Recently an op-ed was published entitled “How We Got Here,” and it was so one-sided I felt compelled to respond.
If there is one lesson that should be learned about the real estate industry right now, it should be that we need to consider outside opinions. Now is not the time to retreat to our echo chambers and only talk to each other in ways that are going to get nods of approval from “the industry.” Our industry is supposed to be about maximum care for our clients who are supposed to be our fiduciaries. What our industry is actually about is securing high fees so that mega agents get rich, but poor-producing agents can still make a decent living. Creating an environment where poor agents can earn high fees to survive is about as anti-client as you can be. The government stepped in because the industry was out of control and unwilling to police itself.
I could go on for days with a list of problems in the industry, such as:
- Being required to be a National Association of REALTORS® (NAR) member (in many areas) to have MLS access
- Agents obsession with being accepted by their fellow agents
- An unwillingness to offend “the industry”
- The very low barrier of entry into the business
There are many glaring hypocrisies in the industry, but for this response, I’ll simply state the worst ones:
Problem 1: Paying high referrals for leads is acceptable but charging lower fees for leads is not.
This one absolutely blows my mind. Every agent out there understands that listing homes faster is the key to success, but for whatever reason, we have an industry that is obsessed with paying referrals up to 40% for a buyer lead; yet our industry is adamantly opposed to charging less money to get a listing lead. I cannot open my social media feed without seeing a post in a real estate group asking what is the best source to buy leads, and when I simply ask why not charge less money to list houses, I am quickly shunned by the entire group. Can we please start encouraging entrepreneurship and innovation? Charging a lower fee to list a home is somehow “bad for the industry” but netting the same lower fee and paying a middle man is a totally acceptable way of doing business as long as the fees remain high. This line of thinking stops agents from getting ahead and keeps the lead providers fat and happy.
Problem 2: Brand new agents with no experience are taught to charge the same fees as experienced professionals.
One of the biggest problems I see in the industry is everyone knows their worth and that worth is always incredibly similar regardless of their accomplishments. One of the major issues the public has is the extreme gap between the true professionals in the industry and the brand new agents that all charge the same fees. It is all about expectations absolutely not being met, which causes such friction between the public and the real estate industry. If I pay a luxury price, I want a luxury service, but when virtually everyone charges that luxury price, how does the public discern who’s worth it? What if they make a poor choice and they get stuck in a long-term agreement with a brand new, inexperienced agent who is doing a great job of faking it until they make it? In every other industry price comes into play and that is how you can tell the difference between luxury and affordable. But when it comes to “the industry,” everyone is taught and expected to charge the luxury price regardless of their actual worth.
Problem 3: We absolutely “know our worth” and we continually expect everyone else to devalue their worth for our benefit.
Lenders and title companies are expected to sponsor everything as well as “co-market” with agents. Every single day I get an email from a brokerage offering to let me keep nearly 100% of my commissions while offering me tons of free stuff. Why would all these brokerages start charging agents less money? Don’t they know their worth? Perhaps they understand that amassing agents is the key to success as a broker? We all know the same holds true for listings, so why aren’t agents taking the same approach to get listings? Why are we so opposed to providing the same courtesy to our clients that so many agents demand of everyone else?
In summation, let’s be honest with ourselves. These lawsuits needed to happen because we refuse to listen to anyone except industry insiders. How many of you have actually spoken to current or past clients about the lawsuits and asked them how they feel? How many of you immediately retreated to our industry peers, coaches and brokers to confirm your already held beliefs? With all of this happening around you, if you haven’t put in any effort to hear how your clients feel about the lawsuits, are they truly your main concern or are your concerns really about protecting the industry? You can’t be a true fiduciary for someone if your first interaction is to try to get the highest possible fees out of them. It’s supposed to be about the clients and yet somehow it never is; or stated better, it’s always about the client as long as the fee remains high.
