people scared, but the people who were first to get out of their feelings and into action were the winners.
My life changed the day I decided that I would not be defined by what the world did to me, but by what I did in the world. I suggest you take a similar tack. This means stop with the gnashing of teeth and rending of garments. Stop blaming anyone but yourself for the situation we're in. Be patient with your brokerage as they take the time to craft a coherent and feasible path forward. Even the patron saint of real estate agents, Tom Ferry, took almost a week to carefully study the 108-page settlement report before he busted out any kind of advice.
For some of us, this is going to be too much to bear, and will not be worth the strife. We'll go back to our pre-real estate lives or just retire altogether. That's probably good for everyone. For the rest of us, we have to make a decision. The days of the real estate dabbler are over. You've got to be all the way in. So what does that look like?
Here are a few things you can do to survive and maybe even thrive in our evolving industry:
Read the settlement agreement and check out the NAR Facts page. Even better, get together with a group of colleagues and one of your attorney partners and read/discuss it together.
Write the business plan you never got around to in December (or update the one you did). Here's a quick and dirty template
As a buyer agent, if people only ever see you open a door, write an offer, and make a few phone calls, that's all they think you do. You need to get the news out about all that background deal doctoring you do. Here are some ideas:
After you've solved a problem for your client, tell them about it! They think our job is easy because we make it look that way.
In your content, start documenting things you do for your buyers, like poring through permit records at town hall, sitting in a continuing education class, getting your plumber over to a house the day after a home inspection, etc.
Interview past clients in a recorded Zoom call and ask them what they appreciated most about what you did for them during their home purchase. Publish it.
Send a survey out to your partners (lenders, attorney/title reps, home inspectors) asking them to compare their experience working with represented vs unrepresented buyers.
Don't be that guy. With no precedent for 0% buyer comp listings, things are bound to be messy. We don't even know if the model is going to stick. Let someone else make all the mistakes.
Keep paying attention. Next week we'll have new info we don't have today. July will bring a whole new wave of chaos. And don't forget, it's an election year! Buckle up, and listen more than you talk (or type).