Real estate executives disagree on many things, but nearly everyone agrees that the terms of the National Association of Realtors’ commission lawsuit settlement agreement, if approved by the court (a big if), would generate significant change within the industry.
For the past month, much of the focus has been placed on the potential negative changes the agreement may cause, including more buyers being unrepresented, an uptick in dual licensing and potential hardships for low-income buyers, including those that utilize Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans.
“Whenever change occurs, we tend to think about what we are giving up,” Keller Williams CEO Mark Willis said. “We are naturally programmed, when change occurs, to focus on what we lose.”
But at HousingWire’s annual conference, The Gathering, executives are looking at some of the positive changes the commission lawsuits may bring for the industry.
“In many respects, in the (Biden) administration’s efforts to decrease the cost of housing and the cost of transacting housing, they have clearly indicated that they want to see downward pressure on commissions,” said Damian Eales, the CEO of Realtor.com parent company Move Inc.
“The outcome of the antitrust actions and the settlement, and all of the Department of Justice’s influence, has created an environment where there will be greater transparency of fees and greater competition, and I think the administration wants to see more professionalism from the industry. On the face of it, none of those things are bad.”
Willis likened the pressures currently facing the industry to the concerns and pressure felt in the early 2000s after the emergence of Zillow.
“In terms of transparency, I don’t think we have anything to fear here. I think it is time to be transparent,” Willis said. “I remember leading KW back in 2004 when Zillow showed up and everyone thought the sky was falling. There were concerns that the firewall that we had built, which was the MLS, would be public domain. And, in essence, under increased transparency, our industry has thrived like it never has before.”
Additionally, leaders believe an industrywide increase in professionalism will ultimately lead to a better consumer experience. This is a positive, they note, even though they believe it will lead to some agent attrition.
“Full-time agents probably have a better chance than part-time agents,” said Erik Carlson, CEO of RE/MAX Holdings. “Agents need to have a certain level of skills in order to educate buyers, sellers, negotiate, etc. Those folks that are professionals will have a better chance than not to be successful moving forward. Buyer representation is really important because it is a complex transaction, so I think agents that are willing and able to deliver on and talk about their value will be more successful than a lot of others.”
With fewer agents competing for deals, eXp World Holdings CEO Glenn Sanford sees this new landscape as a great opportunity for top agents to be even more successful.
“You can only work with a finite number of consumers in any given time, which means that if you are a good agent, there is going to be more demand for your services than you have the capacity to supply to the marketplace, which fundamentally means that they can charge what they want,” Sanford said.
“In some markets, I could see those top agents earn more post the new norm (rather) than less, because they can say, ’This is what I charge and if you want to work with me, great, and if you don’t, that is fine because I am busy.’”
It remains to be seen whether NAR’s settlement agreement will be approved and if the DOJ will seek further involvement in the commission lawsuits, but for now, real estate executives are choosing to see how some of the changes the litigation is engendering may be a positive opportunity for brokerages, agents and consumers.
