The post NAR settlement may disrupt mortgage partner agent programs appeared first on Inman.
]]>A proposed settlement to resolve a slew of real estate commission lawsuits could make it harder for mortgage lenders to drum up business by offering incentives to homebuyers who agree to be represented by the lenders’ partner real estate agents.
Some big mortgage lenders, including Rocket Mortgage, loanDepot and Better, collect referral fees from partner real estate agents in exchange for sending them “leads” — unrepresented buyers who have qualified to take out a mortgage or who are shopping for a lender.
Lenders can incentivize buyers and sellers by promising those who agree to work with partner real estate agents thousands of dollars in cash or closing credits — essentially rebating some of the commission the buyer or seller pays their agent.
One such partner agent program, offered by Navy Federal Credit Union, is powered by a subsidiary of Anywhere, the real estate franchise giant. Formerly known as Realogy, Anywhere’s brands include Better Homes and Gardens Real Estate, Century 21, Coldwell Banker and Sotheby’s International Realty.
But the National Association of Realtors may have unintentionally thrown a monkey wrench in the gears of mortgage lenders’ referral programs by agreeing to prohibit listing brokers from making offers of compensation to buyer’s agents through multiple listing services (MLSs). NAR did not respond to Inman’s request for comment.
That prohibition — part of a proposed $418 million settlement that NAR announced Friday in the hopes of resolving a swarm of commission lawsuits filed by homesellers — could make it harder for lenders to advertise incentives to consumers who agree to work with their partner agents.
That’s because mortgage lenders often recoup at least part of the cost of providing those incentives — which can amount to thousands of dollars in cash or closing credits — by charging agents (or their brokers) a referral fee, typically a percentage of the commission the agent earns if the “lead” buys a home.
The proposed settlement — which would also require buyers’ agents to enter into written agreements with their clients — could make it riskier to offer such incentives to consumers since it would be harder to know in advance how much a buyer would actually be willing to pay their agent.
Once they’re asked to enter into a written agreement specifying how much they’re willing to pay their agent, some buyers might even decide they don’t want to work with a buyer’s agent at all.
To facilitate the payment of referral fees, many mortgage lenders have formed their own real estate brokerage businesses. But the real estate brokerages operated by mortgage lenders typically don’t employ many agents or provide services directly to consumers.
Instead, they exist primarily to provide lenders with a mechanism to receive referral fees from other real estate brokerages that do employ agents, and to populate property search portals with listing data from multiple listing services (MLSs).
Rocket Mortgage’s parent company, for example, also operates a real estate brokerage, Rocket Homes. The brokerage’s property search site, RocketHomes.com, attracts about 1.5 million unique visitors per month.
To incentivize homebuyers, Rocket Mortgage’s “BUY+” program, promises a closing cost credit equal to 1.25 percent of their loan amount (capped at $10,000) if they are represented by an agent partnered with Rocket Mortgage. (When announced in April 2023, the program originally provided a 1.5 percent closing cost credit).
Rocket Homes’ role in the process of matching buyers to agents not only makes it a potential defendant in real estate commission lawsuits, but the outcome of those lawsuits could affect its referral business, the company noted last month in its 2023 annual report to investors.
“In addition to litigation risk, developments or outcomes in such litigation or other legal proceedings involving the operation of the real estate industry could result in a significant change to the broker commission structure, the effect of which could result in reductions to the share of commission income received by Rocket Homes in both our core referral business and in our efforts to list and sell homes from our centralized location,” Rocket Companies disclosed to investors.
Representatives of Rocket did not respond to Inman’s requests for comment.
LoanDepot offers up to $3,500 cash back for buying a home with a mellohome-approved real estate agent and financing through loanDepot.
In its latest annual report to investors, loanDepot describes its mellohome agent matching service, Home Services LLC, as “our wholly-owned captive real estate referral business. A large portion of our purchase-oriented customer leads have not yet selected a Realtor, thus affording us the opportunity to provide a more integrated customer service between the two key homebuying functions, as well as capture ancillary revenue in a RESPA-compliant manner.”
RESPA — the Real Estate Settlement Procedures Act — is legislation intended to help mortgage borrowers shop for settlement services like title insurance, without having to pay kickbacks and referral fees that can increase their costs.
In 2021, loanDepot launched a “Grand Slam” package of incentives providing cash rebates of up to $7,000 on bundled services when clients buy and sell with a mellohome preferred real estate agent, finance with loanDepot, and choose the company’s title insurance services.
A loanDepot spokesperson said the company had no comment on the potential impact of NAR’s proposed commission settlement on the company’s partner agent incentives.
