There is a lot going on in real estate right now! Thanks to the proposed NAR settlement, real estate agents and our commission have become the hot topic this week.
Instead of going over the details with you for the hundredth time (because we all know you’ve been pouring over them already), I thought I would share 3 different post ideas you can create today for your clients to help them understand what’s going on.
Before You Start
Before we get into the post ideas, let’s go through a couple of things NOT to do when talking about the proposed settlement.
Don’t Fight
I’ve seen plenty of agents online fighting it out with strangers. First, this is not helping our cause. Second, those people will likely never use an agent. They were never your client so don’t try and convince them.
Stay Positive
There’s enough doom and gloom, the sky is falling rhetoric going on. Break out from all of that and be positive about these changes.
Be Honest
Whether we like it or not, we as an industry are partially to blame for how we got to where we are. There’s nothing wrong with being honest and truthful about our industry’s good and bad parts. Talking about it doesn’t make you complicit.
Okay, with that being said, here are 3 post ideas you can create today.
#1 – Explain Now vs. The Future
Most consumers don’t understand how we get paid. I’ve had numerous buyers ask me, “so how do I pay you?” when using my services. And, to be honest, oftentimes my answer, “oh, you don’t have to pay me. The seller’s agent does.” didn’t accurately explain how the buyer broker agreement is actually worded.
They’ve always been on the hook to pay us. We just always agree to take what’s being offered by the listing agent, even if it’s less than what our agreement states.
A post that talks about the current way of doing things vs. how the proposed settlement will change things is a great way to educate your clients. It’s also a great way to talk about some of the benefits and drawbacks sellers and buyers will face going forward.
Note: I know we as agents want to look at this with a critical eye, but the truth is there may be some benefits to these changes.
Benefits
- Sellers may save money on commission. If they are no longer required to pay for the buyer’s agent, they could walk away with more of their proceeds.
- Buyers may stop getting steered to higher-commission homes. It’s a reality that some agents push their clients to homes with a higher payout, ignoring what may be in the best interest of the client.
Drawbacks
- Sellers may lose out on qualified buyers. If a seller isn’t willing to offer any buyer’s agent compensation, a well-qualified buyer may opt to buy a different house from a seller who is.
- Buyers may lose out on representation. If a buyer can’t afford down payment, closing costs, and agent fees, they may forgo an agent in order to purchase a home, leaving them vulnerable to a myriad of problems.
- This may create reduced transparency, not more. Now, every time a buyer makes an offer, they’ll need to weigh asking for all or a portion of their buyer’s agent fees against writing a more competitive offer not including them. They won’t know if and how much the seller is willing to kick in.
#2 – Explain What a Buyer’s Agent Does
I’ve read many comments online where buyers have said, “all my agent did was open doors and they got paid a buttload!”
While we may not like hearing it, and while it certainly isn’t accurate most of the time, there is some truth to this. Some buyers truly DO FEEL like that’s all a buyer’s agent does. Since we were “free to the buyer” we never had to really sell our services or properly explain the importance of our role in the transaction.
Buyer’s agents will continue to be compensated. We will just need to properly articulate our benefits going forward.
- Searching for homes. Sure, buyers can search on the portals and likely spend way too much time doing so. However, our back-end access to the MLS makes searching faster. PLUS, we can weed out any homes we know won’t be a good fit. Have you ever shown a home to a client you knew they wouldn’t like at their insistence… and you were right?
- Coordinating showings. It’s a lot of work to get clients in to see houses quickly and efficiently. We also provide security to the seller because they know who’s been in their home. It may not be rocket science, but it’s still hard work.
- Pointing out potential issues during showings. We see things buyers don’t. We can point out potential issues when showing homes that could create a huge problem during or after the transaction.
- Giving pricing opinions. Nearly all AVMs are inaccurate. Coming up with an offer price takes research, time, and knowledge of more than just comparable stats.
- Negotiating. One of the biggies. Having someone advocate for their best interests is crucial to a successful sale, not just for the initial offer but also during escrow.
- Vendor recommendations. Not only can we provide recs to vendors who we know will do a great job, our relationships with them can often get them in on short notice, giving our buyers an advantage.
- Loan guidance. We see home loans all the time. We know what to look out for, what seems fair, and what doesn’t. Furthermore, when something goes wrong, we can guide the client to a solution.
- After the Sale. We provide our clients with someone to reach out to whenever they have a home-related question. It’s like having someone on retainer for free.
#3 – Point Out Myths vs. Truths
The news articles have created a bevy of inaccurate information surrounding not only the proposed settlement but also how real estate works in general. I mean, just look at these headlines from the top news sources:
- CNN – The 6% commission on buying or selling a home is gone after Realtors association agrees to seismic settlement
- FOX – NAR $418 million legal commission settlement could save you thousands on your next home
- NYT – Powerful Realtor Group Agrees to Slash Commissions to Settle Lawsuits
Clearly reporters and consumers alike have little understanding of how real estate compensation works. And to be frank, that’s on us. We’ve done a horrible job as an industry of explaining to the public our value and how we’re paid.
Here are some great myths vs. truths you can share with your clients.
Myth: 6 percent commission is standard.
While it’s true that, for years, 6 percent was the de facto average commission sellers paid to sell their home through an agent, it’s never been mandatory. Each individual agent sets their commission amount and each individual seller agrees to that commission rate. In addition, we’re actually prohibited from discussing commissions with each other.
Myth: Buyers agents are free.
While it is true that oftentimes the seller’s agent will offer a buyer’s agent commission, if they didn’t, the buyer would still be on the hook for their agent’s commission. Of course, this is only true for agents using a buyer broker agreement (which has become pretty standard practice for most of us).
Myth: Home prices will go down.
This is probably the biggest lie I’ve seen so far being touted by the news. Just because a seller has fewer expenses doesn’t mean they’ll magically reduce the price of their home. The price of their home is still set by what a ready, willing, and able buyer will pay for it.
Wrapping Up
It’s clear consumers have a lot of misconceptions about real estate in general and our compensation specifically. Use this settlement as an opportunity to educate your clients, prove your value, and become their trusted advisor.
And most of all, don’t panic! There’s still little we know for sure and only time will tell how this is truly going to affect the industry going forward.
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