News

 Aricle Courtesy of: RIS Media
By: Jordan Grice
July 3, 2024

Industry leaders and stakeholders are trying to keep their relationship with the DOJ amicable as the August 17 deadline approaches.

The complicated process of ensuring that the real estate industry complies with incoming policy changes is underway, as concerns about loopholes surrounding commission-sharing have already started a discourse among regulators and innovators—potentially, an amicable one.  The ongoing dialogue was highlighted by a recent meeting between the National Association of REALTORS® (NAR) and the U.S. Department of Justice (DOJ) to discuss incoming policy changes and DOJ concerns regarding implementing and adhering to settlement provisions set to take effect on August 17. 

In a memo to members obtained by RISMedia, NAR President Kevin Sears claimed that the meeting was a big step in having “a meaningful dialogue” with the DOJ. 
“While there is much more work to be done, the meeting was productive as we try to find ‘common ground’ on topics that define how we do business and support the dream of homeownership in America,” he wrote. 

Sears states that DOJ officials raised concerns regarding industry participants using potential avenues to “circumvent” the coming practice changes.   “To be clear: NAR—and I personally—oppose any attempts to circumvent the settlement,” Sears wrote. “The practice changes should be implemented fully and in good faith, in the service of promoting consumer empowerment, consumer choice and healthy competition.”

Among the changes is the elimination of buyer broker compensation offers on multiple listing services, which has spurred innovation among industry professionals trying to bridge the communication gap between the buy and sell sides of the transaction.  

While the DOJ’s scrutiny of shifting policies and industry adherence hasn’t branched into this growing sector of companies, it has already begun spurring discussions among them.

Dan Cooper is the founder and CEO of Gitcha, a consumer-facing platform allowing buyers and their agents to publicize what they want in a deal.  The crux of the site is for buyers and their agents to be able to be upfront about what they are looking for in a deal, allowing sellers to decide from the beginning who they want to work with.  That can include compensation, but Cooper points out that his platform isn’t meant to be a workaround for industry professionals.  

“This is a standalone product,” Cooper says. “It’s not to circumvent commission sharing, but to proactively communicate what you want to have that you would put in the offer.”

Cooper made similar arguments in a recent social media post expressing dismay for being categorized as a company exploiting a loophole in the settlement. 
“While real estate agents can use Gitcha as an alternative to past practices, and we will continue to innovate to help them with all the upcoming changes in the industry, it was not built to circumvent anything,” Cooper wrote. 

His post went on to state that the platform is designed to be integrated as a workflow for agents, not a workaround.   “We are also a consumer-facing site, where consumers get to see the postings by agents. We aren’t an agent-only, secret society of commission sharing, and our product wasn’t created because of the settlement or the lawsuits,” Cooper wrote.

Steven Hattan, co-founder of ListingSplit, echoed similar sentiments. His consumer-facing platform is the polar opposite of Gitcha, allowing homeowners to publicize the financial incentives they are willing to offer to attract buyers.   

“This is a seller platform, and it has nothing to do with the settlement,” Hattan says. “It has nothing to do with NAR and the structure of the platform, and it has nothing to do with listing agents.  “We are strictly a site for sellers as if you were for sale by the owner, and you wanted to advertise your house on ForSaleByOwner.com,” he adds.  “You can mention your bedrooms, you can mention bathrooms, you can even mention that you want to offer a commission to a buyer’s agent.”

What to watch for

While both Hattan and Cooper are confident that their respective platforms uphold incoming rule changes, both tell RISMedia that they are open to feedback and willing to adapt if that were to change.

Hattan says, “If the Department of Justice approached me and said, ‘Steve, listen, we’ve got some problems with what you were doing,’ my response would be, ‘Let’s go sit down and have a cup of coffee, and let’s figure out where our discrepancies are and let’s try to fix this because we both have so many things in common.’ We want transparency; we want competition…there does not have to be an us and them. We can work together and make this work beautifully.”

Sears’ memo also states that the Justice Department is monitoring buyer representation contract drafts and revisions, encouraging members to “evaluate them for clarity and emphasis on consumer choice.” 

That clarity, or lack thereof, was a central issue in recent tensions between the California Association of REALTORS® (CAR) and the Consumer Federation of America (CFA).   In a recent press release, the latter entity heavily criticized CAR’s draft of a buyer agent agreement and commissioned a report that called the form “unreadable” and “anti-consumer.” 

“The concern that DOJ has and CFA shares is that the litigation settlement provides opportunities for the industry to avoid uncoupling the rates,” says CFA Senior Fellow Steven Brobeck.   Brobeck tells RISMedia that if the rates are coupled, that could open the door for collusion among agents on both sides of the transaction to influence consumers to pay more in commissions, which has been the crux of past and present litigation facing the real estate industry and its largest brands. 

With that in mind, NextHome CEO James Dwiggins tells RISMedia that attempts to include commission sharing in listing agreements in the new age of industry rules will open the door for further litigation and damage to the industry. 

“This is not that hard to understand,” he says. “If we just move that same practice off the MLS and onto standardized forms that everyone is using—developed by a committee of competing brokerages—the lawyers will come back for round two.  “They’ll sue everyone again on the same basis only using standardized forms this time—whether justified or not, and we’ll end up right back in court,” Dwiggins continues.  “We’ll all end up settling again or spending a fortune defending the claims, hurting our reputation further, and paying the lawyers hundreds of millions more.”

Given the current “consumer-centric model” in the industry today, Dwiggins notes that sellers no longer need to advertise buyer incentives.
Instead, he says listing agents need to state that their clients are “willing to entertain any requests for offers of compensation or concessions” in the purchase agreement. 

He also encourages buyer agents to put their requests in the purchase agreement.  “It can be that the seller pays your compensation so it can be financed and doesn’t affect IPC, or you can request a concession toward buyers’ closing costs—or both,” Dwiggins says. “The buyer then uses those concessions to pay closing costs—whatever they might be. It’s a negotiation, which is literally what we do every day.

“All the rest of this workaround stuff everyone keeps trying to figure out is going to end up in more lawsuits,” he continues. “The DOJ does not want this, and while I disagree with almost everything the DOJ is doing, again, we need to be skating to where the puck is going, and not where it is.”

Article courtesy of: Inman News
By: Jim Dalrymple II


NAR's landmark settlement bars sellers' agents from offering commissions to buyers' agents in the MLS. A batch of new companies are stepping in to fill the void

When the National Association of Realtors announced its landmark commission settlement earlier this year, it raised one huge question: How will buyers’ agents get paid?

The question arose because, among other things, the settlement stipulates that sellers’ agents will no longer be able to offer commissions to buyers’ agents within NAR-affiliated multiple listing services — which is how much of the industry had been operating. Now, more than three months later, the answer to that question remains unclear. Some have speculated that without offers of compensation in MLSs, concessions might be the answer. Others have floated the possibility of cultural changes, such as the expansion of dual agency.

But during a recent virtual open house, Keller Williams Head of Industry and Learning Jason Abrams argued that really, the sky’s the limit for commissions.

“Sellers can still decide to specifically offer cooperative compensation, and it can be marketed any place other than the MLS,” Abrams said. “This could include things like newsletters and text messages and carrier pigeons. Or a broker or agent’s own website.”