Navy Federal Credit Union’s RealtyPlus program offers $400 to $9,000 cash back to homebuyers and sellers who sign up to be connected to a real estate agent in Navy Federal Credit Union’s agent partner network, which is powered by franchise giant Anywhere.
According to a website FAQ for the Navy Federal RealtyPlus program, Anywhere splits a share of its commission with Navy Federal Credit Union when buyers and sellers who are referred to agents affiliated with Anyhwere close a deal.
“When you buy or sell a home through our program, the real estate company splits their commission with us,” prospective borrowers are informed. “This commission split is a common practice in the real estate industry and is used to increase business for the broker and provide a savings to homebuyers and sellers.”
Representatives from Anywhere and Navy Federal Credit Union acknowledged receiving Inman’s requests for comment on Friday but had not provided responses by publication time Monday.
Better offers a $2,000 closing credit to buyers who work with a Better Real Estate partner agent. After shutting down its in-house real estate brokerage services last year, Better moved “to a purely partner model” with respect to Realtors, pairing borrowers who come to Better to get preapproved for mortgages with agents in their local markets.
When Better unlocked $565 million in fresh capital by consummating its long-awaited SPAC merger in August, Better CEO Vishal Garg told Inman that the company would hire mortgage loan officers, coordinators, processors and underwriters and “aggressively” partner with real estate agents to grow the business to “greater heights” than before.
A spokesperson for Better said in a statement that the company “would expect demand for our partner agent program to increase significantly as a result of the NAR settlement.”
Better declined to address whether uncertainty over how much homebuyers might be willing to pay their agent if the NAR settlement takes effect would impact Better’s ability to advertise that they can “save big” if they “match with a partner agent and save $2,000.”
Better’s position is that “if the fee for buy-side Realtors has to be paid for through the mortgages, then customers will increasingly turn to the mortgage companies for help selecting a Realtor who is price efficient. Similar to title insurance and homeowners insurance programs, we believe that we will be able to help consumers match with the Realtors who deliver the best value for them.”
Sharon Cornelissen, director of housing at the Consumer Federation of America (CFA), said that if adopted, NAR’s proposed settlement will provide “additional incentive to lenders to make sure the real estate agents they partner with offer high-quality services at great prices.”
“We hope that lenders will explore products that will help pay first-time homebuyers for the additional closing costs of paying for a real-estate agent as well,” Cornelissen said in an email to Inman. Even though the CFA expects commission costs to drop, “I think ‘closing costs’ programs will be more necessary than ever.”
Editor’s note: This story has been updated with comments from the Consumer Federation of America, and to note that loanDepot declined to comment.
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]]>The post Thanks to NAR settlement, real estate is in its Wild West era appeared first on Inman.
]]>The ides of March are upon us and exactly on March 15, which is the date associated with misfortune and doom in the ancient Roman Calendar, NAR’s commission lawsuit settlement was announced.
If you were blindsided by the news of the NAR proposed settlement, you are not alone. I am still trying to make sense of it all, but it feels like we’ve been hit by a sledgehammer.
We should have seen the signs. NAR remained extremely quiet throughout the course of it all, providing members with very little guidance that we weren’t already getting from our brokerages, and state and local associations. They were late in the game to respond to ongoing attacks of inaccurate, clickbait media stories about our profession that are continuing.
There did not seem to be a rapid-fire communications team at the ready to respond to these issues, other than the same few sentences that were repeated time and again. Because if the media pounds the message out enough, no matter what the news source, it becomes reality to the public and misinformation and misinterpretation spread like wildfire.
Then there was the offer to take the Accredited Buyer Representative (ABR) course at no charge. Something was brewing.
Once again, the very association that we have been required to join has failed to protect our compensation, and that is putting it lightly. There was the fallout that ensued regarding the sexual harassment and illicit behavior issues at NAR, with several leadership changes in a short period time.
The distraction and dysfunction of those situations, coupled with massive litigation, have exposed the cracks in the organization. Over the years, NAR allowed MLS data to become a free-for-all, in which the “empowered” consumer has become entitled to it, think they don’t need us and we are a public information service about properties.
Listing data is so transparent that many think our role is no longer needed. We are fighting against ourselves, trying to justify our value, and tooting our own horn in a room by ourselves, but is the consumer really listening, and do they even care?
The reality is they only care about getting a property that meets their needs with little regard for the process involved in getting it, and who gets compensated, if at all.
The media is running rampant with inaccurate headlines, such as The New York Times: Powerful Realtor Group Agrees to Slash Commissions to Settle Lawsuits. Of course, the proposed settlement does not mention slashing commissions, because all commissions have always been negotiable, vary in offerings and no dollar amounts have ever been discussed.
