Change. Is. Here.
Perhaps you know the feeling after surviving a particularly difficult and sudden situation – like a natural disaster. You experience a quick high – that of significant relief and gratitude. In these type of situations, everything can change in an instant – yet somehow you find a way to survive, and breath a sigh of relief.
However, while the storm may pass – that’s not the end. The real challenge, the hard work is just now beginning as you begin the clean up, dig out and begin to deal with 100 other issues that have been altered by the storm.
As an industry, we’ve delt with the market shift that we predicted and we are dealing with the clean up. And yet, now, like back to back storms, comes the industry foundational shift that has been foreseen. NAR has not done enough to ease the fed’s concerns over price fixing in the real estate industry – and now like dominos, NAR lawsuits are beginning to fall, signaling that change is no longer on the horizon, change is here.
Jack Miller, President and CEO of T3Sixty is a friend that I’ve worked with in the past for 15 years. He took the helm of Stefan Swanepoel’s consulting company several years ago – and has been crushing it. I recommend working with their team.
They wrote an open letter to the industry yesterday that is pretty on point, and I wanted to share a section of it with our audience because new change is upon us – and this makes the point succinctly with out any embellishment or hyperbolic language (like I may be prone to doing 😉
Oh, and for the love of god, this is not legal advice.
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The intense legal and regulatory scrutiny on the residential real estate brokerage industry’s predominant compensation structure – in which buyer brokers receive compensation directly from listing brokers via an MLS-mediated cooperation agreement upon the sale of a home – has hit a critical point.The recent settlement between MLS PIN and plaintiffs in the Nosalek case reveals that foundational change to the structure – a decoupling of buyer broker compensation from listing broker compensation to some degree – will most likely occur sooner than later. These changes could come because of a settlement, a judge’s injunction or, if the industry is smart, by key stakeholders’ proactive adjustments to their policies and practices.
Some industry players started preparing for a potential shift a few months ago but many remain unready.
Those who do not proactively adjust, face:
Operating a system that risks harming consumers.
Significant legal and regulatory risk.
Challenged businesses unprepared for a key change to how they make a significant amount of their revenue
Change is here. Find a way to adapt sooner rather than later.
Recommendations for key constituents follow below:
NAR should immediately pass a mandatory rule to its MLS policy and Code of Ethics that requires buyer’s brokers to have signed buyer broker agreements that clearly spell out compensation terms signed before showing MLS-listed properties. It should mobilize national lobbying resources to explicitly allow mortgage loans to finance the buyer broker compensation and educate members on how to talk to consumers about the value of buyer representation.
Brokerages should, as soon as possible, require signed, executed buyer agreements at the beginning of their agents’ engagements with buyers. They should develop educational, marketing, and training materials for agents that explain the specific value of their buyer agent services and tools, and audit their existing materials to comply with NAR rules on buyer agent compensation messaging.
Agents should review their sales and marketing materials for buyer services and update accordingly. Listing agents should update their materials to address how they and any agent representing a buyer are compensated, and the pros and cons of sellers offering or not offering compensation to buyer’s agents, as well as language in their contracts regarding compensation, services and fiduciary duties in states that allow dual agency or transaction brokerage.
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Now is the time to use the storm shelter you built. Now is the time to grab the ditch bag you prepared. Now is the time to take action if you have not or duck and cover may be your only hope – because this one is for real. This is not a drill.