Carrier pigeons might be a stretch. But in recent months a host of industry professionals have apparently come to the same conclusion — and stepped in to fill a void.

Specifically, a collection of companies have emerged to offer what the MLS no longer can: Online locations for agents and consumers to share their offers of compensation.

The sites represent a particular philosophical understanding of real estate’s future. They’re an argument, essentially, that buyers’ brokers will still be paid by sellers and that compensation offers will still appear online. 

Neither of those assumptions are foregone conclusions, but the people behind these offerings are forging ahead with the hope that consumers and industry members will see something they like — and that government regulators won’t get in the way.  In other words, buyer beware.

Verified Commissions

Verified Commissions launched last month. The company described itself in a statement as “an open-source platform for agents to share offers of compensation,” with the goal to become the “largest database for verified offers of compensation to buyers’ agents.” The site is free and allows users to search listings by address to see if those listings have compensation offers attached.

In a conversation with Inman, William Schoeffler — who is part of Verified Commissions’ design team — said the company is building a database by sending out about 10,000 emails daily to listing agents asking them to register with the site.

“Basically we want to grow awareness and build out the number of listing agents that are using our platform, so that over time we can become the go-to platform,” he added.

CEO Cody Tuma told Inman that demand for the offering has been strong so far, and noted that as the August deadline for implementing the NAR settlement rules nears more agents are likely to be looking for a solution like Verified Commissions.

“All these agents, their phones are just gonna start lighting up and they’re just gonna be like, ‘Oh my gosh, there has got to be a better solution for this,'” Tuma said. “And there already is.”

 Listing Split

Listing Split is the product of Steven Hattan, a long-time real estate broker, and Ed Ellingham, a software developer. The site went live last week. Unlike Verified Commissions — which markets itself as a tool for agents to use in the wake of the NAR settlement — Listing Split is geared toward consumers themselves.

“Sellers are at a disadvantage if they can’t offer a finders fee,” Hattan told Inman, adding that “our focus is completely on the homeowner; it’s completely on the seller.”

The site includes pages where sellers can offer commissions, as well as where buyers can search listings by address for “incentives” homeowners are providing. It also includes a page that aims to help Realtors introduce the site to their clients, though Hattan noted that Listing Split is “not for agents to use” directly.

The company charges users a one-time fee of $19.

 Nesthook

Nesthook was the first company to garner significant attention as a kind of commission-sharing workaround and advertises itself on its website as a “compliant commission disclosure for real estate pros.” The orientation to industry members, rather than consumers, puts it in a category closer to Verified Commissions than Listing Split — though like both rivals it, too, includes an address-based search bar.

Speaking to Inman earlier this month, President Ryan Kelley characterized Nesthook as a direct response to the NAR settlement, adding that he believes the company complies with the new rules.

“I understand that changes could still happen [and] it’s all very unclear, and none of us really know, but we’re confident with what we built, [and that it] is something we’re going to move forward with now,” Kelley said.

Nesthook offers two pricing plans: Either $3.99 per month, or $39.99 for an entire year.

Gitcha

Gitcha markets itself as the “first ‘in search of’ marketplace,” meaning it’s a space for buyers and their agents to publicize what exactly they’re looking for in a deal.  Founder Dan Cooper recently told Inman that the project was in the works for years, though the site does now reference the NAR settlement — the timing of which Cooper said was serendipitous. The general idea is that would-be buyers share what they need, including, but not exclusively, broker compensation. Homeowners can then more easily find the right people to buy their homes.

For consumers, Gitcha offers a free “lite” version, as well as a paid tier costing $13 per month. Consumers who sign up are given the chance to either create a “want ad” detailing what they’re looking for in a property, or to add a home they already own to their “inventory,” which can let them gauge demand.

Real estate professionals can sign up for Gitcha as either brokers, property managers or both. Industry members also have access to a free version of the site, as well as a paid version that costs $12 per month.

Unlike other offerings on this list, Gitcha is unique for including rentals on its site.

Payload

Payload is the odd company out on this list because it isn’t a website for posting commission sharing offers. Instead, the company — a secure transaction payment provider that has been around for years — is now offering invoicing tools for agents to collect fees directly from consumers.

The tools are among numerous offerings the company provides, but represent a kind of theoretical alternative to the sites above; instead of envisioning a world in which commission offers still appear online, Payload imagines one in which agents bill their clients directly. It’s still a kind of workaround, but one of a different flavor.

In a recent statement, the company nodded to the NAR settlement as the impetus behind the new tools.

“The industry is poised for a shift towards increased transparency and direct financial dealings, highlighted by the anticipated use of buyer agency agreements,” the company said in its release. “This shift is likely to see a reduction in standard commission rates, with agents and brokers exploring alternative fee structures, such as buyer retainer fees, hourly fees, showing fees and other service fees.”

 Will any of these solutions actually work?

The big question looming over all of these workarounds is if they’ll survive the tumultuous and highly uncertain legal obstacle course that lies ahead. Attorneys Inman contacted for this story were reluctant to speak on the record, citing the ongoing nature of various lawsuits, though several did agree to talk on background. The gist from those conversations is that third-party sites with no relationship to MLSs do not appear to violate the terms of NAR’s settlement.

However, there are caveats.
For instance, in addition to barring commission offers in the MLS, the settlement also disallows such offers on sites supported by MLS data, either “directly or indirectly.” What this means in practice is that a portal that licenses MLS data, for example, could not step in and create a space for agents to make shared commission offers.

The above sites currently offering workarounds aren’t doing that. On the other hand, there is some ambiguity in language such as “indirectly,” meaning it’s conceivable that commission-sharing sites could eventually cross a line that has not yet become clear.

A bigger caveat, though, is what the Department of Justice might think of such workarounds. The department has indicated that it does not want sellers making preemptive offers of compensation to buyers’ agents. Instead, the DOJ wants buyers’ agents to negotiate directly with their clients for compensation.

The DOJ hasn’t yet weighed in on third-party commission-sharing sites, probably because such sites are still relatively new, but one attorney said the concept generally does seem to be at odds with the department’s overarching objectives and could eventually lead to some sort of litigation.

Or not. One of the primary reasons lawyers contacted for this story were reluctant to publicly speak out is because the future of commission workaround solutions is highly speculative and involves numerous unknown variables. Meanwhile, predictions abound that the DOJ will become more assertive, and back in February NAR President Kevin Sears suggested the agency could be a “bigger problem” for brokers and agents than the settlement itself.

Against that backdrop, debate about the issue has raged in online forums and message boards. Inman reached out to a handful of agents who have weighed in, though none of those who were strongly in favor of various commission workarounds called back. On the other end of the spectrum, though, Indiana team leader Patrick Harris, of the Harton Group, did tell Inman that commission-sharing websites are “an attempt to hold on to a past that no longer exists, and [according to] the settlement and by the DOJ, it can’t exist anymore.”

“People need to stop trying to find loopholes and just move forward,” he argued.

Harris’ sentiment is far from universal but does capture a viewpoint that many share — and which could complicate the rollout of any particular commission-sharing workaround.