But this headline will reinforce the public belief that they’ve been overcharged for every real estate transaction they’ve been involved in and that Realtors do the same amount of work no matter the transaction or price.
For some reason, the attorneys, DOJ, media, consumer and the court of public opinion do not acknowledge the risks involved in getting paid as a 100 percent commission-based profession.
The references to how other countries do real estate continue to be mentioned in a lot of this litigation rhetoric, but no details are ever shared other than: See, in Japan they only charge X percent, etc.! Well, this is the United States of America, and we are not structured like other countries.
Many of these countries offer health care, people are generally compensated better in various professions compared to the United States, and there are inherent cultural differences. Most importantly, it is the law in those countries to require consumers to pay their agents.
If the buyer doesn’t compensate their agent by contractual agreement, the agent has the right to sue. I dive into a lot of this in my article: “Real estate the Australian Way? It Won’t Solve US Commission Woes.”
The questions continue to stack up as this situation continues to evolve, particularly about compliance and enforcement regarding compensation, which I hope we will get answers to very soon.
With all the discussion about transparency, I would have never imagined that NAR would have agreed to remove offers of compensation from the MLS.
In my article “9 post-Sitzer questions we still don’t have answers to,” I pushed for more transparency in terms of showing what the compensation was on both the listing and selling sides to all agents and consumers, since buyers may have to participate in the compensation to their agent.
As a result of this ruling, agents have less protection than ever before. We have always been a contingency-based profession, which carries its own sets of risks — the buyer may not buy with us, and the seller may opt not to sell and take their home off the market.
Although not perfect, between the MLS rules and the NAR Code of Ethics, both had most of the agents playing nicely in the sandbox and ensuring we got compensated.
I realize there have been exceptions to this and many horror stories regarding procuring cause and other less than transparent situations because of buyer, seller and sometimes just bad agent behavior.
Now, we are heading blindly into the real estate ether, working tirelessly on behalf of a buyer with no idea if we will be compensated (despite having a buyer agency agreement) or what a seller may be willing to do.
How is that OK? Every other profession and service provider has a fee or a price they charge which is known upfront.
We have the freedom to charge a retainer or hourly fee for the work we are going to do, or time spent, but administration, oversight and enforcement of that is another matter.
Any number of things can happen; our current enforcement provisions were always limited and now don’t mean much. What is to prevent a buyer and seller from going around the agents in a transaction to negotiate a better deal directly?
While offers of compensation cannot be made contingent upon an offer getting accepted, let’s be real: if the seller has a choice between compensating a buyer’s agent or not (and the buyer is limited in their financial bandwidth of what they can do), the seller won’t want to consider the offer asking for buyer agent’s compensation.
Some listing agents may not want to work with certain agents bringing buyers. Unfair bias may ensue on any number of things that will go unchecked: the listing agent doesn’t like X brokerage, had a bad experience with them and won’t offer any compensation to any agents from that company, but is telling agents from other companies that compensation is available.
Other listing agents may have preconceived notions about buyers based on race, background, creed or sexual orientation and a seller and/or agent who is biased may discourage interest from the agent representing that buyer by telling them they aren’t offering any compensation or offering very little on purpose, to discourage interest.
There is no way to vet what the buyer’s agent or their client may be told because nothing is disclosed in MLS. So what does the agent and their buyer do at that point? Take a chance, show the property and submit an offer to test that theory out?
This brings up another question: When a transaction closes, will it be disclosed what fee if any was paid to the listing and/or buyer’s agent in the MLS or anywhere else? Only then could an agent who feels the listing agent was less than transparent with them see what really happened, but by then it is too late. In the interest of transparency, we absolutely need to know.
At that point, are we going to get mired in filing complaints and lawsuits that will likely far exceed the cost of the commission because it is going to be a they said/they said at point? The compensation paid (or not) is likely to impact the final sales price. We will need to know this information when reviewing comparable sales for both buyers and sellers to advise them on values, as will appraisers.
We as an industry are not set up to run interference with the fallout that could ensue from this. Agency relationships and all that we know may have to be completely redone. It is almost like starting over as a brand-new agent, and you have to hit the delete button on all you’ve known.
The learning curve is going to be huge, and the biggest challenge will be getting all agents on the same page on how to do things the proper way, whatever that is. We will be up against a lot of confusion, misinformation and misunderstandings between agents and consumers alike.
There is already an inherent amount of distrust among agents of getting screwed over by each other in the best of circumstances; the MLS served to establish what agents working with buyers could expect compensation-wise. There have always been shady situations that have occurred between agents and consumers, and the MLS helped to protect what the agent bringing the buyer could expect to be paid.
