Woodbury, New York—Two heads are almost always better than one when facing uncertainty. When facing a lot of uncertainty—for instance, when a parade of class-action lawsuits upend century-old precedent in how your industry operates—it might be better to get as many experienced minds together as possible.
That was the idea at the Long Island Board of REALTORS®’ (LIBOR) annual conference held last month, where 800 real estate professionals collectively put their heads together, looking ahead to how best navigate the months—and years—following new restrictions and new scrutiny on real estate transactions. Focusing on the most urgent topics, as well as a vision for medium-term success, RISMedia sat down with half a dozen top LIBOR brokers and agents at the event to discuss buyer contracts, prospecting, brokerage models, compensation negotiations and much more.
RISMedia: What are the biggest changes real estate professionals are already confronting?
Frank DellAccio, Owner, CENTURY 21 AA Realty: There’s going to be some turmoil in the industry. It’s going to be a learning curve over the next 12 months or so. And I also think there’s an attrition of agents. There will be attrition in the marketplace from agents who said, “This is just too much work. It hurts my head. I need to move on.” There will be a thinning of the herd, so to speak.
I think what you’re going to start to see is that some agents are going to pick which side of the fence they want to spend more time with. I’ve already got some of my stronger listing agents saying, “Look, you know what? I’m not so sure I want to work with buyers,” because that whole dual agency comes into play. I have listing agents saying, “I’m going to list, and if somebody contacts me on my listing where there might be a chance of impropriety of dual agency, I’ll get somebody else to do it.”
Leah Tozer, Associate Broker, Daniel Gale Sotheby’s International Real Estate: If everybody has to change the way they do business, they weren’t doing it right in the first place. I don’t know if you’re hearing a lot of the people saying, “Well, here’s the revolutionary new thing we’re going to be doing.” Yeah, we’re all going to have to tweak our approaches, but we should have all been talking to buyers about our value proposition all along.
We’re not good at conveying the value of buyer agency—the industry as a whole has not been great at it. That’s really the big uphill push, right, is how to demonstrate what we already do, better.
Tiffany Balanoff, Agent, Douglas Elliman: I think the No. 1 for agents right now is figuring out, if they haven’t figured it out already—what is your value to buyer’s agents? It’s not just grabbing a key and opening the door and showing them the house. There are so many different ways that we offer value, whether it’s learning about new developments being built or new zoning policies or things that are going on in our state government that might impact housing.
Being informed in all aspects of housing showcases your value, and knowing that market showcases your value, knowing the trends, really being out there on the day to day and seeing how the market can shift in 24 hours—you can really guide your buyers into the buying process with your knowledge. I think our knowledge is our No. 1 asset in the industry, and a lot of buyers think they know a lot, they know everything, but they don’t, and we see that at every turn.
Paige Ryan, Agent, Ed Ryan Real Estate Group: I think it’s all about showing your value, getting your clients to trust you, being your authentic self. If you don’t know something, just be honest, and I think that buyers will relate to that and will be more prone to trust you. Right now it’s a new concept. I know some people have been with the buyer agreements forever, but I think it’s going to take a little bit of time. I think good agents who work hard at it will get the buyers more used to signing them.
Natasha WIlliams, Broker, Cornelius Group: Some buyers might now say, “I don’t think I can afford you, and I’m going to put this off.” They’re putting it off already for what they considered a high interest rate market. Now they’re also putting it off because they’re saying they don’t have enough money saved for down payment and closing costs. They’re putting it off for a lot of reasons. Now, in addition, they’re going to put it off, and say, “Hey, I can’t pay upfront for a commission.”
But like with anything, I tell them, “I’m here to work in your best interest.” Nothing changes. I’m still going back to that listing agent, “I’m going to say, this is the offer that we’re presenting, and before I present this offer, we need to negotiate on commission.”
Our low- to moderate-income wage earners are dealing with interest rates and affordability. They don’t even get to the point of commission, and if we do get to the point of commission, I say, “Listen, out of all the concerns you have, that’s your least. I can always still talk to the listing agent and see how we can communicate this.” It’s not even their top three concerns, though.
Mike Litzner, Broker/Owner, Coldwell Banker American Homes: We need to be a little bit more deliberate in how we move. As a bigger company, I feel you need to be really mindful and thoughtful with your strategy, so we’re not knee-jerking this because there’s a lot of information going out.
In the short term, we’re trying to take a more patient approach. Don’t panic, let’s get a lay of the land. However, with the really strong understanding that written buyer agreements are going to be a norm, a mandatory thing, I am actually excited about that. I think it’s a cleaner form of business. I think making agents more and more comfortable, starting to shift to the understanding of fiduciary responsibility and buyer representation, even though it’s not something we’ve shied away from in our local markets.
RISMedia: What brokerage models and agent skills are going to be most successful after the dust settles?
Leah Tozer: I think that’s going to come down to the brokerage level, and it is all on the table. There’s nothing that’s off the table. That being said, I think “menu of services” is an interesting concept. I charge X for these things, and I charge X plus one for this, but I suspect that most consumers are going to want you to do the full job. I don’t think most folks if you tell them, “Hey, so which service don’t you want me to do?” You’re not going to say, well, it’s this one. Not a great pitch.