The analog solution

Tech may ultimately be the answer to questions about how agents will get paid — or, communicate about pay — in the future. But in a case study of how other solutions still abound, Tracey Hicks has pivoted in an entirely different direction: analog.

Hicks is the owner of All Things Real Estate, a store that offers supplies to agents. She recently told Inman that soon after the NAR settlement, a member of the real estate community reached out to ask if Hicks had any resources. So she made some.

The result is a sign now available through Hicks’ store that reads “courtesy to buyer brokers!” It can be affixed to an agent’s normal yard sign, and Hicks said the idea is to use language agents are familiar with and to let them know there is a commission on offer.

Whether the sign catches on remains to be seen, and asked about commission solutions, Hicks herself said that “there’s going to be quite a few different ways of handling it.” But she also said that eventually the questions will be answered. People will keep buying and selling houses. The real estate industry will move forward.

“Like most things,” Hicks concluded, “the dust will settle.”

Once again, a new sales tax on homes and commercial property is being debated on Beacon Hill.  This time, the State Senate is considering real estate transfer taxes as part of its version of the housing bond bill, and we need your help in sending a message to senators urging them to oppose a provision allowing cities and towns to create a transfer tax.  If you haven’t acted yet, please take the time now to join in the Legislative Call-For-Action issued last week by the Greater Boston Real Estate Board.  
 
As we’ve noted, transfer taxes are not a solution to the housing crisis. Instead, they would add to the already high cost of housing home buyers face in Greater Boston, strip equity from home sellers, and worsen our already severe housing shortage by discouraging older homeowners from selling and acting as a disincentive to investments in new housing production.  
 
Significantly, GBREB, the Massachusetts Association of REALTORS®, and other industry groups have worked together to successfully keep transfer tax language out of the housing bond bill reported out by the Massachusetts House of Representatives.  Now, we need to convince the Massachusetts Senate to do the same.   
 
To learn more about the negative impact transfer taxes would have on the local housing market and economy, visit our StopNewTaxesMA campaign website.  To join the effort in urging the Senate to reject transfer taxes in the housing bond bill, simply respond to the Call-For-Action today as the Senate debates the legislation.  In doing so, a pre-drafted letter outlining industry position to transfer taxes will be sent to your state senator.   
   

Article Courtesy of: Inman News
By: Jonathan Pressman

Want some fast, simple ideas for powering your marketing through a summer slowdown and pumping up the volume on your pipeline? Agent Johnathon Pressman has you covered

If you’re like most real estate agents, you’re a regular social media user. You post a couple of photos when you have a new listing, then again when you sell a property. There’s nothing wrong with that, but if you want to make the most of your social media pages, you need to engage your audience and post regularly consistently.

Here are nine ideas you can use to create endless content that can help you connect with your audience, build your brand and grow your business.

1. Reintroduce yourself

Believe it or not, there are people in your natural market who don’t know what you do, no matter how many times you announce it to the world.

Some people might forget, and others might just misunderstand what you do or where you do it. Take the opportunity to introduce yourself and share what you do as an agent, including the types of properties you specialize in and the geographic areas you serve. 

2. Give a home tour

You’re used to giving in-person home tours to clients, so why not bring the tour to them on their social media pages? Let your audience see a home from your perspective. Point out things you notice, and give your viewers an idea of what they should look out for when they’re touring a house.

If you’re hosting an open house, take advantage of the downtime to go live and show people around in real-time. 

3. Talk about home styles and systems

Don’t wait until you have a listing to talk about the features and systems of a house. If you’re walking down the street and see a beautiful home or an unusual architectural design, show it to your followers.

If you’re traveling, point out some differences between the styles of houses in your local market and the houses elsewhere. The more time you spend in real estate, the more you learn — and your followers value (and are interested in) that knowledge.

So get in front of the camera and explain the differences between radiant heat systems and forced air, show them what an oil tank looks like, or give a quick tip on how to spot knob-and-tube wiring. 

4. Highlight a local business

Engaging with the local community is always a great idea, so the next time you’re out shopping, highlight a local business on your social media pages. Introducing your followers to your favorite restaurant or retailer is a win-win that can help you engage with your audience and promote local businesses.

5. Repost or repurpose old content

Sometimes, you’re just fresh out of ideas. This is the perfect time to repost or repurpose old content. If you’ve been posting regularly and gained new followers, they might not have seen some of your older content. Take the opportunity to repost something you shared several months ago, or if you prefer, you can simply repurpose old content with a new spin. In the worst case, you can even repost someone else’s content.

6. Share your thoughts on the state of the market

Everyone wants to know what’s happening in the market, and who better to tell them than you? You can share data from a market report or just tell your audience what you think about the market and trends you’ve noticed.

Pro tip: Check your local MLS for free housing market statistics and graphs.

7. Share ideas for home decor

Homeowners are often looking for decor ideas, and while you’re (probably) not an interior designer, you can still share ideas for inspiration.

If you follow an architect or interior designer on social media, repost some of their content and tell your audience why you love it.

If you’re at a friend’s house and love the way they’ve furnished their guest bedroom, share it with your followers. 

8. Offer homeowner tips

Everyone wants to save money, and your listing prospects will appreciate you sharing valuable tips on how they can cut back on the costs of homeownership.

You can remind homeowners of the homestead exemption a few weeks before the filing deadline (this varies by location and is often between February and May), share tips for reducing electricity costs in the summer and winter months, or talk about which upgrades tend to have the highest ROI. 

9. Team up with another real estate professional

As you know, buying, selling and maintaining a home can take a small army. In addition to real estate agents, there are mortgage lenders, title agents, attorneys, inspectors, appraisers, surveyors, photographers, stagers and more.

Your social media content doesn’t always have to be a solo performance. Try teaming up with another professional to offer your audience the valuable perspective of someone they might work with on their next transaction. Not only is this a great way to vary your content, but it’ll also help you build relationships and extend your reach to your guest’s audience.
One of the founding partners of the real estate team I work with has a saying: “Your clients have to buy into you before they buy a home.” Don’t forget to be your most authentic self.

Most of us rely on our natural market to generate business, yet we often run our social media pages like we’re targeting strangers. Sometimes, the posts with the highest engagement have nothing to do with real estate but everything to do with you as an individual. So, live your life and give your audience a glimpse of who you are, not just what you do for work. 

Jonathan Pressman is a Realtor who writes on a wide range of financial topics.

Have you heard the news? 
  
The National Association of REALTORS® annual convention is coming to Boston this fall! 
  
If you’ve never attended an NAR conference, we invite you to attend our informational webinar on Friday, June 21, from 10-11 a.m. During the session, we will provide an inside look at the program for the 2024 NAR NXT Conference & Expo taking place from November 8-10 at the Boston Convention & Exposition Center and Seaport District hotels.
  
On this webinar, two national REALTOR® leaders – NAR New England Region VP Steve Medeiros and NAR Member Services Liaison Gary Rogers – will share their insights and tips for navigating the conference schedule and maximizing your time to get the most out of the NAR NXT experience.

As one of the real estate industry’s premiere annual events, NAR NXT offers numerous opportunities to learn, network, and expand your business at daily education sessions, member forums, governance meetings, and special tours and field experiences. It also features one of the largest industry trade shows and this year includes several special events, including a General Session with Baseball Hall of Famer David Ortiz. 
  