Now, it is a free-for-all; the rules are there are no rules. And don’t think for one second there won’t be those trying to find ways to dodge paying hard-working agents.
With agents not having to be members of the MLS to be compensated for their work, this adds even more confusion to the fire. What rules are agents going to be playing by?
The NAR Code of Ethics won’t seem to mean much, so is there going to be a new playbook written that applies to all agents with a real estate license no matter what organizations you belong to (or not) and if you call yourself a Realtor or are a real estate agent?
Will a new title need to be procured for all of us? Real estate advocate or adviser? Will we see brokerages and agents opting not to list properties in MLS? Trying to keep up with all that is on the market in a comprehensive and efficient way will be mayhem.
Will listing agents and sellers want to negotiate compensation with 20 different agents before they show their listing? Agents working with buyers have a right to know what they will be paid or not before they drive 50 minutes to show 10 properties. Their buyer may not be able to afford to pay them in certain circumstances, and along those lines, cannot afford to simply add the cost of the compensation to the sales price, as that may push their monthly payment beyond their comfort level, or push them past the max they qualify for.
So, welcome to the Wild West. Everyone is going to be in different sandboxes, and all of this will contribute to unnecessary confusion. The fear for agents stems from not knowing who will pay them and how much — if they can get paid at all — with no practical means of ensuring compensation.
Are we going to be ready to sue a buyer at the drop of a hat with legal counsel on standby, ready to send a demand letter? While that sounds like a great idea, who would pay for that? Most brokerages are running lean due to the market shift as well as all of this litigation and won’t be able to take on that expense. Neither will agents.
Besides, all compensation is payable to the broker, so the brokerage really needs to be the one taking that on.
Four and a half months later, here we are with settlements to the tune of hundreds of millions of dollars, and the only thing it has done is have the plaintiffs’ attorneys essentially hitting the lottery.
What’s the point of remaining a member of NAR or an MLS? Maybe an alternative system needs be started that isn’t part of any of this, so we can get back to common sense.
Good luck out there everyone. We are going to need it.
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]]>The post Blackstone president: Now it’s time for real estate investors to pounce appeared first on Inman.
]]>The president of Blackstone believes real estate prices have bottomed out, and the time for investors to jump in before they recover is now.
Jon Gray, president of the $1 trillion asset management firm, said in a recent interview with Bloomberg that investors exercising too much caution right now risk missing out on opportunities, as he believes real estate prices will soon be boosted by interest rate cuts.
“Now is probably a good time, before rates come down, to move,” Gray said. “Perception is so negative, the headlines are negative, yet the value decline has occurred.”
Gray described the current market as a “bottoming period” that should inspire investors to get moving on new purchases and that investors who move fast stand to be rewarded once prices recover.
“I’m not saying there is some V-shaped recovery, but when you get into this bottoming period, that’s when you want to move,” Gray said. “As investors, you miss it by being overly cautious and I think now is probably a good time before rates come down, to move.”
Gray further explained that the forces shaping the current real estate market have already taken place, and that the next major mover of forces should be the Federal Reserve’s lowering of interest rates.
“Real estate has obviously been hit by two big forces here, one work from home, which has really hit the office sector, and the second is rising interest rates, which has caused cost of capital to go up and multiples in real estate to come down,” Gray said. “We’re seeing cost of capital start to come down, spreads are starting to tighten, and new construction’s coming down dramatically, so in sectors that we like — logistics benefiting from e-commerce, digital infrastructure, student housing, hotels — we think there are opportunities.”
The billionaire investor also added that while he expects some financial institutions to take financial hits from the ongoing real estate slump — with turmoil largely concentrated in commercial real estate — he expects that the sector at large will largely remain stable.
“I don’t think it’s systemic,” Gray said. “I don’t think this is like 2008-09 in terms of the scale that we’re facing, but I do think there will be some situations.”
With an asset management portfolio totaling $1 trillion, most of Blackstone’s real estate holdings are in commercial real estate, though the company also deals in credit, infrastructure, hedge funds, insurance, growth equity and secondaries, and it recently made a big bet on residential rentals with the $3.5 billion acquisition of the Canadian real estate firm Tricon Residential.
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]]>The post Richard Hottinger and team flip-flop back to Corcoran Group appeared first on Inman.
]]>Richard Hottinger and his team are some of the latest agents to change brokerage affiliations as top talent shakeups continue across the country. They’re returning to Corcoran Group a little over one year after moving to Douglas Elliman, Inman has learned.
