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WASHINGTON, DC — National Association of Realtors President Kevin Sears spontaneously — and sometimes bluntly — fielded questions from attendees seeking clarity around the proposed settlement of commission lawsuits during a forum Sunday at the 1.5 million-member trade group’s midyear conference.
Sears spoke at the Idea Exchange Council for Brokers Forum at the Realtors Legislative Meetings in Washington, D.C., where he thanked the 100 or so attendees for combatting what he deemed “misinformation,” “half-truths” and “plain bad reporting” from the media regarding the proposed settlement.
He also told attendees to encourage their agents to take NAR’s Accredited Buyer’s Representative (ABR) designation course, which is free through the end of the year “to equip our members to have the tools that they need in this new world.”
The day NAR signed the settlement, March 15, was “the first day of our future,” Sears told attendees.
“We have a hearing scheduled at the end of November for final approval and we’re gonna do everything we can to get that through so that it can be in our rearview mirror. We need to make sure that it’s behind us so that we can find what the new normal is going to be for us, for our agents, for the consumers that we serve.”
He then offered to answer any questions attendees might have and about a dozen took him up on his offer.
Attendee: In the settlement, it talks about a seven-year agreement. Does that mean that after the seven years, we’re just going to go back to putting it [compensation] on the MLS? Or what does that mean?
Kevin Sears: What that means is in seven years, we can decide whether we want to put the toothpaste back in the tube. What is the market going to look like in seven years? I don’t know. What is the association going to look like? Well, I can tell you we’re going to look a little different. We’re going to be probably a little more streamlined.
I am very confident though that we’re going to come out of this stronger, better for it. Some of this stuff, it sucks. I get it. But if there’s one thing I know about Realtors, [it’s that] we’re resilient. We adapt. At the end of the day, what we’re going to do is we’re gonna do everything we can to help our consumer to be able to freely buy, sell, lease and transfer real property because we’re pretty darn good at that.
I would suggest, if we can, to make the SRS [Seller Representative Specialist designation] also free because if we’re talking about buyers, we also need to be talking to sellers and we need to have good information.
Sears: We made the decision about the ABR for the settlement. Obviously, we were negotiating the settlement. But with everything, it costs money. First quarter of next year, we’re gonna write a pretty big check [to comply with the settlement]. The next three years, other big checks. So we’ll have to look at that. I’ll bring it right back to the team. I’ll see what we can do. Everything is on the table. Thank you for the suggestion.
What’s your message to Realtors to bring us together before we bring our message to the public, so they can understand our value?
Part of the settlement is we have a written agreement with the buyer before we tour any properties. We were very specific in the words: a written agreement with the buyer. We didn’t say a buyer rep contract because there’s some states that have transactional brokerage, Florida being one.
Any opportunity that we get to have a conversation with the consumer, where we talk about the value and expertise that we bring to the transaction — “Oh, by the way, this is how much I expect to get paid and this is how it can happen” — the more communication, the more conversations we have, the better off everybody’s going to be. And so clearly you have to be able to articulate the value that you bring to the transaction, and I think that’s where we can rally around because we know the expertise that we have and how we can help the consumer to navigate through the complex process of a transaction.
I really appreciate the messaging that we receive from NAR as agents. But is anyone planning any sort of messaging to the general public? Because their perception of us is Hollywood broker, million dollar commission. We need to have messaging that shows us working with first-time homebuyers.
Two things. 1. The consumer ad campaign has changed up a little bit this year. What we’re trying to do is to show the scenario of the consumer being the subject of a commercial, rather than the Realtor. It’s the consumer’s story about their experience in the buy cycle or sell cycle. There’s an ebb and flow to the media buy for that.
The second thing is, despite the headlines that have been going out, the misinformation I talked about, we are pumping out information on a daily basis, multiple times a day. We’re giving data, good stories, but we can’t force the media to print it.
The second piece is our chief communications officer, Suzanne Bouhia, has had hundreds of meetings with different media outlets to talk with them about where they got things wrong, to correct the record. The problem with a correction is that usually shows up on page five in the bottom corner. The headline’s already done the damage. We’re not getting the same headline in the correction.
Try not to pay attention to the national media. For me, what I really care about is the local media. We’ve got over 400 Realtor members across the country who have said we’re willing to be a media surrogate and help tell our story and connect consumers with the media so they can tell their stories. Because it’s the local media that, for me, really matters.
We are the fabric of the community and they know it and we need to tell our story to anyone that will listen, whether it’s the media, regulators, elected officials. I do appreciate what you’re saying about the consumer. But we all need to help in that effort.
