A post-verdict future is taking shape fast — here’s what to do
More settlements and MLS changes are coming, the CEOs of NextHome and T3 Sixty say. Agents need training, and they’re not the only ones.
Struggling to make sense of lawsuits, verdicts and all the ways juries, lawyers and judges could shake up the real estate industry? It's time to shift your focus.
Sure, you'll want to know the latest. But with multiple cases in play and lengthy appeals expected, legal battles are going to drag on and on. Don't let that distract you from the future, which is approaching fast and already taking shape.
"Change is a matter of 'when,' not 'if,'" NextHome Co-Founder and CEO James Dwiggins told attendees during a pair of prescient panels at the T3 Tech Summit last month. (Note: Real Estate News and T3 Sixty share a founder, Stefan Swanepoel.)
Here's how that change could shape the future, and what you should be doing to prepare.
More settlements likely
Jack Miller, T3 Sixty president and CEO, shared what he sees in his crystal ball, a vision informed by years of experience, analysis and conversations with industry leaders. It starts with this: All the defendants are going to settle. Even NAR, which has been vocal about its willingness to keep fighting.
"They're putting on a game face for all of us, as they should," Miller said. But if NAR and others don't settle, the door is open for copycat lawsuits, like the one filed by the Sitzer/Burnett lawyers immediately following the verdict in that case, or others from less prominent attorneys hoping to cash in.
"And it's relatively inexpensive for them to do so because those big, highly paid corporate class action attorneys have done all the heavy lifting for them," Miller said. "They go find some sellers and they just copy that lawsuit and they're just printing money."
Settlements can close that door.
MLSs and buyer's agent compensation will change
Miller and Dwiggins both see a future where buyer's agents are no longer paid by seller's agents. This doesn't mean buy-side agents are going away or won't get paid — but compensation is going to look different, and it may not be handled through the MLS.
"The MLS is going to change," Dwiggins said. "The way that we have been compensated on the buy side of a transaction is going to change."
The Real Estate Board of New York, which runs an independent Residential Listing Services for New York City listings, has already embraced a new approach. Starting next year, listing agents will no longer be able to make an offer of compensation via the RLS or directly compensate a buyer's agent.
Miller and Dwiggins see buyer's agents getting paid directly by their clients, or by home sellers. Buyers can bake their agent's commission into their offer. Sellers can offer credits.
It may even be possible for commissions to be financed. Sure, that would require the government to change current rules, but that seems doable, Dwiggins said. "We're all aware of the issues NAR is facing, but one thing NAR does incredibly well is lobby."
What agents and brokerage leaders can do right now
Miller said the most important thing real estate professionals can do at this moment is commit to a future where things are different and educate themselves and others about what that means.
Buyer's agreements are going to become the norm, Miller said. And many managers and agents aren't ready. They haven't done them, and they don't know how to train others to do them.
Agents on both sides of the transaction will need support, Miller noted.
Listing agents will have to help sellers understand that even if compensation changes, they may need to cover closing costs or prepay expenses for buyers to get the deal done.
"You're going to need to have your listing agent explain how seller concessions help more buyers come to the table because they don't have any more money to spend," Miller said.
On the buy side, "you may have to build agents up" and remind them of the hard work they do, the hours they've spent, the "ridiculous things" they've handled for clients.
"Shoot a bunch of videos of their clients saying how awesome they are and give it to your agents," Miller said. "A lot of agents haven't done that for themselves," and it's a good marketing tool as well.
Homebuyers in the U.S. value the service agents provide, Dwiggins said. They don't want the "Wild West" of Australia, where buyer's agents are less common, and auctions, which can be daunting and emotionally charged, are more common.
"Buyer representation is not going to go away," Dwiggins said. "We just need to be better."