Top brokers talk industry’s biggest challenges — lawsuit and all
In a panel discussion, leaders of four fast-growing brokerages shared their thoughts on agent attrition, the commissions lawsuits and other hot topics.
- If the market continues to slow, there will likely be a wave of agents leaving the industry, one top broker suggested.
- But perhaps more importantly, brokers and agents should be prepared for a seismic shift in buyer agent compensation.
- Brokers and agents have many avenues for developing leads, but building relationships with developers would be a safe bet.
What are the top issues on the minds of brokers?
That was the question asked during this week's T3 Leadership Summit in Naples, Florida, where the leaders of four fast-growing brokerages shared their thoughts on some of today's biggest issues (and opportunities).
The leaders featured during the broker panel were Dan Duffy, CEO of United Real Estate; James Dwiggins, co-founder and CEO of NextHome; Michael Saunders, founder and CEO of Michael Saunders & Company; and Laura O'Connor, president and COO at JPAR.
The market is in a tough spot right now with low inventory, high interest rates and steep home prices, sending buyers off onto the sidelines. The proverbial feast between 2020 and early 2022 has turned into famine for many agents — particularly those who aren't already well-established — and could lead to a decline in the total number of licensed agents.
"We went from about a million Realtors in 2011 — which was our bottom after the last downturn — to almost 1.6 million [agents]. We're going to see a lot of attrition. It's already starting, but you're going to see more of that this year," said Dwiggins about the current pressure on agents.
Dwiggins suggested that brokers start getting back in touch with those outside of their organization, particularly independent agents, as the market continues to tighten. He expects a lot of people will be looking to "join forces where there's more infrastructure," allowing brokers and agents to reduce overhead.
'The lawsuits' and buyer agreements
Another concern that brokers have right now is what the future of buyer agency looks like. The outcome of the Moehrl and Burnett class action lawsuits, which could fundamentally change the brokerage business by ending the practice of having sellers pay for the buyer's agent, is something that brokers should be preparing for, Dwiggins suggested.
Specifically, Dwiggins said that agents should start thinking about using buyer agreements.
"As an industry, we're just doing things the same way that we've always done them and we're saying, 'Eh, whatever, we'll deal with that when it gets here.' Whereas I'm looking at things right now and thinking about how we'll have to reshape our company," he said. "We have to be thinking about a world, potentially, where we're going to have to get a buyer to work with us exclusively and ask for compensation."
It's important to start thinking about buyer agreements and compensation, Dwiggins said, because "hope is not a strategy."
While some brokers are pulling back from maintaining physical offices, Michael Saunders said she is a firm believer in working out of a bricks-and-mortar homebase and having the team in the office. It's not just about company culture, but it's also important to see and be seen in the community, she said.
"We are big on relationships and as a company do not buy leads or encourage agents to buy leads," she said. "But we spend a great deal of time, money and effort giving them tools to work their sphere of influence."
The team's culture and values are the "bedrock" of her firm, Saunders said, but she did concede that her brokerage "is not for everyone." However, having facetime with clients and being active participants in the community is not just crucial for agents looking to build their sphere of influence and develop leads, it's important for firms interested in working with developers who could deliver hundreds of listings.
"The developer service division offers us the opportunity to not get one listing, but to get 300 listings," she said. "For the future, that is going to be a great source — and it has been for 47 years."
(Note: T3 Sixty and Real Estate News share a founder, Stefan Swanepoel.)