The Hottinger Team’s move is a homecoming of sorts, although the same could be said of their move to Douglas Elliman last February. From 2010 through 2015, Hottinger and the team were at Douglas Elliman and then moved to Corcoran Group at the beginning of 2016. The Hottinger Team was then at Corcoran Group until February 2023, when it returned to Douglas Elliman.
Prior to joining Douglas Elliman in 2010, Hottinger was a solo agent for a brief period with Stribling & Associates.
“I am so pleased to have Richard and his team back with us at Corcoran,” Corcoran President and CEO Pamela Liebman said in a statement. “His incredible success is well known throughout the industry, and Corcoran is the perfect place for him and his team to capitalize on their outstanding reputation.”
Hottinger and his team have closed more than $300 million in transactions in the last three years, becoming the No. 45 ranked medium team in New York state in 2023 by sales volume with $116.34 million closed, according to Real Trends. That same year, the team was also ranked No. 18 medium team in New York City by sales volume, according to Real Trends. In addition to New York City, the team also operates in Miami.
In addition to Hottinger, the team includes agents Sari Ingerman, Frank Lulgjuraj, Adam Hernandez, Gabriella Abdelnour, Sofia Rovirosa and Melissa Au-Yeung.
“Corcoran is where I grew my career to what it is now and where I know I need to be to continue pushing the boundaries of what my team can do,” Hottinger said in a statement. “They say there’s no place like home, and to my team, Corcoran is home. We are thrilled to be back.”
When Hottinger made the move to Douglas Elliman last February, he cited new development opportunities and building a stronger presence in the Miami market as key reasons for the move. More recently, Hottinger told Inman that the team found themselves missing Corcoran, as the firm where they felt they had really honed their craft.
“At the time, moving to Elliman felt like the right idea, but ultimately, my team and I found ourselves really missing Corcoran as we built our careers at Corcoran — both the leadership and the prospects it offers our business,” Hottinger said in an email. “Corcoran Sunshine Marketing Group’s reputation is undeniable, and Corcoran’s influential presence in New York and South Florida is something I’m thrilled to embrace.”
In a statement emailed to Inman, Hottinger’s most recent firm said, “Douglas Elliman wishes Richard the best.”
The team specializes in new development, investment properties and luxury sales. Hottinger has been the sales director for numerous sold-out development projects and the team has represented buyers in several of Corcoran Sunshine Marketing Group’s noteworthy buildings. The Hottinger Team credits its success to effective client communication, transparency and team members with diverse experiences.
Update: This story was updated after publishing to add a comment from Douglas Elliman.
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]]>The post Video automation suite Roomvu lands at LeadingRE, Realty ONE appeared first on Inman.
]]>Marketing software company Roomvu has landed a pair of enterprise brokerage relationships that stand to push it into the everyday marketing arsenal of thousands of agents.
The deal also announces its official presence in the U.S. real estate market. It has been operating primarily in Canada, where its founder once worked as an agent.
Inman learned in a March 18 press release that Leading Real Estate Companies of the World (LeadingRE) and Realty ONE Group have both signed up to use the firm’s range of mobile video resources to power agents’ outreach efforts in the midst of a national slowdown that has no definitive turnaround date.
The software automates localized marketing in mobile video channels custom to each agent. It provides ready-made topical content themes and short-form messaging tactics to help users integrate digestible, shareable video into more expansive marketing plans.
LeadingRE’s Jeff Kennedy, vice president of sales and partnerships, said in a statement that agents can rest assured their marketing needs will be met.
“Roomvu sets itself apart with its advanced marketing strategy, offering a comprehensive suite of tools designed to elevate your marketing efforts,” Kennedy said. “Roomvu’s video customization capabilities empower you to create compelling visual content tailored to your specific needs, enabling you to captivate and resonate with your audience like never before.”
In a 2021 Inman review of Roomvu, the product was lauded for its ease of use in an area historically difficult to adopt for agents — video. The software automates creation and simplifies dissemination.
“The web-based solution offers users ready-made video content. Organized by categories such as Market Updates, Neighborhood Reports and Tips for Homebuyers, among others, Roomvu’s videos don’t merely repurpose weak stock footage. They look and perform as if each was built by a professional editor,” the review stated.
“This is quick, consumable content most ideal for social media and email distribution, both of which can be done from within the application, either as needed or through the calendar tool. Each video has an agent headshot and contact credentials, too.”
Email marketing, digital advertising, a lightweight CRM and AI-backed video creation assistant are also components of Roomvu’s product suite.
Roomvu is an alumnus of the NAR REACH program, a selective program designed to support and advocate for innovative products built to serve the real estate industry. It’s active in multiple geographic regions around the globe, including Australia and New Zealand, Canada, Israel, the U.K. and Latin America.