At our NAR NXT Info Session on June 21 you’ll get an inside look as to the can’t miss sessions for first-time attendees, the best activities to participate in to build your referral network, and special opportunities to save on the conference registration and take home prizes. There’ll also be a Q&A segment, so prepare your questions and sign-up today to join us as we get you ready for the 2024 NAR NXT Conference & Expo in Boston.

Watch the full webinar replay here!

Article Courtesy of: Inman News
By: Andrea Brambila

MLS PIN on Monday urged a district court to reject the Department of Justice's arguments against a settlement with homeseller plaintiffs in the Nosalek antitrust commission case

A large broker-owned multiple listing service is pushing back against the Department of Justice’s take on a proposed settlement seeking to resolve antitrust claims lodged by homesellers in a major commission case known as Nosalek.

On Monday, MLS Property Information Network (MLS PIN) urged Judge Patti B. Saris of the U.S. District Court for the District of Massachusetts to reject the DOJ’s arguments against the settlement and approve the deal, saying that the federal agency’s proposed “total ban” on commission offers from sellers to buyer brokers — both on and off the MLS — itself violates antitrust law and the First Amendment’s free speech provision.

“DOJ’s policy position not only goes far beyond what antitrust law requires; it also creates an antitrust problem for MLS PIN where none existed,” attorneys for MLS PIN wrote in the June 10 response to the DOJ’s statement of interest.

“MLS PIN cannot enter into an agreement to ban the publication of free-market compensation offers without offending the very antitrust principles DOJ claims to be protecting. To impose such a ban through a federal injunction would also suppress speech that is protected under the First Amendment.”

MLS PIN points out that the DOJ is not saying that sellers should not pay buyer brokers, since the antitrust enforcer has explicitly said that buyers can ask sellers to pay buyer brokers in their purchase offers, but rather that pre-emptive offers to pay should be restricted.
“DOJ never denies that sellers have the right to compensate buyer brokers; it only advocates arbitrary restraints on the communication of compensation offers,” the filing says.

“But the payment of buyer-broker commissions has long been legal under Massachusetts and federal law. This proposal to ban truthful and non-misleading speech made in furtherance of a lawful activity runs headlong into a string of Supreme Court cases recognizing that such bans cannot survive First Amendment scrutiny.”

For MLS PIN to ban homesellers from offering compensation to buyer brokers would be “a blatant restraint on trade much more severe than other MLS rules that have been struck down as anticompetitive,” the filing adds.

MLS PIN also argues that the DOJ has other avenues to change how commissions are paid should it choose to.

“Crucially, nothing in the proposed settlement between Plaintiffs and MLS PIN would limit DOJ’s ability to pursue changes to real estate market practices, in Massachusetts or anywhere else, through legislative advocacy or administrative rulemaking,” the filing says.

“Indeed, the entirety of DOJ’s Statement sounds in the realm of policy and should be addressed to those bodies responsible for crafting statutes and regulations: namely, Congress or the Federal Trade Commission.”

MLS PIN pointed out that the Biden Administration has already directed the FTC, which shares responsibility over antitrust with the DOJ, to exercise its rule-making authority “in areas such as … unfair occupational licensing restrictions; unfair tying practices or exclusionary practices in the brokerage or listing of real estate; and any other unfair industry-specific practices that substantially inhibit competition.”

According to MLS PIN, the FTC “is the appropriate forum for resolving the policy concerns.”

Like federal commission suits Moehrl and Sitzer | Burnett, Nosalek seeks class-action status and alleges that the sharing of commissions between listing and buyer brokers inflates seller costs and is a conspiracy in restraint of trade, a violation of the Sherman Antitrust Act.

However, Nosalek differs in one important respect from the other suits: The National Association of Realtors is not named as a defendant, while MLS PIN is. The MLS, which has a full-time staff of 60 employees, boasts approximately 46,000 subscribers in six New England states and New York.

The settlement class is made up of sellers who paid, or on whose behalf sellers’ brokers paid, buyer broker commissions starting Dec. 17, 2016, in connection with the sale of residential real estate listed on Pinergy, MLS PIN’s multiple listing service system.

If Judge Saris chooses to deny final approval to the settlement with MLS PIN, the case against the MLS will continue unless and until another settlement deal is reached and finalized.

Under the current proposed settlement, MLS PIN would remove a requirement that homesellers must offer compensation to buyer brokers; would require listing brokers to notify sellers that they’re not required to offer compensation to buyer brokers and that they can decline if a buyer broker requests compensation; and would clarify that if the seller makes an offer to a buyer broker and the buyer makes a counteroffer, commissions would be negotiated among the seller, the buyer, the seller broker and the buyer broker.

“MLS PIN maintains that these three additional changes — (1) no required offer of compensation, (2) mandatory disclosure, and (3) mandatory certification — are unnecessary,” the filing says.

“But they undeniably address MLS PIN’s alleged role in the conspiracy as a mere conduit between buyers and sellers. These changes fully resolve the disputed antitrust conspiracy claim presented in this litigation.”

However, in its statement of interest, the DOJ rejected the rule changes in the settlement and instead called for “an injunction that would prohibit sellers from making commission offers to buyer brokers at all,” which the agency said would promote competition and innovation between buyer-brokers because buyers would be empowered to negotiate directly with their own brokers.

But MLS PIN emphasizes that the DOJ’s own policy statements have previously said that sellers may offer compensation to buyer brokers “up-front” on MLSs and that doing so can reduce transaction costs because listing brokers don’t have to negotiate separately with each potential buyer broker.

“It is simply not the case that antitrust law requires an MLS to affirmatively prohibit sellers from offering compensation to buyer brokers,” the filing says [emphasis in original].

“Yet DOJ’s core position here is that any proposed settlement must do exactly that to be fair and reasonable. DOJ ignores that scores of federal cases have already confirmed the legitimacy of the practice it now seeks to prohibit.

“So too have state laws, federal statutes and regulations, and the DOJ’s own prior policy positions. DOJ provides no on-point authorities to the contrary.”

Moreover, MLS PIN contends that “an evaluation of the proposed class settlement does not require a mini-trial on fiercely disputed antitrust issues,” but rather whether the deal is “fair and reasonable to the class members.”

“DOJ focuses entirely on the question of whether the proposed settlement would allow the alleged anticompetitive conduct to continue,” the filing says. “But this is exactly the kind of question the Court need not entertain in evaluating a proposed antitrust settlement.”

The DOJ declined to comment for this story. A joint statement from the DOJ, the plaintiffs and MLS PIN regarding the settlement is due to the court on June 21.

Article Courtesy of: Inman News
By: Carl Medford 

Expressing your value to clients begins with knowing yourself, writes mega-team leader Carl Medford. You cannot articulate what you have never taken the time to determine on your own

As the fallout continues from the landmark commission lawsuit, real estate agents across the country are assessing the damage and pondering the way forward. At the heart of the issue is the decoupling of commissions and the inability, as outlined in the National Association of Realtors settlement, for listing agents to display buyer agent compensation on MLS platforms, scheduled to take effect by August 17, 2024.

