Does the Golden Rule Matter in Real Estate?

I’ve thought lots about this for months since the NAR Settlement (Sitzer/Burnett) case has made headlines and the real estate industry is trying to prepare for the impact of major changes in the MLS systems and the way Realtors/professionals/agents do business beginning this August.

The basic rules of residential real estate concerning antitrust and compensation? have NOT changed, so I’m not certain how we made it to this point of making things so much more complex—-which I think creates greater distrust from the general public about real estate agents guiding the home selling and home buying process. ??

?? Our home selling and buying system in the US is actually quite a complex web ??? of open trade, varied state and local laws, along with varied MLS’s (owned by various entities) and their rules and processes.? I truly believe that the INTENT of all rules is to protect the consumer, while guaranteeing free trade, fair housing, and equal opportunities!

How does this affect YOU?? I’ll try to paint a picture.? If you desire or need a change of place to call home, you’ll likely seek some possibilities on one of the many online platforms. ? You may get the contact info of an agent from a friend-of-a-friend, or you may take a risk by hitting the “interested” button online and having an unknown agent call you and meet you at this house you’d like to view.? AFTER AUG 17, that shouldn’t happen without first signing an agreement with this agent (who is an agent of a brokerage) BEFORE entering the first home to view.? These agreements will vary by state, region, MLS, brokerage, etc.? It may be for ONE house only or it may be for an agreed amount of time, but it will establish a relationship, however brief or extended, with that agent/brokerage and will also establish how much compensation that agent/brokerage will be paid if that house or others viewed during the terms of that relationship is the house of your dreams and you wish to purchase.

WHAT? ??? You thought that an agent opening doors and writing contracts was FREE for you as a buyer?? Actually, it never really has been free, but perception is 20/20.? In SC, where I practice as a real estate agent, we’ve had a Buyer’s Agreement for many years so this is not a huge change for us. ? However, in reality, many of us have opened many a door for perspective clients for “free,” building a relationship of trust as we have viewed homes together. ? Why was this perceived as “free?”? Because for decades, we have basically practiced Cooperative Brokerage in which the SELLER had agreed in their listing agreement what brokerage compensation would be offered to the buyer side.? And in the past, this was a published, dollar amount or percentage on the MLS.? After August 17, this no longer will be published in most MLS's, so it will be a? mystery - one that must be solved by better communication between agents on both sides.

So, to me, this is not all bad.? I feel it’s a good thing to slow down a buyer’s process with a good sit-down meeting between agent and buyer and really answer questions upfront, build a relationship, and make certain this partner? is someone you will enjoy the journey with! ??? We have also learned since these pandemic, unicorn housing market years, that an upfront meeting with a lender and studying the financial possibilities BEFORE LOOKING AT HOMES is just as important; everyone is wasting time and energies otherwise.? Just understand, that as a buyer, you will be agreeing upfront how much a buyers agent’s services are worth to you and what YOU AS BUYER will agree to and can afford to pay from your side at closing. ? (Do understand that there will remain ways to achieve obtaining buyer commissions and concessions from the seller, but this will require an adept, knowledgeable agent!)

?? From a seller’s perspective, can this mean that you pay less in commissions?? Possibly, but this is not a simple formula.? AND PLEASE REALIZE THAT THIS BROKERAGE FEE/COMMISSION HAS ALWAYS BEEN NEGOTIABLE! ? This is really another article, but realize that market values already incorporate brokerage fees to some extent; so market values and appraisals are going to become even more complex.? If you want/need to sell your home, you want the most eyes on it as possible, the most visitors as possible, and you want a good deal to progress all the way to closing!? ? What happens if you work with an unrepresented buyer?? Without offering any cooperative brokerage compensation, are you completely leaving out affordability for first-time home buyers, Veteran buyers, and buyers who will choose to not even view your home?? (Again, another article)

I’m not certain how these changes will lower home prices? Home prices are more determined by Supply and Demand, not broker/agent compensations.

You may be thinking . . . if I see a house online, I’ll just call the listing agent and work transactions that way. ? This has already been done legally for years and can work well in many situations. ? Just please understand that it may not save you in fees, and in some instances, kinda comparable to using your spouses’ attorney in a divorce settlement.??? Buyer agency came about in the 1990’s? ? ? ? ? because of a huge need for fair buyer representation. ? Has this need disappeared?

I’m still trying to figure out how the outcomes of this settlement make things more transparent?? With the changes, NO compensation for either side will be on the MLS.? Agents will need to answer their phones to receive calls from other agents for this information.? What if they don’t answer?? Will buyers be taking uncalculated risks?? Are there greedy sellers or listing agents involved? ? While I might understand some of the plantiffs’ concerns in these lawsuits, it is likely that greed, lack of disclosure, or poor agent service were at the heart of these cases. ? I’ve also witnessed the need for speed at client’s request and lack of client’s listening and understanding putting the client in a riskier situation. Most legally approved contracts include all of the required disclosures that sometimes are just not read or truly understood.? Perhaps we just need to slow down . . .?

I just mentioned slowing down . . . . ??

Maybe transactions on buying and selling a home are as easy as purchasing a plane ticket online or an item on Amazon. ? Perhaps the week-long delays on a closing from an attorney or lender aren’t because of any difficulties with deeds, HOA’s, financial validations, etc. ? Maybe you should just be able to push a button and make what is typically the biggest purchase of your life? ? Maybe a home and its location are not really a compilation of complex parts that shape what we call the housing market? ? Technology has certainly changed the way we can shop for homes, view pictures, study financial histories of homes, and learn more about the neighborhood.? Maybe we should just be able to call one of those 800 numbers, open a home with an app, and take care of a transaction of hundreds of thousands of dollars while on our drive from home to work?