There’s been a lot of discussion about “We’re all just going to leave NAR.” I have heard if you leave before a certain date you’re not covered under the settlement. I think in all fairness, to help everybody understand the value of NAR, that we put the message out that says, “These things can happen to you.”
Well, we’re actually expecting a membership drop, but it’s because of the economy. It’s because of the market. Maybe a very small percentage will be because of the settlement. [The settlement] should reinforce the three-way agreement [between the local, state and national associations].
In the settlement, we’re protecting all local, state and territory associations. If they leave, they’re not protected. If you’re in a state where you have licensee practitioners who aren’t Realtors, now’s the time to actually recruit them. If they are members of the classes noticed in August, they will be protected by the settlement.
So I would just say, go back to your local associations or your brokerages and say, “Hey, let’s try to get some of those licensees to join us and we can sell it, saying we’re gonna be protected based on selling if you’re a member by the end of July.”
My entire immediate family are veterans except for me. When do you anticipate the VA updating their policy? Because we need to represent and help our veterans.
We’ve had continued conversations with the Veterans Administration. We’ve sent letters. [NAR Chief Advocacy Officer] Shannon McGahn and her team are meeting with them. We’re looking at their policies and if they can modify, tweak, change some of them.
There might be an avenue through Congress, a legislative fix, but it’s not going to happen tonight. It’s not going to happen tomorrow or next week or next month. Because these policies took years and decades to come into play, but we are working on it.
Because here’s the thing, not only veterans are we concerned about. First-time homebuyers, first-generation homebuyers, homebuyers in brown and black communities. We’re very concerned about the disparate impact that this could have.
There are 18 states that currently have buyer rep contracts as part of license law or statute. There’s another handful that will be implementing this year. And so what we do is look at those states for best practices because they’ve been able to serve veterans in those states, and it’s mandated that they sign the contracts, the buyer rep agreements. So we need to learn the best practices.
But then the second thing we need to do, we need to do a better job training our listing agents. Listing agents don’t understand the VA, and they’re afraid and nervous of it, and they convey that information to their sellers rather than say, “Mr. and Mrs. Seller, it’s an honor. This person that sacrificed their life for us and our country and our freedom and our ability to be able to freely buy, sell, lease and transfer real property, let’s work with them instead.” Agents are, I’m sorry to say, some are lazy and afraid, rather than really fully understanding. So we need to go back home and get out to the folks that are taking listings and say, “Hey, we need to give our veterans their fair shot.”
There are some questions about the conversation around a compensation amount being a limited amount according to the agreement, or is there a space for a range because of the different variances offered potentially by a seller or a listing agent?
In the written agreement you need to state what services you’re going to provide for the buyer and what you expect to get paid. If you put it on a written agreement with the buyer and the offer of compensation [from the seller or listing agent] is actually more, you can’t accept more.
Now, have you ever had a contract that’s been amended? Have you ever eliminated one contract and signed another contract?
I’m not telling you to do that. Seek legal counsel. No, I’m kidding. But we will figure this out. We’ll figure out how to navigate it. I don’t have a full answer for you other than yeah, we’re going to have to work with the consumer. But at the end of the day, so long as the consumer understands what services we’re gonna provide and what we’re expecting to get paid, then I think that we’re gonna be okay. There’s going to be a learning curve, but we’ll make it work.
Our state AE [association executive] doesn’t even know the two media representatives that were chosen for our state. How are those people being chosen?
The media surrogates, we’re asking them to self-identify. Hands were raised, and we said thank you. If there are others that would be better or added to the list, we need to know. Let us know.
[Brokerages] understand why we had to settle. They understand that there are rules that are changing. What they can’t understand is why anyone thinks it’s a good idea to remove compensation from the MLS.
It’s not. It’s so transparent [to have it in the MLS] that our MLS is currently the envy of the world. The plaintiff’s attorney did a great job convincing the jury in Missouri. It’s not good. It sucks that it has to change.
So the question is, is there something that we can rely on Congress to do?
Be very, very careful what you ask for. [Attendees laugh.] Do you want Congress regulating how you get paid? This is what you have to understand: If we go that route, next thing you know, the CFPB [Consumer Financial Protection Bureau] will be involved.
OK. [Questioner immediately walks away from mic and audience laughs.]
What do you see forward as far as an opportunity that we can begin to embark upon, so we’re part of the cream that rises to the top?
I love the fact that you said that because with every challenge there’s an opportunity. I think the true professionals in our industry are going to thrive. They are going to kill it because they can communicate their value. That’s where the opportunity is: being able to continue to have that conversation with the consumer and explain why it makes so much sense for them to use a professional because of the expertise and knowledge that we bring to the transaction.