I think you could always have the value add-on, as opposed to the takeaway, but I just really think that agents are going to have to be able to concisely, completely and clearly convey what it is they’re already doing.
Natasha Williams: It’s going to come back to community involvement. It’s going to come back to, do you know your local officials? It’s going to come back to, do you have conversations and sit down with them and talk about the needs of the community as well? I think as real estate brokers, we have a really great advantage wherein we can sit down with our local officials, telling them about the needs of our buyers in that neighborhood. We can tell about the needs of our sellers in that neighborhood.
If I’m looking at a brokerage, I need to know not only how many houses have you sold in that neighborhood, I need to know what are you doing as far as being an advocate in that community with your local politicians? That’s going to be consumer-facing. I’m going to be facing consumers, being able to speak at their level. I live in their neighborhood, I work in their neighborhood, and I advocate for their rights in that neighborhood.
Tiffany Balanoff: I don’t prefer to do “menu of services” because I have a hard time not being me—not being all in on something. But if I explain to people like, “Hey, you want to go to open houses, and when you see something you like, you just want to call me and put in the offer and I can guide you through that process?” Great, we can do that. If you want me to be on call for you, which is kind of how it is nowadays, I’m on call, especially with the pace of the market being so fast—yeah, I’m going to need you to sign a contract, and listen, it’s going to keep us both honest. It’s saying, “I’m going to be loyal to you. You’re going to be loyal to me.” Even if it’s for just that one day, that one property.
Frank DellAccio: Recruiting is important always; it’s the lifeblood of the business. If you’re not recruiting, you’re in trouble because the attrition in this business is high.
I see two things: One, if you’re seen in the marketplace as a listing company, you’ll attract buyer’s agents. If it is seen in the marketplace that you have educated your agents for buyer agency, and you have cutting-edge tools, you attract agents. So yes, recruiting will improve. I think that the smaller firms that don’t embrace this, that don’t want to make that change or understand the need for the change will probably be absorbed by somebody else. I do think there’s going to be a change.
RISMedia: How have interactions with clients and prospects changed? What is driving what consumers want and expect from agents, and where will that lead the industry?
Mike Litzner: At first substantive contact, at least in New York state, we were obligated to present the prospective client with an agency form, which describes our fiduciary responsibility, which really is a perfect entryway. What does that actually mean when I have to protect your best interest? That’s the entryway into a conversation about the value proposition, the task management that you provide for your client, whether it be a buyer or seller.
Locally, because we didn’t engage with the buyer agency that much, I found that agents would kind of throw the buyer agency form at the person because they were obligated to. And they missed that opportunity. It’s a superheated market, and also, sometimes the buyer just wants to see this house and hopefully compete against 15 other people and figure out how they can get an accepted offer. I kind of feel like this change is going to slow everything down through that connection at the start, and we start more organized and more transparent and more communicative from the beginning, that will lay the groundwork for how the process plays out.
Leah Tozer: Newer agents are always like, what’s the script or what’s the canned presentation? And I always try to say, there’s not one—you have to go loaded for bear, but only pull out what that client is seeking. If they don’t care about marketing, don’t suck up their time giving your marketing pitch. If they just want to hear about pricing, let’s talk about that. Just like listing calls, when compensation comes up, you have to talk about your fee.
They may be asking you to cut it. You don’t oversell it. I think it’s going to depend on the buyers. Savvy buyers might say, “Hey, I’ve been watching what’s happening with this settlement. Tell me how you work.” Some less savvy buyer or people who haven’t been as tuned into the news, you may have to give more of an explanation, kind of give the backstory of the settlement, here’s how we ended up where we are. Here’s what this looks like now.
Buyer presentations are not common in my market. I mean, I’ve been pushing for them in my office since forever, but they’re not all that common. I tell agents, stop being a scaredy cat. They don’t want to do it because the person down the road isn’t doing it.
Frank DellAccio: I always think buyer agents should determine what their value is. Why should the seller or the listing agent determine what your value is? I don’t know how hard you’re going to work with your buyer. I don’t know what services you’re offering. On my side, we explained to the seller that nothing’s changed. Offers of compensation were never really required, other than a dollar. So what would you like to do?
And we tell the pros and cons: “Mr. and Mrs. Seller, if we don’t offer compensation, here’s what we’ve got. If we do offer compensation, here’s what we can do. How much do you want to offer? What do you think makes more sense?” And we’re going to have that candid conversation. But I find right now from my agents that sellers are just asking a question.
In one of my offices, we have a lot more first-time buyers. And so we ask, “Do you think that first-time buyers have the necessary cash to pay their agent?” More than likely, no. So how do we want to handle this?
Paige Ryan: I think authenticity is the strongest selling point for anyone, and for me to be my authentic self, I have to dive into it. But also being my authentic self, I will never make someone sign something they’re not comfortable with.
If you don’t trust that I’m the right agent for you, we’ll do a one-time showing agreement, and we’ll do 25 one-time showing agreements until I can show you that I’m the agent that you want to be exclusively represented by.
