Brokers in Focus: ‘There's no half doing this anymore’
Laura Ellis, Baird & Warner’s strategy leader, believes changes spurred by Sitzer/Burnett will be “good for the serious, competent real estate professional.”
As the strategy and sales leader at the largest independently owned real estate brokerage in Illinois, Laura Ellis plays a critical role in shaping and implementing Baird & Warner's best practices and policies — including how to adapt to a post-Sitzer/Burnett world.
While there are still many unknowns surrounding the landmark commissions case, Ellis is focusing on moving her team forward in an environment where agents are openly discussing their value with clients and are equipped to advocate for and negotiate their compensation.
This interview has been edited for length and clarity.
What was your initial reaction to the Sitzer/Burnett verdict?
I've been in the industry for about 30 years, so I've witnessed the evolution of how we work with buyers and sellers and changes in the industry. I believe that today's real estate consumers are much more sophisticated, more savvy, and they have access to a lot of information.
So we were not surprised to see this lawsuit come about, and before the verdict came out, I knew this was going to have major repercussions in the industry, whether the plaintiffs were successful or not.
Some people ask me if I think it's going to be overturned on appeal, and my response to agents is that it doesn't matter. Change is here.
How are you preparing your agents for changes to compensation?
A month before the verdict came out, we had already created a six-hour buyer certification course. It focused on what you do to represent a buyer, how you get a buyer agency agreement signed, and the various ways that you can get paid.
So we were way ahead on this. This is an industry that has not really changed much over the years, and it's time, because consumers have changed.
How do you reassure agents who feel concerned about their future?
I emphasize the importance of making sure consumers really understand where the commission is coming from — they want transparency, they want disclosure, they want value. Someone recently said to me, "Laura, are you going to teach us how to protect our commission?" I said, "No, I'm going to teach you how to earn your commission."
On the buy side, agents can negotiate with the buyer on a flat fee, hourly rate or a la carte services. Our company is still saying that we are negotiating a percentage of that sales price and of course laying out and demonstrating the value that the client is going to get.
When you talk about demonstrating value, what does that look like?
First-time homebuyers need an advocate to help them navigate this really complex transaction and make sure they're paying a fair price, getting the right financing product, and negotiating their way through home inspection issues, attorney review issues — all of those things.
If buyers go in on their own without that professional representation, guidance and fiduciary responsibility, I think they put themselves at a disadvantage. And I think they could really end up losing in ways that they may or may not ever realize.
As the industry changes, do you think 'virtual' brokerages will have an advantage over traditional brick-and-mortar firms?
I actually think a more traditional brokerage like ours is better equipped to handle these changes. The online brokerages that have been growing so fast are growing with part-time agents, for the most part, because successful full-time agents need more support.
We all have to operate our businesses as efficiently as possible, but we still have one manager per office. Some of these other companies have one designated managing broker for literally 1000 or more agents. Good luck with that. When our offices get to 80-85 agents, we add an assistant to the managing broker to ensure those agents have the support they need.
Do you expect more agents to leave the industry following the verdict?
I think part of what got us to where we are now is that some consumers have not felt that they got any value from their agent. And so I really believe that long term, what's going on in the industry is good for the serious, competent real estate professional. And that's what we train our agents to be.
In order to make it in the real estate business moving forward, you've got to give it 110%. You're going to have to put in those hours and be highly trained, and that takes time, it takes energy and it's more than a full-time job, especially in the first few years. There's no half doing this anymore, which I think is a really good thing for consumers.