Additionally, buyer agents will now be required to use a buyer broker agreement to delineate their relationship with their clients and specify how their fee will be paid.

As a result, we are currently experiencing chaos, which is producing a growing uncertainty as to how buyer agents will be compensated for their efforts, if at all. “If commissions will be decoupled going forward,” some reason, “then buyers may be expected to begin compensating their agents. With little or no precedent for this in many markets across the country, how will buyer agents convince their clients to pay a full-service commission or fee?”

We are already beginning to see pushback from buyers as many are already straining to come up with down payments and closing costs. The thought of adding an additional fee might literally “break the bank” for many. 

To clarify, there is no such thing as a “full-service” commission. In sharp contrast to the allegations against NAR of “price-fixing,” commissions have always been negotiable and that fact will not change going forward. Additionally, the level of service provided has always varied from agent to agent, company to company, region to region and is also affected by the type of home being purchased, price point and so much more.

I think the real question here is, “What will buyer agents do going forward to ensure that, under the new rules, they still have the ability to earn a living?” 

My answer here is divided into two segments. First of all, I think there is going to be some short-term confusion as sellers, listening to the fake news pounding the airwaves, believe they no longer need to provide any financial incentives to the buyer’s side of the equation in order to sell their home. I think this is going to be short-lived as market pressures, especially in declining markets, will reveal the short-sightedness of this approach.  

Second, I believe we will see a return to buyer agent compensation that will very closely match what existed prior to the NAR settlement but will be packaged differently thanks to the impending decoupling rules. 

REAL Prsident Sharran Srivatsaa, in a video response to the NAR settlement, provides a great perspective. Using a trip from his home in Laguna Beach to Los Angeles as an example, he explains that the shortest route would take approximately 69 minutes. That is not the only way to get there, however, he points out, adding there are additional routes which will still get you to LA, but will involve a few more steps and take a bit longer.

He emphasizes that regardless of which route you take, the goal is always the same: get from Laguna Beach to LA. As for your role as a Realtor? “You are going to help a consumer buy or sell a house. The result is exactly the same. There are two routes: a route that you are used to and a route that you are not used to.” He continues, “And the new route probably takes a few minutes longer.” 

As a result, to prepare for the impending changes, here are 12 recommended steps Realtors representing buyers should take to effectively manage the path forward. 

1. Get skilled up 

I many cases, buyer agents’ existing toolboxes do not have the tools required to handle the emerging changes. Successful agents will be those who have the ability to fully explain the emerging landscape, have the new procedures and forms dialed in and are seriously trained negotiators.

All of this requires training to enhance agents’ skills. As an example, most real estate agents I know claim to be great negotiators. How many of them, however, have attended negotiation training events, taken protracted negotiations classes, earned a negotiation certification or have at least read outstanding books like Never Split the Difference by Chris Voss?

2. Develop a value proposition

At its most basic, “a value proposition is a simple statement that summarizes why a customer would choose your product or service. It communicates the clearest benefit that customers receive by giving you their business” and has four key components:

1. A focus on needs: Start by identifying the core issues potential clients will face when buying or selling a home.
2. A clear and specific roadmap: Follow up by identifying how your services will address your client’s anticipated issues.
3. A list of benefits: Continue by explaining how your services are unique and how you will save your clients time, effort and money.
4. A risk-free commitment: Conclude with specific ways your clients are protected when working with you. Examples could include an “easy out” policy whereby they can cancel their representation agreement or a guarantee to resell their home for free within a specific period of time if they are unhappy with their purchase.

A value proposition is not a vanity list of how great you are in comparison to others but, rather, a summary of specific things you will do to meet a client’s perceived needs. Everything else you do should be built upon this. 

3. Develop a mandatory buyer consultation and presentation that rocks

Successful agents have always had stellar listing presentations. Given the new guidelines, a buyer presentation is going to be critical as well. Sharran Srivatsaa again provides some clarification by reminding us of his cardinal rule of real estate.

He states. “We have a seller and we have a buyer. A seller has a house and a buyer is looking for a house. It is our job as the agents to facilitate that.” He emphasizes, “Don’t overthink this. Your job in a living room on a listing appointment is not to talk about marketing — your job is to talk about finding a buyer.”

He further explains, “Your job with a buyer is not to talk about loyalty or the buyer-broker agreement. It is not to talk about how great you are and how many sides you have represented. Your job is to talk about how they can get the home they want at a price they want and the terms that they want.”

He goes on to state that, to develop a buyer presentation, we should 10x the amount of time and effort we put into developing our listing presentation.  Our presentations should provide a clear roadmap to success so potential buyer clients understand how you will help them accomplish their dreams. To facilitate this, an effective buyer consultation should be mandatory. 

4. Learn to tell stories

People quickly tire of facts and figures but will listen to captivating stories for hours. Rather than try to convince buyers how great you might be, provide examples to help them understand how critical competent representation is. Here are a couple of examples: 

No. 1: Recently, our team had a home listed for $1,650,000. We had set an offer deadline and as the time approached, we had no offers. At the last minute, an offer hit our inboxes. Excitedly, we opened the email and discovered a fully non-contingent contract for $1,900,000.

The buyer’s agent, a recently licensed individual working for a discount brokerage, had not contacted us, had not asked if any other offers had been submitted, had not asked about the seller’s desires … nothing. Had they called, it is quite possible they could have negotiated a contract for less than the list price.

Instead, their incompetence as a buyer’s agent, inaccurate assumptions about the market and subsequent failure to act as their client’s fiduciary unnecessarily cost their clients a quarter of a million dollars. 

No. 2: Our team listed a home for a couple looking to downsize. We quickly secured a buyer for their home and then got them into contract on the home of their dreams in a nearby city.

As time progressed, the husband began to exhibit anxiety. I received a call one day from the wife, who explained, “A number of years ago, my husband — due to an extremely stressful situation — had a massive anxiety attack that led to a depression that lasted three years. During this time, his depression was so significant that he was under constant medical attention and literally could not work. Apparently, the sale of our home has retriggered the symptoms of anxiety and I am concerned we may end up going through another bout of depression.”

Although the transactions would have provided two large commissions to our real estate team, we put the needs of our clients ahead of our own and counseled them to cancel both transactions. Needless to say, the other two Realtors involved were less than happy, but we successfully negotiated on behalf of our clients and got them out of both transactions with no financial penalties. 

Bottom line? Experience matters. 

5. Explain how agency works

There is a significant amount of confusion out there as to what agency is, how it is established, and how it is compensated. Many agents assume that since a buyer visited their open house or they showed a person any given property, they are now the agent with procuring cause. Au contraire. Here are the definitions from NAR (National Association of Realtors):

The seller’s representative (also known as a listing agent or seller’s agent) is hired by and represents the seller. All fiduciary duties are owed to the seller, meaning this person’s job is to get the best price and terms for the seller. The agency relationship usually is created by a signed listing contract.

The buyer’s representative (also known as a buyer’s agent) is hired by prospective buyers to and works in the buyer’s best interest throughout the transaction. The buyer can pay the agent directly through a negotiated fee, or the buyer’s rep may be paid by the seller or through a commission split with the seller’s agent.