Sam Mehrbod, Roomvu’s founder and CEO, said in a statement that his goal is to replicate the success he’s had in Canada in the States and that large partnerships are key to the company’s ability to scale.
“Our technology is not just about marketing properties; it’s about empowering agents and brokerages to build their brand and connect with clients in meaningful ways,” he said. “We are committed to providing our innovative video marketing solutions to help agents and brokerages enhance their brand visibility, engage more effectively with clients, and ultimately, drive business growth in today’s competitive and challenging market.”
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]]>The post DelPrete: Here’s what’s driving agent migration patterns now appeared first on Inman.
]]>I recently wrote about learning from a new generation of brokerages, which includes the migration patterns of tens of thousands of agents across the industry.
Why it matters: Agents change brokerages for a variety of reasons — technology, compensation, support, brand — but it turns out one of the biggest factors may simply be that agents are attracted to new things.
Dig deeper: Aside from compensation structures, another factor appears to be at play: the average age of the brokerage.
Which raises an interesting question: why?
The bottom line: The industry is shifting, and one powerful trend is the migration of agents between brokerages.
Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.
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]]>The post Douglas Elliman doles out Ellie awards for top NYC producers appeared first on Inman.
]]>Douglas Elliman unveiled its annual Ellie Awards this week, singling out brokers who performed well despite challenging economic conditions.
The awards focused on agents working in the Manhattan market, where Elliman saw sell-side volume fall by more than $2 billion to $4.2 billion during 2023.
Elliman’s top producers in Manhattan combined for 21 sales over $25 million, according to an announcement from the brokerage.
“Despite very real challenges in the market, Elliman agents broke monumental sales records, broke into exciting new markets and broke ground on stunning new developments,” Douglas Elliman Realty President and CEO Scott Durkin said in the announcement. “It was mesmerizing to watch and truly a master class in how to beat the odds and achieve success.”
Ann Cutbill Lenane was named the top-earning individual agent, and the agent with the most sales in Manhattan, while Shari Scharfer Rollins was named the top individual agent by volume.
In the teams category, The Holly Parker Team ranked first for large teams sales volume, with the Noble Black Team and the Michael Lorber Team following. In medium teams, The Erin Boisson Aries Team ranked first and the Janice Chang Team was the highest-ranked small team.
Noble Black’s team was highest ranked for the highest gross commission earned for large teams, while Holly Parker’s team came in second followed by the Rubin Team and Michael Lorber’s team.
The Rubin Team was the large team to sell the most units, while the Kirsten Jordan Team earned the designation for medium teams and the Capotorto Team for small teams.
In Brooklyn, The Scott-Robles Team was named the borough’s top medium team by gross commission income, while the Christina Kremidas Team was named the top small team.
Rebekah Carver was named top individual agent by gross commission income in Brooklyn, while Margula Roumani claimed second place for that title.
The Eklund-Gomes team was named to the Billion Dollar Club, an award given to teams with $1 billion in sales volume.
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]]>The post An anticipated settlement still shocks the real estate industry appeared first on Inman.
]]>The real estate industry was shocked on Friday by news that the National Association of Realtors had reached an agreement to make sweeping changes to the way homes are bought and sold in the United States in a proposed settlement of lawsuits challenging the industry.
The changes are widely expected to add transparency and complexity to the way buyer agents are paid, with several industry experts saying commissions, and possibly even home prices, will fall as a result.
NAR said it worked with the plaintiffs in multiple lawsuits mounting across the country to come up with a list of reforms and pay a $418 million penalty in an effort to protect the organization, and two-thirds of its members, from lawsuits moving forward.
“Commissions will become more transparent as a result of all this and that will also put downward pressure on commissions,” said Stephen Brobeck, senior fellow at the Consumer Federation of America, which has long called for changes similar to those agreed to in the settlement.
“It’s going to ultimately bring down consumer costs,” Brobeck said. “In fact, it even ought to lower housing costs.”
As part of the proposed settlement, which still needs to be approved in court and will likely be scrutinized by the Department of Justice, NAR agreed to create a rule by July that would remove offers of compensation from the multiple listing services.
MLS participants will be required to work with buyers to enter into written buyer representation agreements before touring homes, according to a framework of the settlement, which has yet to be released publicly or filed in court.
It’s not yet clear which cases were included in the proposed settlement. NAR noted that some litigation is still ongoing, suggesting that Friday’s settlement wouldn’t absolve brokerages and franchisers from the threat of litigation in all of the nearly two dozen cases filed across the country in recent months.
