REAL Trending Episode 39
From REAL Trends, the trusted source for real estate industry news, this is REAL Trending episode 39. We’re breaking down the trends of the week, showing how they impact brokers, agents and the business. I’m Steve Murray, president of REAL Trends. Today we’re going to discuss a report from the conferences, the recent class-action law suit against everybody in the industry and the continued assault on the way things are and our reaction.
Report from the conferences, we’ve had the great honor and privilege of being at the Keller Williams’ Family Reunion, Leading Real Estate Companies of the World, RE/MAX R4 and just came back from the Berkshire Hathaway Home Services Conference. Three of them were in Vegas, so we’re getting very familiar with everything going on in Vegas. Interesting enough about this year’s conferences, there were only two real focuses of the general sessions of the four conferences we’ve been to thus far.
It tells us something about the state of our industry. The two were technology on the one hand and the power of relationships and building relationships on the other hand. Keller Williams Family Reunion with a record attendance of over 17,000 people, enormous energy. Gary Keller, Josh Team leading the discussion presenting the Keller Platform, Keller cloud and Kelle, the personal assistant and all of the good benefits that come from integrated platform, large data, integrated that data and artificial intelligence.
And there was tremendous focus on it, tremendous. But one of the things Gary Keller pointed out time after time after time when addressing agents interesting enough had to do with relationships because what he talked about over and over again was the value of an agent or a team’s business is inherent in the database of clients and customers that those agents and teams have and how effective one works with that database, grows it, nurtures it and improves it both with personal contact and through using platforms, technology and integrated data.
When you go to Leading Real Estate Companies of the World, you heard a lot of message about the importance of relationships, about poor recruiting and building relationships with agents and staying in contact, had to do a lot with referrals as well which is a big part of that organization’s business. There was a lot of focus of conversation about that. When we went to RE/MAX R4, yes, they discuss technology and the booj RE/MAX platform and it was very enlightening as to the direction they’re going about what they’re doing.
Everything was fine. But most importantly as a keynote speaker they had Marcus Lemonis from the reality TV show The Profit. How is it possible that one guy in an audience of 7,000 plus people can grab and keep their attention for over an hour? Well, he did it and he did it by sharing part of himself with the whole audience. The good, the bad and the ugly. He did it enormously well and he engaged people who were there with RE/MAX in his quest to show the power of opening up and building trusting relationships.
And in fact commented that the whole success of the businesses he interacts with on his TV show has to do with relationships. There was a big focus on that. Then we went to Berkshire Hathaway and we heard Gino Blefari, the new CEO of Berkshire Hathaway Home Services with a theme all in and all of the items that Gino listed on being all in had to do with personal character, dedication, willpower and focus, and had a great guest speaker named Alison Levine.
Frankly, I thought I’d heard the last of the men or women who’ve climbed Mount Everest and said, great, I climbed Mount Everest. Well, Alison Levine relayed the success and failure since she experienced both going up Everest and the heartbreak of getting to within hundreds of feet of the summit and having to turn back and know you may never get that close again. But more it was the lesson someone learns from a challenge about that, the personal perseverance and the willpower and being part of a team and the responsibilities of members of the team.
I come away from the first four conferences we’ve attended with these lessons. We could talk about technology and we all know what’s important today and in the future of this business and there may come a day when technology replaces more of what real estate agents and brokers do. I don’t think any of us doubt that, but I think most of us that know better about housing consumers and the way agents and consumers interact is you cannot replace empathy and human understanding that agents have.
And I think secondly, broker owners need to get over the technology and all the other areas they’re spending their time on and understand that agents are with them because they look for leadership and vision and accountability and community and a sense of belonging. Someplace where somebody cares they’re there. That’s what we’ve learned so far. Next week we’re off to four Realogy brands, Better Homes and Gardens, Coldwell Banker, ERA and CENTURY 21.
Will be an exciting week to see all four at the same time. Later on in the month we’ll be visiting with the leadership and the people of Realty One Group. More on that later.
The Class-action Lawsuit
The class-action filed against the National Association of Realtors and four large national real estate organizations and dozens of MLSs which basically proclaim that an illegal conspiracy exists where a seller of a home is compelled to offer a commission to a buyer agent who brings a buyer to their home.