A subagent owes the same fiduciary duties to the agent’s customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. The subagent works with the buyer to show the property but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer customer can expect to be treated honestly by the subagent.

A disclosed dual agent represents both the buyer and the seller in the same real estate transaction. In such relationships, dual agents owe limited fiduciary duties to both buyer and seller clients. Because of the potential for conflicts of interest in a dual-agency relationship, all parties must give their informed consent. Disclosed dual agency is legal in most states, but often requires written consent from all parties.

If you expect to establish meaningful client relationships that lead to a paycheck, you need to fully understand agency and be able to clearly articulate it to clients so they fully understand the nature and implications of the various relationships. 

6. Explain how representation works

When a party is represented, compensation is warranted. This simple fact is what secures a fee in a real estate transaction. In any given transaction, there are three representative parties: 

1. The seller is represented by the listing agent.
2. The buyer is represented by the buyer agent.
3. The purchase agreement is represented by the closing company (title or escrow company or attorney) to facilitate the contract.

In each of the three scenarios, a fee is earned. I think it is safe to say that Realtors have shot themselves in the foot over the years by stating that we represent buyers for free. Now that commissions will be decoupled, some backtracking is in order so buyers understand that if they are going to be represented in a real estate transaction, a fee is warranted. Once they grasp this fact, then the various options for payment of the fee can be discussed. 

7. Establish a strong relationship with a very good lender  

The recent Fannie Mae and Freddie Mac decision to not count a buyer’s agent commissions as part of their allowable interested party contributions (IPCs) removes what could have been a serious obstacle in the way of a buyer agent securing a fee from their buyer clients. Going forward, it will be critical for buyer agents to partner with lenders who fully understand all of the rules specific to each type of loan program.  

8. Start using the buyer broker agreement now

It is important to understand the difference between a consumer and a client. You provide information to a consumer, but you provide service to a client. The documentation that establishes the difference between the two entities is the buyer broker agreement.

Since a majority of real estate-related information is now in the public domain, it is assumed that information is free. The only means of justifying compensation occurs at the point where you have an officially recognized client relationship (in writing and signed by all parties) that delineates the activities that will be performed that justify a fee.

Although the planned date for the new rules is in July, we recommend you start using your association’s buyer agreement now. Since these forms can typically be filled out in any number of different ways, get the training you need now so you will not be playing catchup once their use becomes law. 

9. Consider charging a retainer fee

Many professionals charge a retainer fee, including attorneys, contractors, some auto mechanics and more. With the real estate landscape shifting, in an effort to increase the professionalism of our industry, retainer fees need to at least become part of the ongoing discussion. The retainer would be paid upfront and then reimbursed through escrow.

If the client decides to back out and not purchase a home, the fee would be retained by the Realtor to compensate for the time already spent on behalf of their client. This practice has been suggested by none other than The Consumer Federation of America, which has also lambasted the current levels of Realtor professionalism given the high percentage of Realtors who are part-time and who do virtually no transactions on an annual basis. 

10. Talk to the listing agent

There is one caveat here: The listing agent needs to answer their phone. With the decoupling of commissions and the emerging inability to put compensation information on the MLS, buyer agents will need to be able to talk to listing agents to get compensation particulars.

Those listing agents who think they can set up a separate website and expect buyer agents to go through a series of hoops to get the information they need will quickly earn the same reputation many REO agents had during the foreclosure crisis, which includes some words that cannot be used in this context. 

Those listing agents who want to help buyer agents succeed will establish some effective communication protocols in order to set the stage for meaningful offers. While it may be hard for some agents to understand the nuances of this, the goal of a listing agent is to do whatever it takes to help facilitate a buyer agent’s success (and yes, this comes under the category of don’t get me started).

In my opinion, any listing agent who consistently fails to answer their phone is in violation of their fiduciary relationship with their seller. Bottom line, to quote Leigh Brown, it’s time for agents to “show up.”

And if you as a listing agent are too busy or too important to field buyer agent queries on how to effectively sell your listing, at least have the courtesy to provide — on the MLS — contact information for someone on your team who has the required answers and who will answer their phone.

11. Have an ongoing dialog with your existing clients

We have a history of doing things behind the scenes to make life easy for our clients. Not only do we need to continue in this vein, but we now need to communicate the intricacies of what we are doing so buyers begin to understand everything we actually do.

A buyer cannot fully appreciate what we do if they are not consistently and methodologically informed. Once they get a glimpse of what you are doing on their behalf, they will be more amenable to writing reviews and providing referrals. 

12. Make getting client reviews a priority

I am amazed at how few agents consider reviews a vital part of their business strategy. Let past clients do some of the heavy lifting for you. Implement a strategic plan for getting reviews for every transaction and, while you are at it, ask for referrals as well. Showcase these reviews in your buyer consultation meeting and provide a list of references.   

We are entering a brave new world where buyer agents will need to be able to delineate their value to their clients in a way that leads to contractual relationships. It begins with knowing your value yourself: you cannot articulate what you have never taken the time to determine on your own. 


Further, GBAR is offering the Accredited Buyer Representative® Designation course at no cost to our members on May 21, 22 and 23. This course differs from NAR's online options by being offered with a local instructor, covering Massachusetts-specific info, and offers 10 CE credits. We also hosting our Budiling Bridges, Not Barriers: Strategic Buyer Counseling in Legal Turbulence webinar on June 13, which montiors the ongoing legal actions, settlements & updates relevant to the ongoing antitrust litigation.


Carl Medford is the CEO of The Medford Team.

Article Courtesy of: Inman News
By: JIm Dalrymple II

The National Association of Realtors on Friday, May 3, outlined the various policy changes that will stem from its landmark commission lawsuit settlement, and revealed that those changes will go into effect in August.

NAR broke down all the policy changes in a 57-page document posted to its website. Significantly, the document begins with an executive summary revealing that the changes “were approved by the NAR Leadership Team and will be effective on Aug. 17.”

The August date may surprise some observers; after NAR agreed in March to settle various homeseller-led commission lawsuits, the resulting policy changes the organization promised to make were expected to officially roll out in July.

The new date pushes the deadline back. It’s also the first date that a class notice can go out following preliminary approval of the settlement, which happened on April 24. A hearing to grant the settlement final approval is currently scheduled for November.

NAR’s new document also outlines the specific policy changes that will go into effect. Among other things, those changes prohibit listing agents from making offers of compensation in the MLS to buyers’ agents. The document further notes that MLSs also will have to eliminate the fields in their technology platforms where such offers were made, and states that MLSs also can’t create other mechanisms for their members to make such offers.

The document additionally explains that the new rules “prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives.” Such a rule presumably means a consumer-facing portal, for example, cannot step in and fill the role MLSs once had by displaying offers of buyer agent compensation from sellers or their brokers. Doing so will “result with the MLS terminating the participant’s access to any MLS data and data feeds,” the document adds.

The document also defines the word “cooperation” as it pertains to MLS participation, notes that compensation disclosures will be required between consumers and their agents, and reiterates that buyers will need to have signed agreements with their agents before touring homes.

Though various policy changes stemming from the settlement were already announced and clarified, the new document shows specifically how and where NAR’s governing language has been updated to reflect the changes. Because the document is lengthy, Inman will continue to analyze it and report on additional details in the coming days.

