You don’t have to like it. But you can only hate it for so long.
More than two months after the National Association of REALTORS® (NAR) announced it was paying $418 million and making long-resisted changes to MLS policy and compensation, brokers and MLS leaders are still seeing that anger in the real estate community. The chorus of bitter voices decrying the lawsuits as a cash grab by lawyers, built on a rank misunderstanding of real estate, continues unabated—on social media, in water-cooler conversations and even addressed directly to the judge overseeing the commission settlements.
Speaking on a May 15 RISMedia webinar, Michele Harrington, CEO of First Team Real Estate based in southern California, said she feels that same resentment and rage herself.
“There is a lot of anger in the industry; I feel the anger,” she said. “The anger that it is unjust, the anger that NAR settled…there is a (question of), ‘Can we fix our system in general, so we can run a business without interference from the government and greedy lawyers?’”
But Harrington, along with other thought leaders in the MLS and brokerage spaces who joined her on the webinar, urged the industry to find a pragmatic approach, and not let that anger weigh them down as they seek to do what they have always done: build their businesses.
“We see the things that we can’t change. That’s there. Let’s move on and focus on the things we can change,” Harrington continued.
That shift in mindset is just the first—but maybe most important step—toward a new world that Art Carter, CEO of CRMLS (the country’s largest), said is more of a “different landscape” rather than a “new planet.”
“I wouldn’t have wished this to have occurred,” Carter emphasized. “But people need to relax. There is life moving forward—this is not an extinction level event for agents in our system; it’s not an extinction level event for buyer’s agents. I think people need to recognize that this industry has gone through change on a regular basis.”
Real estate coach, speaker and writer Matthew Ferrera, who co-moderated the webinar with RISMedia Founder and CEO John Featherston, called on agents and brokers across the country to embrace a “spirit of optimism,” as the leaders on the panel promised to do.
“It’s an equation, not a zero sum game. I really like how this is a mindset of—we just need to adjust certain variables, and business will continue on,” he said.
Today’s game
But mindset is not the only thing that agents are going to have to change. NAR’s settlement mandates concrete, and potentially complex, new rules on how agents can conduct business, most notably removing all offers of compensation for the MLS and making signed buyer agent contracts required at the outset of a client-agent relationship.
Ken Trepeta, president and executive director of RESPRO, said one thing that has been overlooked is the new responsibility for listing agents—not just buyer agents—to explain the benefits of cooperative compensation.
“I really see more educated real estate agents making a better case for their value proposition a year from now, and probably not a huge difference in the way business is done in most areas,” he said.
According to Trepeta, listing agents are going to have to explain to their sellers the dynamic of offering concessions to pay for buyer agent commission. But there is nothing wildly unprecedented about this, he argued, calling the change “a wash” and saying markets will likely balance out relatively quickly, even if there is some “downward pressure on commissions.”
“There might be choices, and there might be deviations,” he said.
In the shorter term, though, Carter urgently pushed MLS board members, CEOs and anyone with a platform to ramp up their internal outreach before the NAR settlement changes are implemented on August 18, and make sure their members are prepared for the transition.
“If you don’t feel comfortable getting out there and talking about this, and talking about this, and talking about this—find someone who is. Because you have an absolute obligation to your membership to talk to them,” he said.
There are multiple scenarios where a buyer agent could end up not getting paid for a deal, if they aren’t aware of exactly what they need to do as the practice of real estate compensation changes, with Carter saying he is going to do everything he can to avoid those scenarios.
“At the end of the day, it’s because somebody didn’t pay attention,” he said.
For instance, someone who doesn’t have a signed buyer agreement with a client who they start working with before the change, but then closes after the change has no guarantee of any sort of payment.
These types of scenarios, while obviously something that Carter said MLS and broker leaders will do everything to avoid, will also be short-lived, noting that agents are extremely unlikely to make a mistake of that magnitude twice.
“That’s a very expensive and painful lesson to learn,” he said.
How about long term, on the MLS side? Harrington, Trepeta and Carter all saw specific opportunities to use the MLS to benefit real estate practitioners in new ways. Losing the compensation field is unfortunate, Carter said, but MLSs have an opportunity to start looking at the data they collect and provide, saying he is going to “double down” on cooperating with members and brokers.
Harrington described how the NAR changes opened opportunities for mergers and acquisitions or recruiting, bolstered by analytics that could be provided by an MLS—things like sales trends or lockbox openings, which could allow a broker to start conversations about M&A. The same types of data can help brokers see how their own agents are adapting to the changes, and allow them to better build teams and coach.
“MLS data is really, really important—to look at, to analyze it,” she said.
Carter emphasizes how much data isn’t being collected or provided to brokerages which still could be, to the “net benefit” of everyone.
On the wall in his office, Carter said he has a whiteboard reading “We will collect everything.”
“My staff often asks me, ‘What does everything mean?’ and I say, ‘I think everything is pretty all-inclusive.’ Anything we think is important to the brokerage community that they are willing to share with each other, we are going to collect,” Carter promised. “And we are going to provide that intelligence back to the brokerage community in a way that they want to consume it.”
Editor’s note: a previous version of this article incorrectly listed Michele Harrington as founder of First Team Real Estate.
