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With fewer than three months until the National Association of Realtors settlement terms go into effect, much of the industry is grappling with how to talk about commissions, written buyer agreements and the value of buyer brokers in a changing landscape.
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While continuing legal drama has created some skittishness, luxury leaders Jay Parker, Liane Jamason, Thad Wong and Daniel de la Vega said industry members must put their anxiety aside and begin having open and transparent conversations on how to navigate the road ahead.
“I’ve heard from agents that some companies are still like, ‘Don’t talk about the lawsuit,'” said Jamason, broker-owner of Corcoran Dwellings. “It’s settled now. Even before it was settled, you have to talk about it.”
“We’ve definitely encountered a lot of agents that were scared about the future,” she added. “We started holding weekly meetings to let the agents voice their concerns, voice any objections and things that they’re hearing from their customers, and talk them through those scripts and dialogues. It’s about facing this challenge together.”
One of the biggest challenges, the panel said, is helping agents properly communicate their value to consumers and being able to effectively and fairly negotiate a commission that reflects that.
“Agents, first, you’re gonna have to be better prepared and you’re going to have to professionalize your business more than ever,” said de la Vega, president of ONE Sotheby’s International Realty. “I think the days of just taking our clients to see a home and make a commission are over.”
“You’re going to have to know your listing presentation. You’re going to have to know your buyers’ presentation because your buyers’ presentation is, arguably, going to be more important than your listing presentation,” he added. “The industry is going to be more professionalized … We’ll have to see this through together, and we may [end] up in a better place.”
When it comes to the professionalization of the industry, Wong said the upcoming changes, which include the removal of cooperative compensation (i.e. Participation Rule) and the requirement of signed buyer agreements, will see the oft-quoted “80/20 rule” come to fruition.
“Twenty percent of the agents out here, I’m not worried about. They’re already showcasing how they’re going to lead the charge,” said the Christie’s International Real Estate and @properties co-founder and co-CEO. “You have to worry about the bottom 80 percent of agents that do 20 percent of the business because that’s where the weak spot is.”
Wong said real estate leaders must be willing to cull the pack and get rid of underperforming agents. If they don’t, leaders are putting their brand integrity at risk — an important key to building and maintaining a strong clientele through a market shift.
“I think our job as broker-owners is to empower our agents with a strong brand, with technology, with tools and fundamental education training, to bring confidence up so that you can charge what you deserve to be paid,” he said. “You have to let go of those agents that are not willing or not able to maintain their value and embrace those who carry your brand; they’re proud, and people are willing to pay.”
Another part of brand integrity, Jamason said, is being willing to walk away from a potential client when commission negotiations have stalled.
“We had one agent come to us last week that was pitching for a listing and the seller had been reading the headlines, which are very misleading in most cases,” Jamason said. “[The agent] said, ‘Can I can I do it for X?’ and we said, ‘Do you want to take yourself to that level? Is that really where you’re at?'”
“This is a top agent, and he said, ‘You know, I don’t need this one. I’m gonna let this one go,'” she added. “And I think that’s important to realize that you don’t have to work with everybody, especially if they don’t appreciate your value.”
Although much of the future is still unknown, all four panelists said they believe luxury agents will continue to thrive as the market dictates the flow of commissions.
“Commissions have always been negotiable. Most agents with significant transactions are asked to negotiate,” said Parker, Douglas Elliman CEO of Brokerage for the Florida Region. “The thing that drove me crazy is at the end of the day, the money to pay came from the buyer. So when reallocated to a different place on [a] closing statement, charged to a different person, the lump sum payment [came] from the buyer.”
“If you’re a seller and you don’t want to offer a cooperating broker a commission, no one’s going to show the property,” he added. “… So those sellers who think we’ve changed the landscape and the way they pay their commissions, I think they’re going to realize pretty quickly that they’re gonna have to offer commission.”
“We’re not going to set any rules on what they have to pay, but the market will dictate that just like the market dictates price.”