In the meantime, some uncertainty remains. Though NAR has expressed confidence in its settlement — which will also see it pay $418 million — the U.S. Department of Justice has also indicated it wants to see even bigger changes. The DOJ consequently serves right now as something of a wildcard that could, ultimately, mean different or bigger policy changes lie ahead as well.

New Report: Local Option Transfer Taxes Would Reduce Sales, Lower Property Values, Generate Minimal Revenue Study Highlights Alternative Ways Massachusetts Should Confront the Housing Crisis

The report is available for review at the website, MAHousingsolutions.com which breaks down the findings.

Article Courtesy of: Inman News
By: Marian McPherson

Thirty-nine percent of agents plan to switch brokerages in 2024, according to Coldwell Banker Real Estate's latest survey, citing favorable commission structures and strong lead gen systems

In the survey of 1,500 agents, 39 percent said they plan to switch brokerages. That’s a 56 percent increase from 2023 when 25 percent of agents said the same thing. Of the 852 respondents affiliated with Coldwell Banker, the growth in agents who said they plan to move increased marginally from 2023 (30 percent) to 2024 (31 percent).

“Given today’s challenging landscape, many agents have become more open to leaving their current company and working with a partner who best supports their personal and career goals,” Coldwell Banker Affiliates President Jason Waugh said in a written statement.

For agents who plan to switch brokerages this year, wanting more referrals and leads (52 percent), better training and education opportunities (44 percent), a better commission structure (42 percent) and better team support (42 percent) are the driving factors behind their decision.

When it comes to agent priorities, brand trust (93 percent), marketing and advertising support (88 percent), a strong brand image (85 percent), recognizability (83 percent) and leading-edge technology and tools (82 percent) topped the list.

Respondents affiliated with Coldwell Banker were more likely to cite brand trust (97 percent), marketing and advertising support (95 percent), strong brand image (95 percent), recognizability (95 percent), and leading-edge technology and tools (92 percent) as a priority when considering brokerage choice.

Coldwell Banker agents also had an increased interest in a brokerage’s luxury real estate expertise (66 percent in 2024 vs. 51 percent in 2023) and the strength of their global footprint (65 percent vs. 50 percent).

Waugh said he’s proud of the results from respondents affiliated with Coldwell Banker as the company heads toward its 118th anniversary in August.

“I’m proud to say that the Coldwell Banker network continues to find value in our products, services and resources as well as their partnership with the brand,” he said. “Our strong reputation, powerful brand image and global network equip affiliated agents to maintain a commanding presence in the marketplace.”

Coldwell Banker’s survey comes in the middle of a recruiting frenzy centered around attracting high-quality agents who have the experience and skills to navigate strong market headwinds.

Of the 1,009 agents who responded to the March Inman Intel Index, 71 percent said they received recruiting offers during the first quarter of the year. Nineteen percent said they received a recruiting call once a week, and 32 percent said they received a call once a month.

Coldwell Banker Realty president and CEO Kamini Lane offered her insights on Intel’s findings, saying a slower market stokes competition and pushes brokerages to supercharge their retention and recruitment efforts.

“When the market contracts, the cream rises to the top and the best agents are the ones who are going to get the fewer listings [that remain],” she told Intel in April. “Because of that dynamic, we naturally look for the better and best agents.”

Article Courtesy of: Inman News

Judge Stephen R. Bough ruled that the sweeping changes NAR agreed to were 'fair, reasonable and adequate' and set a final approval hearing for November

Judge Stephen R. Bough, who presided over the landmark Sitzer | Burnett class action lawsuit, granted preliminary approval to the proposed settlement reached last month by the National Association of Realtors® in an order released on Tuesday.  The order makes it increasingly likely that Realtors® will operate under new rules within just a few months at which time NAR has agreed to implement a set of changes governing the industry.  Bough ruled that the sweeping changes proposed within the settlement agreement were “fair, reasonable and adequate” and set a November hearing for final approval.

Under the terms of the settlement, NAR agreed to establish rules preventing the display of cooperative compensation within the multiple listing services by mid-July. In addition, it will require MLS participants working with buyers to enter into written buyer representation agreements prior ro touring a home. NAR will also pay $418 million over the next four years, and plaintiffs’ attorneys said in a Friday filing the settlement amounted to “greater than 50 [percent] of NAR’s net assets.”

The rule changes are widely expected to provide added transparency into how real estate agents are compensated, and some experts believe the changes will lead to more negotiation around real estate commissions paid by buyers and sellers in the near future.

NAR’s proposed settlement offered blanket protection from a growing list of lawsuits filed by home sellers and homebuyers across the country in the months following the Sitzer verdict.

In a statement, NAR spokesman Mantill Williams said the organization was happy with Bough’s order.  “It has always been NAR’s goal to resolve this litigation in a way that preserves consumer choice and protects our members to the greatest extent possible,” Williams said. “This proposed settlement achieves both of those goals and provides a path for us to move forward and continue our work to preserve, protect and advance the right to real property for all.”

The lawsuits largely centered around what was known as the Participation Rule, which required listing brokers to make blanket, unilateral offers of compensation to buyer brokers in order to submit a listing in a Realtor-affiliated multiple listing service.

The rule changes envisioned by the settlement will also require buyer’s agents to obtain a signed representation agreement with clients before touring homes.

The settlement didn’t include HomeServices of America or other brokerages that conducted over $2 billion in transaction volume in 2022. That left out more than 90 brokerages. Ultimately, however, NAR said its proposed settlement would protect over 1 million of its nearly 1.5 million members. HomeServices has vowed to fight the Sitzer verdict.

Brokerages and MLSs not covered by the proposed settlement have until June 18 to take action and be covered.

Bough also agreed to certify the proposed settlement class, which would include the following:
• Homes listed on Moehrl MLSs: March 6, 2015, to date of Class Notice;
• Homes listed on Burnett MLSs: April 29, 2014, to date of Class Notice;
• Homes listed on MLS PIN: December 17, 2016, to date of Class Notice;
• Homes in Arkansas, Kentucky, and Missouri, but not on the Moehrl MLSs, the Burnett MLSs, or MLS PIN MLS: October 31, 2018, to date of Class Notice;
• Homes in Alabama, Georgia, Indiana, Maine, Michigan, Minnesota, New Jersey, Pennsylvania, Tennessee, Vermont, Wisconsin, and Wyoming, but not on the Moehrl MLSs, the Burnett MLSs, or PIN MLS: October 31, 2017, to date of Class Notice;
• For all other homes: October 31, 2019, to date of Class Notice.

Watch now

Following the Oct. 31 verdict, some of the largest companies in real estate have reached proposed settlements with plaintiffs in various lawsuits. More settlements are expected to come.

“Every day we continue to engage in settlement conversations and settlements with companies,” Michael Ketchmark, the lead plaintiffs’ attorney in the Sitzer case, told Inman earlier this month.

On Tuesday, Ketchmark told Inman he was happy to see the preliminary approval.  “It’s a huge step towards bringing about the necessary relief to homeowners nationwide,” Ketchmark said. “NAR negotiated a way for large brokers, and we reach settlements almost daily. The long-engrained mandatory compensation is finally dead.”