Illegal conspiracy that compels a seller to offer money to a buyer agent essentially. Now, we only have a few comments about this. First of all, this is still America and at least as far as this editor’s concerned, no homeowner is compelled to list their home with an agent. It is completely permissible to sell your home without an agent. Whether you want to pay a listing agent or a buyer agent is totally up to you. In fact, we’re fairly certain that every seller even today can choose not to pay the buyer agent what the recommended commission split is.
It’s true, they may not have a lot of buyer’s agents bring in their buyers, but you know what? It’s still their choice as to whether to pay a listing agent or a buyer agent, how much they pay them or whether they use them at all. But let’s take the argument on the other side for a minute and say let’s blow this whole thing up and let’s make buyers pay their own agents. If that’s what this action really is about, first of all, that’s not what it’s about at all.
It has nothing to do with wanting to “fix a system,” it’s about extorting money from a very large industry that by all of our consumer studies does a pretty good job delivering very acceptable service to both buyers and sellers. We’ve reported numerous times before our Harris Study of last summer, over 90% of all buyers or sellers chose to use an use an agent and the great majority of those people believe that being paid a commission at closing is a fair way to pay agents. Well, more on that later. Let’s come back to the central thesis.
If this is really a bad, bad system where buyers aren’t paying their agents out of their own pockets, then let’s address that. Let’s assume that it’s not just an attempt by half a dozen plaintiffs’ bar attorneys to extort money from our industry. We now have 35% or so of all home buyers are first-time home buyers. The main reason they’re constrained from buying homes is the cash they need for closing. Let’s saddle them up with another $2,000, $3,000, $4,000, $5,000, $6,000 or more in buyer agent fees and let’s see what happens to the home ownership rate of young families.
Number two, let’s move up the ladder and we got people who are trying to move up. What’s going to happen to them? They got to pay a listing commission on one side and then a buyer’s commission on the other side and somehow coordinate all that even though it may not be the same agent. Ladies and gentlemen this has nothing to do with fixing a broken system, this has something to do with law firms who are trying to exploit their knowledge of law to intimate to a judge or a jury that this is wrong and it’s illegal and it’s a conspiracy and it harms consumers.
All of that’s wrong. Not just wrong, but dead wrong. More on that later.
Assault On Our Industry
Lastly, the continued to assault on our industry and our reaction to it. Well, if you read my post on LinkedIn last week or heard my podcast about the editorial on the Wall Street Journal from the leadership of technology based brokerage called REX, then to wake up today and hear about another firm coming out of Texas with offices, various places called top offer, who says, “oh no, we ought to have both agents pay their own and sellers shouldn’t have to fix up their homes.”
“And by the way, we’re really good at marketing and we think we can raise a lot of money and somebody will give us money to try to push this and if it works great, and if it doesn’t, well that’s okay too.” Ladies and gentlemen, here’s the bottom line on this and you’ll hear it more from us in the future. We cannot defeat Wall Street and Silicon Valley throwing tens of millions and billions of dollars at real estate technology firms to try to disrupt the relationship between agents and brokers. You can’t beat them at their own game. Don’t even try.
The major fundamental thing men and women who were leaders in this industry need to focus on is go back to the very beginning, 40-50 years ago when how brokerages got built was not with technology, not with great marketing, not with great offices, but with great leadership, great managers who took care of their agents, who were involved in their businesses, who were there for them when they needed it. That’s all we have left to offer that uniquely ours. Keep that in mind please at all times.
And by the way, if you want to hear a lot more about that, then do plan to come to Denver, Colorado, May 15-17 for the Gathering of Eagles because we will have the Compasses and the iBuyers and others there, their leaders to really talk about and answer questions about what they’re up to and together with the two greatest leadership coaches in the country or among the best, Larry Kendall and Mike Staver.
You’re going to finally get answers as to how to go forward. Learn more about industry trends, marketing and technology strategies as well as listen to past REAL Trending episodes on our website, realtrends.com/blog. This has been Steve Murray, till next time.