Introducing Bill Brown, 2016 President-Elect of the National Association of REALTORS®, in this month’s Power Broker Roundtable
J. Nicholas (Nick) D’Ambrosia, Liaison for Large Residential Firms Relations, NAR; Broker of Record, The Long & Foster Companies, Chantilly, Va.
Bill Brown, 2016 National Association of Realtors® President-Elect; Founder, Investment Properties, Oakland, Calif.
Nick D’Ambrosia: As we wind down another notable year in real estate, it’s important to take stock of what we’ve accomplished, both for our industry and the consumers we serve. But it’s equally important to start planning for the year ahead. Bill Brown will help us usher in 2017 as he steps up to the role of NAR President. He was gracious enough to spend some time with me to discuss what issues will be particularly important to brokers next year. Bill, in your opinion, what are some of the biggest challenges facing brokers?
Bill Brown: Profitability and liability continue to challenge brokers in today’s market.
ND’A: How is NAR helping brokers address these challenges?
BB: Perhaps the most important way NAR helps brokers remain profitable centers on the work we do to protect and promote homeownership and property investment. NAR advocates policy initiatives that support a fundamentally sound and dynamic U.S. real estate market thus creating opportunity for brokers and agents to prosper. The REALTOR® Party’s Broker Involvement Program provides broker-owners with tools to quickly and effectively rally their agents on critical legislative issues affecting our industry, thus ensuring their voices are heard on Capitol Hill.
Also in support of brokers, NAR developed the Real Estate Services (RES) program to help real estate firms and their agents implement and maximize their core business services, such as mortgage operations, title, escrow and settlement; home warranties and inspections; and insurance and concierge services. NAR brings public policy and legal concerns of brokerages to regulatory officials and lawmakers in D.C. and educates them about the benefits of affiliated business arrangements and consumer preferences.
Additionally, NAR provides tools and resources, such as research, conferences, webinars, and classes, focused on broker best practices to achieve success in today’s marketplace
Regarding liability, NAR’s legal department works vigilantly to protect brokers’ and agents’ businesses. A recent example is our victory against patent abuse in a settlement with Data Distribution Technologies, a subsidiary of the patent enforcement firm General Patent Corporation. DDT sued and threatened several real estate businesses in the past over use of a technology-related patent, but NAR challenged the patent’s validity before the U.S. Patent and Trademark Office and filed a declaratory judgement lawsuit on behalf of NAR members. NAR’s advocacy on behalf of its membership culminated in a settlement requiring DDT to refrain from enforcing its patent in the real estate industry; the covenant included in the settlement specifically notes that NAR members, associations, MLSs, affiliates, and other related entities are protected from potentially costly litigation.
ND’A: How might the presidential election impact business for real estate brokers?
BB: On the presidential level, NAR does not participate in the presidential election, so it’s each individual’s choice as REALTORS®. Donald Trump is in the real estate business; he understands the industry. Secretary Clinton was a REALTOR® champion when she served in the U.S. Senate, helping with several key issues including the Banks in Real Estate effort where she was a lead cosponsor of the Community Choice in Real Estate Act, which sought to permanently prohibit banks from engaging in real estate brokerage. Clinton stepped up her support in the 110th Congress when she became the lead sponsor on the legislation, which was signed into law.
On election night, our focus will be on the congressional races to see if there is a shift in party control and who will be in leadership positions dealing with the issues we care about the most.
Regardless of who wins on election night, in the presidency or in Congress, we are in good shape to push our issues in 2017 because we build our relationships early, we have an incredibly strong grassroots system, and we advocate issues that are nonpartisan and pro homeownership.
ND’A: What are the greatest growth opportunities for brokers?
BB: New and innovative technology centered on big data, predictive analytics, and cognitive computing present tremendous opportunities for brokers. However, the most successful brokers will not only embrace new technologies but also maintain the human connection in their business relationships.
ND’A: How can brokers best adapt their firms to serve today’s consumers, particularly millennials?
BB: Today’s hyperconnected consumers, and in particular millennials, have a tremendous amount of information at their fingertips. It’s essential that agents and brokers provide value to their clients in this age of information. Brokers must adjust their communication styles and deploy innovative technologies to meet the needs and style preferences of today’s consumer.
It’s important to note that understanding what is important to the buyer still applies to millennials. What changes with this generation is exactly what these important things are. This younger generation, being digital natives, is more willing to accept the time-saving and utilitarian aspects of smart-home technology. Knowing which technologies are best for each situation (home and buyer combination) is important to demonstrating knowledge. These new technologies are not for everyone, but for millennials, they contribute to the livability they look for in homes.
Recruiting younger agents with entrepreneurial spirits should be a priority for brokers. Consider ways you can encourage young talent to consider real estate for their first career. From technology tools to marketing to millennials, young agents often provide innovative ideas and new perspectives.
ND’A: What are some of the most important market trends that brokers need to be aware of?
BB: National median existing home prices continue to rise at a robust rate of roughly 5 percent per year. Continued increases in home prices are due to low inventory of homes available for sale. A balanced market, where neither buyer nor seller has an advantage, would be about six months’ supply, but we are now in the five months or less range, with some metropolitan areas significantly less than that. So, even though the economy continues to move forward, many would-be buyers have been hampered by an inability to find a home in their price range. Home builders have been trying to fill the gap, but following several years of lackluster construction, inventory pressures and diminishing affordability will likely remain a concern for the foreseeable future until enough new homes are built.
More positively, the share of sales that are distressed (short sales and foreclosures) has declined to very low levels and the pipeline of delinquent mortgages has almost reached pre-Great Recession levels.
For current homeowners, the rise in prices has resulted in sizable gains in home equity that have contributed to a steady rise in household net worth. In fact, homeowner equity relative to the value of homes is now back to where it was pre-crisis.
For prospective homebuyers, who are now attempting to make the transition from renting to owning, the combination of rising home prices and escalating rents has put a squeeze on affordability. Many renters are under the mistaken belief that they need a down payment of at least 20 percent, which may keep some potential first-time buyers out of the market. In combination with high levels of student debt for some millennials, younger households have been less active in the market in recent years resulting in a sizable decline in the homeownership rate. That is also shown by the fact that the share of first-time buyers, currently about 30 percent of home sales, is well below the long-term level of about 40 percent of home sales.
ND’A: What does it take to be a great leader in today’s real estate environment? How can brokers really make a difference in the success of their salespeople?
BB: First and foremost, you have to love this business. Successful brokers approach the business wholeheartedly. Without enthusiasm and commitment, you cannot create a winning team or provide strong mentorship to your agents. Additionally, in this day and age, to keep up with the changes occurring within our industry—within technology and within our society—you have to be willing to get out of your comfort zone and take risks to innovate. Encourage your agents to do the same. REALTOR® associations and REALTORS® need to be the force leading the revolution we’re experiencing by pushing our profession ahead of technology and ahead of the clients we serve
Finally, our brokers and agents have to realize how important our legislative agenda is on Capitol Hill and how important it is for us to have every member participate in RPAC and respond to REALTOR® Calls for Action; 2017 is going to be a critical legislative year and NAR needs to ensure that our voice is heard. We represent not only our 1.2 million members but also every person that owns a piece of property in the country.
For more information, please visit www.realtor.org.