The approval isn’t the end of the scrutiny NAR faces. Earlier this month, an appeals court ruled that the U.S. Department of Justice could reopen its investigation into NAR’s cooperative compensation rule, also known as the Participation Rule, which it began investigating five years ago.

Article Courtesy of: Inman News
By: Jimmy Burgess

Change is coming, so it's time to make sure you're leaning into the potential of a listings-based business, Jimmy Burgess writes. Nothing helps do that better than geographic farming

When change happens, the key to success is to find the most effective strategy possible that will generate results and execute on it. The time-tested strategy of geographical farming worked in the past, is working now, and will continue to work in the future.

In this article, I’ll share the step-by-step blueprint for success that will develop a consistent flow of listing opportunities for your business.

Step 1: Identifying the right area

Success or failure through geographical farming is determined early on by choosing the best area to farm. The first question you should ask is whether there is a dominant agent in the neighborhood. I determine this by totaling the number of listings closed in the past 12 months and the current active listings.

I prefer to start a new farm in a neighborhood where there isn’t any one agent who has active listings or sold listings from the previous 12 months that exceed 10 percent of the total listing opportunities for the neighborhood. If you find a neighborhood like this, you have identified one that is ripe for your marketing to make you the dominant agent for that area over the next 12 months.

If there is someone who has between 10 percent and 20 percent of the sold and currently active listings, then the neighborhood still has potential for you to farm, but make sure you know where your breakeven number is for the investment you will be making.

Step 2: Financial evaluation

Finding the perfect farm area involves not just finding a neighborhood you love, but also identifying one that provides an opportunity for you to add money to your bottom line. Consistency is key to becoming the dominant agent for your area, so we want to start with a 12-month commitment to marketing to the neighborhood.

I like to use a budgeted amount of $2 per month per home or $24 per home for the year. I will go into what these expenses will be shortly, but for now, let’s see where our breakeven point will be.

For this example, let’s assume we have 400 homes in the neighborhood. The $24 per home, per year budget multiplied by 400 homes means we will have an estimated expenditure for the year of $9,600.

If the average sales price in the neighborhood is $400,000 and your listing side commission is 3 percent, then you could anticipate an average listing side gross commission rate of $12,000. If you have an 80 percent split with your brokerage, then your net proceeds after the split would be $9,600. Meaning, for this example, you would need to list and sell one home in the neighborhood during the year to break even.

I also like to evaluate the opportunity in the neighborhood. If the average homeowner stays in a home for 11 years, then that means the neighborhood should have roughly 9 percent of the homes in the neighborhood selling each year. Based on 400 homes in the neighborhood, this means we can anticipate roughly 36 homes in an average year being listed and sold.

If you execute on the marketing in the following section, you should be able to list over 10 percent of the available listings in a neighborhood over the next 12 months. That means the estimated minimum results you should expect for this farm would be to list 4 homes in the coming year.

If we are being conservative and say you only sell three of the four homes you list, then based on our average net commission from above, this means your $9,600 budgeted expense for the year would generate $28,800 ($9,600 average net commission times three homes sold) or a net income amount of $19,200.

With the breakeven point of one sale, no dominant agent in the neighborhood, and a conservative expectation of listing 10 percent of the available listings, generating a return of $19,200, this appears to be a farm area with a lot of upside potential.

Step 3: Consistent direct mail

The marketing plan for the neighborhood will determine whether the farming efforts are successful or not. Remember that we budgeted for $2 per home per month. The consistency of monthly, at a minimum, mailers to the neighborhood is foundational to your success.

The monthly mailers I suggest are a mix of postcards or direct mail letters. I like a quarterly sales report or card that goes out four times a year. The January one will be a year in review; the April, July and October ones will be reports for the quarterly sales activity.

These cards should be clean and easy to understand with a section for homes currently for sale, under contract or that sold during the time this card is reporting on. It should include the address, number of bedrooms and bathrooms, square footage of the home, list/sales price, and date sold if closed.

These cards should also include a summary of the activity levels and any market details that encourage potential sellers to call you for additional details. Every mailer we send should have a strong call to action for additional details or a free, no-obligation home valuation analysis of their home.

The additional eight months of monthly mailers will be a mix of different marketing pieces. The following are examples of the types of mailers you can choose from, or you can supplement with some of your own ideas.

I recommend a review/recommendation piece twice a year. These should share a quote from your client about how you helped them sell their home and the service they received. The effectiveness of these pieces is increased if you can include a picture of your clients and even more effective if the home you sold for them is in the neighborhood you are farming.

Other mail alternatives for the additional months should be a mix of local service provider cards, community calendars, just listed cards, just sold cards and even an “About Me” card so the owners get to know you.

Step 4: Next-level ideas for the farm area

Mail is the foundation, but additional touch points are what turn good farms into great farms. The $2 per month per house I mentioned during the budgeting portion will not be completely absorbed each month via mail costs. These additional funds will be spent on quarterly activities or large events every six months to increase your recognition in the neighborhood.

The first of these additional activities should be an evergreen video about the community. This video should include the history of the community, the number of homes, the size range of homes, amenities and a call to action to reach out to you for additional details. Not only is this a great lead attracter, but it also shows your commitment to and expertise on the neighborhood to the owners in the farm area.

Other options for special events can include a food truck night you sponsor, a family photography or pet photography day in the neighborhood or even a fall festival in the community park. The key is to serve the neighbors and show your commitment as the neighborhood agent of choice.

In addition to the special events, your presence in the neighborhood is also a key to success. Glennda Baker, out of Atlanta, Georgia, said she began her career farming a luxury neighborhood while living in an apartment. Not only did she know the neighborhood inside and out, but she would drive over to the neighborhood she was farming in the afternoons to walk around it, pushing her baby in a stroller so that she could be visible and meet the owners.

Why not walk your dog or take an afternoon walk in your targeted area? Your presence will make a difference.

Step 5: Leverage your listings

If you follow these steps, you will generate listings. Once you get that first listing, leverage it to audition for your next listing. Spend extra on professional photography and videography of the home that you can share with the neighbors.

Send just-listed and just-sold cards, but with a twist. Instead of typical postcards, tell the story of listing the home and the marketing you did, and provide bullet points showing numbers and results.

Door-knock or call neighbors to let them know you are hosting an open house. Put up clean, professional signs with take-one boxes and QR codes for easy access to the marketing videos you produced of the home.

Always look for ways to stand out. Mary Maloney, out of San Diego, California, utilizes the take-one box in a unique way once a listing she has goes into escrow. She asks the sellers for a review of their experience and has professional photos taken of the family providing her with the review.

Once the home is in escrow, she creates a two-sided flyer that states the home is in escrow with the owner’s photo and review. The second side of the flyer provides other properties they have listed and a strong call to action to call Maloney if they are considering buying or selling.

By marketing the listings you take at the highest level possible, you will be rewarded with additional listings.

With the changes coming, now is the time to build a consistent listing lead flow for your business. Nothing accomplishes that goal better than geographical farming.

Jimmy Burgess is the CEO for Berkshire Hathaway HomeServices Beach Properties of Florida in Northwest Florida.