Pending NAR Settlement, An Opportunity to Upgrade Your Business Process

For agents, it’s no longer about what you want, it’s about what you must do to change.

The NAR compensation rule changes, pending DOJ approval, will simply require you to change your current business process to one that, in our experience, leads to more productivity and reduces wasted time with lookie-loos.

I believe the most probable outcome is that agent compensation will not change much for two primary reasons:

1.    The Process is Stressful & Emotional: 91% of respondents to a Bright MLS survey said it would be very stressful to do a transaction without any representation. A real estate transaction is generally the customer’s largest financial transaction in their lives and often very emotional. It’s a very personal process and every transaction is different.

2.    Most Don’t Transact Often Enough To Be Familiar With The Process: Customers only go through a real estate transaction every 7-12 years, often in different markets and/or states. Thus, due to being unfamiliar with the transaction process, it’s likely that they’ll opt for some version of representation to get the outcome they seek.

What Will Really Change?

There’s evidence that not much will really change for agents who are willing to educate their customers and market their business process.

18 states have already required buyer representation agreements and are operating in a similar way to the NAR pending rule changes.

Agents in these states have not had many issues getting compensated for the work they do. Many report that the buyer representation agreement process creates more transparency and clarity about the agency relationship, which is a good thing.

The major change is simply in the process of presenting a buyer representation agreement at the beginning of your relationship with the customer, before providing any services or showing a home. Under the pending changes, we are required to explain agency before touring homes.

Don’t wait until June/July to make process and communication changes with buyers and sellers. Do it now. The best thing you can do today is start working on understanding the rule changes and implementing them in your business.

So, here’s what we know so far:

Contract and Disclosure Rule Changes

· You cannot state that your services are free

· Must disclose that commissions are not set by law and are negotiable

· Buyer Broker must have buyer sign an agreement and negotiate fees prior to showing a property in MLS

Seller Concession Rules

· Sellers may offer concessions via MLS for buyer closing costs but cannot be specifically buyer agent compensation (% or $ amount)

· Seller concessions must be asked for in the contract

· Concessions are subject to negotiations in the purchase contract

· Buyer Agent may NOT be paid more than the pre-negotiated amount on the Buyer Broker Agreement

For buyers, you need to be able to:

· Articulate your value (negotiation skills and results, your process, availability, your reviews/testimonials)

· Explain the contracts and process (title, mortgage, insurance, and timelines)

· Explain you cannot show a home without an agreement

My wife Brittany and I have been using buyer loyalty agreements (similar to buyer reps but not legal) and related marketing materials for the last eight years. We’ve even been hired regionally to teach our process of how to convert buyers at your initial consultation (before showing the home).

The exact process and materials we use at Momentum Realty led Brittany to sell 66 homes to all buyer customers in her first year in real estate in 2018 (when the average days on market was roughly 80-90 days, not 30 days like it is today).

We know what it takes to win in this new market environment.

We look forward to embracing the new rules and adjusting the process for our agents so we can improve our service, ourselves, and our activities.

If you want to connect and talk more on how we are positioning our agents to win, reach out to us at 904-570-1216 or email jon@movewithmomentum.com.

Check out our Q1 Inside Scoop of Momentum Realty video here.