Editor’s Note: The Playbook is an RISMedia ongoing segment centering on what brokers and agents are doing to ensure they not only survive but thrive in these challenging times. Industry professionals explain the strategies they’re employing and unique ideas they’ve formulated. Tune in every other Thursday for another addition to the series.
It’s the new “Oh, I wanted to ask you…” that you as a REALTOR® must be prepared to not only address, but educate others about. “Others” meaning potential buyer clients who have questions and/or opinions about the Burnett vs. NAR trial outcome, and how it affects the commission they will be expected to pay. If unsatisfied with your answers, they could very well sign an agreement elsewhere.
Related: NAR Agrees to Major Rule Changes Beginning in July, Pays $418M to Settle Commission Suits
Anticipating their questions that have come to light in the wake of the Burnett verdict and addressing their commission concerns has become almost as important as discussing mortgages, comps and all the other vital property sales information involved within the residential real estate realm.
The optics that resulted from late October when a federal jury found real estate power players conspired to inflate commissions in violation of federal law are not good. There’s no easy way to not be on the defensive when explaining the details, but as the saying goes, the best defense is offense. So, if necessary, you will need to stress why what you provide is a critical part of the home-buying process.
“A change in buyer agency and how buyer agents are paid are possible in the future,” says Pam Rosser Thistle, a REALTOR® with Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Philadelphia. “My brokerage has been regularly updating and educating agents on what to expect. However, we are living and representing clients in the here and now. Our unwavering representation of our buyers as a fiduciary will not change. Their interests come first now and always will. Personally, I explain the process and have a system. Based on final (court) rulings, my system related to buyer agency may change. I will look to my broker for guidance and training when/if that time comes.”
What are the questions most likely to be asked? These are some, with answers provided by Jeffrey Decatur, a broker associate with RE/MAX Capital in Latham, New York, who has 30-plus years of experience in the real estate business.
How has the Burnett saga influenced your business in regard to conversations with prospective clients?
JD: Most of my clients don’t even know about the lawsuit. Most of them, when I tell them, it is the first time they are hearing about it. I prefer to manage my clients’ expectations, so bringing it up first shows I have nothing to hide.
What is the conversation with a prospective homebuyer like now?
JD: I want my clients to know about the lawsuits, because it opens up an in-depth, honest discussion about how I get paid, the options they have to pay me, and how the transaction works. I spell out exactly how I am paid, how much I am paid, what expenses I pay (even before I meet them) like dues, advertising, office fees, insurance, etc. For most people, it is a very eye-opening discussion, and helps them grasp the value of their time and my time, sets the tone for the transaction and manages expectations.
How do you handle it when potential clients know what happened with Burnett vs. NAR?
JD: If they are aware and ask what changes are being made, I am upfront and tell them not too much is happening at this point. I always explain how I get paid, and now I go a bit further in-depth, and make sure they not only understand it, but can explain it back to me. I also explain the basis for the lawsuits.
What if the commission they are expected to pay is still not clear to them?
JD: If they ask me if they have to pay a separate commission, then I haven’t explained it correctly the first time and will go over it again. I will show them the different fees being offered throughout the MLS and explain how each one works with my contract, how each situation is different, and how it affects their transaction. I explain that if there is a short fall from the offer of cooperation to my contract that they will be paying one fee, part will be coming from the offer of cooperation from the seller and the remainder will be coming from them.
How do you handle needing a contract to represent them as a buyer agent if they had no knowledge one was necessary?
JD: I explain to my clients the benefits of having a contractual agreement with me. It is an employment contract per se, spelling out how I work, how we work together, how I get paid and what both of our obligations are. I explain that I don’t work for free, and most people giggle at that, because they can’t believe anyone would think we as agents would work without getting paid. It is all a matter of education and managing expectations.
What if someone is reluctant, or expects some sort of guarantee of landing a house if they must pay you in advance to be their buyer agent?
JD: If someone asks for a guarantee, that makes me question them a bit more. Typically, those that are ready, willing and able to buy in the near future don’t have any issues with it. Those who are looking to kick tires and don’t understand the process have concerns like that. Typically, before I go look at a house with a buyer, we sit down and have a consultation. I go over every step of the process and show them the MLSs that I work within so they have a guideline for market expectations. When I start like that, usually if they are tire kickers, it will come out in the questioning, and we plan accordingly.
How deep will the initial conversation be regarding fees?
JD: Our agency doesn’t have set fees. All fees are negotiable for both the buyer and seller, and always have been. Everyone is always trying to get the best deal, no matter whether it is a buyer’s market or a seller’s market. The buyers always want to pay less, and the sellers always want to sell for more. However, TV shows have made it appear as though all real estate professionals are interchangeable, and that we all have the same skills. I can tell you after three decades in this business that all real estate professionals are not created equal. You get what you pay for.