Representatives from NAR, as well as their legal team, didn’t respond to requests for comment on Friday. However, many welcomed the news as a positive change that could clear the lingering dark clouds that had been gathering over the industry.
“On a scale of one to 10, the National Association of Realtors’ decision to shift the buyer side commission burden from sellers to buyers is a 10 and represents nothing short of a sea change,” said Toby Schifsky, vice president of real estate education at Kaplan. “This new landscape means a steeper climb for all agents who are going to have to prove their value to potential clients.”
In the outline, NAR shared a framework of the upcoming rule changes that could be made as soon as mid-July. The group also made clear who was covered and, notably, who wasn’t.
Over 1 million members — about two-thirds of the organization’s total membership — received blanket protection from plaintiffs in the cases. It included all state and local Realtor organizations and all multiple listing services that are wholly owned by Realtor organizations.
All brokerages that conducted less than $2 billion in residential transaction volume in 2022, and who had an NAR member as principal, were also covered.
Notably absent from the proposed settlement is HomeServices of America, which has also been resolute in its determination to fight in court. Some believe that a settlement is likely on its way.
“I would anticipate you’ll see a settlement that includes them as well fairly quickly,” said Marty Green, principal at mortgage law firm Polunsky Beitel Green. “Going this alone doesn’t make any sense at all for them.”
A representative from HomeServices declined to comment, saying that the firm hadn’t seen a copy of the proposed settlement.
The settlement was a fraction of the damages NAR and HomeServices were ordered to pay as part of the verdict in the landmark commission-setting case known as Sitzer | Burnett. The jury ordered the defendants, who at the time included NAR, HomeServices of America and Keller Williams, to pay $1.8 billion in damages, an amount that would automatically triple to $5.3 billion.
It’s not clear just which of the nearly two dozen similar cases would be settled by the proposal. NAR referred only to “copycat” lawsuits and noted that litigation would continue in at least one case, known as Batton I, filed by homebuyers in Illinois.
Lawsuits filed by buyers “are not resolved with this,” said Edward Zorn, chief counsel for the California Regional Multiple Listing Service. “But those are very weak cases compared to what has been happening on the seller side. That is still to be determined.”
Still, news of the settlement was shared across major news outlets nationwide. Industry insiders said they expected consumers to take note that change is coming and would begin asking questions immediately.
“This is a really significant move,” said Clelia Peters, managing partner of Era Ventures. “It’s going to impact consumer perception. Within that context, I suspect it will make it materially harder for the status quo to be maintained.”
While many industry insiders expected NAR to eventually reach a settlement, the news still came as a surprise and shows how quickly things changed after being kept under wraps before Friday.
Just Wednesday, NAR Chief Legal Officer Katie Johnson planned to tell CEOs of state and local Realtor organizations at an NAR event in San Diego that the verdict was “flawed” and that NAR had made motions asking for a favorable ruling from the judge overseeing the Sitzer case.
Fewer than 48 hours later, on the final day of the event, The New York Times first reported that NAR’s legal team had agreed to terms of a proposed settlement and that the real estate industry would enact sweeping changes to the way homes are bought and sold in the U.S.
“I think this shocked everyone,” said Andrea Geller, a broker with Berkshire Hathaway HomeServices Chicago.
After the story was published and the news was spreading like wildfire through a dry field, NAR President Kevin Sears sent an email to members with a framework of the proposed settlement.
Others said this was yet one more instance of NAR botching the rollout of an important update.
“My mom broke the news to me this morning,” said Karen Stone, an agent with Engel & Volkers in Park City, Utah. “My mom should not have broken this to me. The more I think about that the more annoyed I am.”
Ultimately, news of the proposed settlement caught many within the industry off guard.
“I really expected this to drag out for a while,” said Kevin Kauffman, a team leader with eXp. “In some sense I’m surprised, but in other ways I’m not. We knew something was going to happen.”
As the industry grasped the fact that a settlement was reached, experts quickly worked to understand what would soon change.
“Leading agents … go read your favorite book on negotiation,” said Keith Robinson, NextHome Strategic Officer, during a livestream on Inman Friday. “There’s a whole level of negotiation that is coming soon that you are going to have to get good at.”
Still, there is much left to unravel.
While the proposed agreement provides some clarity around the future of real estate transactions, there are many unknowns.
NAR said the proposal would allow sellers and their listing agents to continue offering compensation for buyer broker services, but that those offers won’t appear in the MLS.
What’s not clear is what happens when sellers offer a commission that’s lower than the amount a buyer and their agent have agreed to in their buyer representation agreement.