You have always been able to sell or purchase a home without an agent and you still can. ? You might be able to find the kinds of contracts you need online.? I’m not sure you’ll be able to find an attorney however, who can hold your hand through an important transaction for less of a fee than a real estate agent would expect.

How do you know if a home in its location has a reasonable asking price?? (And please don’t base everything on “Zestimates” because you have no idea what local data is included to create that approximation)? Good agents study the market and areas of clients’ interests daily because subtle changes can make a difference for sellers and buyers.? Agents also protect consumers and clients from the many scams out there!

Yes, I can imagine that many innovations will come about because of these changes in the industry.? Some proponents of change tout the European ways of residential real estate.? I am no expert on that matter, but it’s my understanding that there is much less of a shared MLS experience in European countries; one must go from brokerage to brokerage to know what listings are even available.? Would that be the “free market” that Americans expect?? Many countries (and states in US) are “Buyer Beware” entities; all loyalties are to the listing, not the new buyer.

I also know that real estate agents cannot work for free. ? Rather than grumbling about the many fees that agents must maintain to keep their license active and their name in the market place, or listing the 100’s of tasks that agents must do to keep a process going smoothly, I prefer to demonstrate the resemblance of my professional services to other professions . . .? professionals I use because of my own decisions.? (And I’m not attempting to equate the knowledge or training required between one profession to another.? The great thing about America - zillions of professions are valued and needed! ) Yes, you should seek referrals from people you trust, do your homework and research, interview, and don’t settle for services that don’t meet your needs.

Could I do my own taxes?? Yes, I suppose I could.? The IRS claims that it’s possible for the majority of Americans to do their own, especially with the online platforms available today.? However, I decide to pay for peace of mind - and save tons of time and headaches.? Peace of mind with a professional CPA who has the training, knowledge of the complex tax code and keeps up with the annual changes.? She can answer my questions about why more deductions in one year vs another; provide confidence that my return will be legal and correct, and provides advice to make the next year a little more advantageous for me. ? I pay the services for a Financial Advisor —-again, for similar reasons as above; confidence that I can financially survive retirement and a long life with advice that I may not love, but see the value. ? Personal medical services and other professionals help me to keep my body, my home, house infrastructure, and vehicles running smoothly and perhaps save me $$$ in the longterm.? Though I might pride myself from fixing a minor garage door issue with helpful YouTubes, I don’t have the knowledge, time, nor patience or confidence to keep everything safe and running properly.

?? So, we all make decisions.? This settlement does not change that at all.? You may hire an agent, or go on your own.? You may negotiate any commissions.? Regardless, you should always remain the boss of the major decisions with a real estate transaction.? You should consider the advice of professionals in the field, but you still have the hard job of decision maker. ? Making informed decisions, however, is much more comforting and advantageous in this complex world. ?

Selling a home, buying a home, and the transitions of moving are very stressful; hopefully combined with lots of excitement, but stressful nonetheless.? Fortunately, most of us don’t do it on an annual basis . ..? but that means that the experience, knowledge of current laws and markets, and time to research thoroughly may be lacking.? It’s your choice to hire a professional!? Good agents often appear calm like swans on the surface, but I guarantee you that the webbed feet below are paddling furiously and purposefully below to take us to the destination you desire.? We are being trained to “show our value” and “demonstrate openly the 100s of tasks we do behind the scenes”.? But don’t you have enough to stress about? ? I cannot take away all stress; but it is my goal to take you to your goal as smoothly as possible. ?

I like the industry and feel confidently that I can continue to abide by laws and new rules and provide ultimate services for my clients. ? I realize that change is the only constant and I must stay abreast of new developments and open my mind to new possibilities. ? However, I am a baby-boomer and can’t change that.? I value services that make my life easier and very much value the GOLDEN RULE.? I wish to be treated with respect and will show the same-plus to my customers and clients.? I need transparency and open two-way communication.? I need a problem-solver when challenges arise. ? Therefore, I must give 100%+ to those I serve. ?

There is RISK in any investment, but you should not have surprises. Facts and possibilities are important to informed decision making.? It’s fun and rewarding to serve as a thought-partner with a client, looking at possibilities, pros, and cons throughout the journey.

You may see some agents and brokerages offering options such as a-la-carte services: $ to see a home; $$ to write a contract; $$$ to negotiate between parties, etc. ? I’m seeing the “One Stop Shops” that offer clickable buttons for everything: escrow agents, insurance, lenders, etc. ? Is a home transaction really that easy?? Who handles the myriad of challenges that can crop up when you consider a seller with goals, buyer with different goals, and a home that itself has many moving parts.? Nothing is a problem until it IS! ??? There may be a need for these options and it may certainly work for some.? But right now, I can only see myself as a FULL SERVICE REALTOR to any client I serve.? Every case is different; each client and client’s needs are unique, and there are many unknowns to take a transaction from start to finish. ?

I hope that Customer Service is not dead or dying.? It’s a complex world; let’s don’t make it more confusing and hostile.? We, as real estate professionals are in a bit of uncharted territory right now.? I? worry about the terrific inefficiencies and confusion this can create for the consumer, but at least I can warn and explain.

I wish to elevate your experience, not discount or compromise it. ? Great service may seem expensive, but when dealing with potentially the biggest asset of your life, poor service can cost you a fortune!? I like to be beside my client the whole way and beyond! ? Right now, that’s the only way I know to do things!

#GoldenRule #RealEstate #NARSettlement #ConsumerProtection #FairTrade