Compass broker Jason Haber — who led the calls for reform of NAR as an institution and recently co-launched a competing trade group with The Agency founder Mauricio Umansky — on Friday called for changes to mortgage rules to allow for buyers to be able to finance their agents’ compensation.
“The American Real Estate Association is calling on Fannie Mae to immediately raise the interested party contribution limits so that buyers have the ability to finance their agent commission,” Haber said.
Also unknown is how quickly the conversations with consumers and other promised reforms will lead to broader changes in the industry, if at all.
Still, analysts at the investment banking firm Keefe, Bruyette & Woods said they expected changes to happen quickly.
“We still think the ultimate timing of changes will prove much sooner than what many market participants and investors were expecting,” the analysts wrote.
In the weeks leading up to the Sitzer trial, KBW released a report that said analysts expected the total commission pool in the U.S. would fall by as much as 60 percent if commission sharing was banned.
“We believe disruption to the industry’s commission structure,” KBW analysts said at the time, “is all but guaranteed.”
But many industry insiders said they don’t expect fewer agents would necessarily be a bad thing for top producers who remain in position to scoop up market share in a world with fewer competing agents.
“The industry and NAR were very wise to settle this litigation right now, to get it behind them as quickly as possible,” Brobeck said. “As interest rates go down and housing inventories increase, real estate professionals, not just salespeople, real estate professionals will face a very bright future. Lower commissions, but many more sales. Because the number of agents, most of whom have little experience, will decline dramatically.”
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]]>The number of real estate agents is on a downward trend, and will likely decline further as market forces and industry shifts push newcomers and veterans alike to the brink.
Most brokerages, meanwhile, seem actively intent on growing their ranks with those who stay in the game.
According to the latest Inman Intel Index industry survey, 6 out of 10 agent respondents said they were recruited by a competitor in the first 60 days of 2024. That same share rises to more than three-quarters of real estate agents when you look back to the start of last year.
While respondents alluded to how the constant recruitment push is an industry norm, at least in their experience, others indicated the pace is increasing.
Here is a sample of anonymous quotes from those who answered the question in February’s survey, which included 563 real estate agents among the 811 total respondents:
Recruitment efforts generally grew in tandem with tenure, track record, experience navigating previous downturns and industry knowledge.
The survey did show a pronounced drop in 2024 recruitment for the longest-tenured agents, a group that was nonetheless in line with other veteran agent cohorts going back 14 months.
The share of agents who said they are likely to change brokerages in 2024 doubled month over month and is now approaching 10 percent. For broker-owners focused on the other side of this coin—retention—the Intel Index survey revealed emerging trends there, too.
Outside of the agents with less than one year in the industry, at least 55 percent of every other group ruled out a company change entirely. Conversely, no group outside of the newest agents had greater than 7.5 percent say they were 100 percent certain they were switching brokerages.
One segment of agents that stands out and may be of particular interest to those on offense and defense is the group with 1-2 years of industry experience.
While a slight majority sat on the most steadfast end of the scale, over one-quarter marked their likelihood of switching brokerages as a 3 or higher. This is the highest concentration among the tenure brackets.
Also notable among a group that has only really experienced a housing downturn is it had the highest number of respondents who had changed brokerages in 2023.
The reasons behind their moves largely sync with what this same group said about their drivers for potentially changing this year, with a change of culture and better commission/compensation coming in first and second, respectively. “Better technology and training” also registered with some of those who relocated.
The Intel Index has seen an uptick in agents acknowledging a brokerage move last year, with February the second consecutive month with over 10 percent of agents saying they changed companies.
For broker-owners, recruiting and retention ranks well below their biggest business concern of the day. Nearly 30 percent said interest rates worry them most, a full 10 percentage points higher than keeping their talent or unearthing new stars.
But when asked specifically about recruiting talent, a plurality of owners and executives pointed to generational issues as the biggest pain point. Their answer choice pointed them toward issues that may confront them with younger and older agents, such as work ethic and technological sophistication.
Intel will explore these insights and more in April in a deeply reported series on the topic of recruiting. The series will be based on new, even more detailed questions that will be part of the March survey, as well as conversations with experts in the field.
Methodology notes: This month’s Inman Intel Index survey was conducted Feb. 20-March 3, 2024. The entire Inman reader community was invited to participate, and Intel received 811 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.
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]]>The post Master your real estate survival: Take charge at Inman Connect appeared first on Inman.
]]>Above all, mastering your destiny as an entrepreneur starts with managing the changes you can control. Take charge of your personal growth today and watch your potential unfold. Join thousands of real estate entrepreneurs at Inman Connect to unlock your full potential.
Register for Inman Connect Las Vegas 2024!
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