In addition to changing their messaging to potential clients, buyers agents and brokerages should can also profit by developing a menu of services available at different price points, experts say. iStock illustration
The shockwaves from the National Association for Realtors’ commission lawsuit settlement are still echoing through the real estate industry. But some say these changes will bring opportunity.
Written buyer agreements are now required and must meet certain criteria. Buyers and their agents will need to reach an agreement regarding how the agent will be compensated for their services and put it in writing prior to touring a home. And many worry that this will lead to agent commissions and brokerage revenue shrinking.
Three months after these changes went into effect, said Cape Cod & Islands Association of Realtors CEO Ryan Castle, they’ve made homebuyers more aware of who’s paying for what in any transaction.
“Well, we’ve made the real estate transaction more transparent than even it was before, when it was very transparent,” he said. “Overall, I think that is making buyers much more comfortable with the process and understand the value of that buyer agent, even more than ever before.”
Boston-based Gibson Sotheby’s International Realty has been tracking real estate commissions among its more than 500 agents as it prepped for the changes, said brokerage President Nicole Rideout Hartwick. While Gibson Sotheby’s is just one company, Hardwick mentioned that she hasn’t seen any changes three months in.
But nation-wide, agents are still trying to figure out how to operate in this new real estate world, said Theodor Tozer, a non-resident fellow at the Urban Institute’s Housing Finance Policy Center, and buyers and sellers are still wondering who will pay the buyer’s agent.
Opportunities for Agents
Now, buyers’ agents have to really think about why they can bring to a transaction, said Juan Murray a RE/MAX Destiny broker-manager based in Boston.
“So, we have to talk about our capacity to negotiate,” Murray said. “We have to talk about how much time we’ve been around, and the relationships that we have created in the marketplace that would potentially give us a leg up in a competitive situation because other agents like and trust, how we do business.”
While some industry veterans might want to resist the change, those who are newer to the business have the opportunity to a way of conducting transactions that’s set to become business as usual, Rideout Hartwick said.
“It’s just defining that value and getting people to understand what it is that you’re providing,” she said. “If you’re able to do that, that’s a huge opportunity, and in fact, it really is a new market because nobody was quite articulating that value before [to] anyone.”
Castle believes that the transparency that the NAR settlement brings to real estate deals will only help quality real estate agents.
“I look at what this does to buyers’ agents, very similar to the way I look at what technology does to real estate agents altogether,” he said. “Technology makes great real estate agents even better and I think this clarity and this transparency we’re bringing to real estate makes great real estate agents even better and really showcases their value.”
Sam Minton
Premium Services
But buyers’ agents don’t just have an opportunity to show off existing skills in the wake of the NAR commission settlement.
The recent, widely-discussed “Opportunity Report” by brokerage consultancy T3 Sixty suggests brokerages can profit by developing packages of premium services.
Whether it be looking for luxury homes or other kinds of property advice, niche services can make a brokerage’s buyer agents more attractive to a homebuyer.
Tozer believes that there won’t just be the creation of a premium market. He also mentioned that specialized services will be advantageous to buyers.
“I think that’ll happen,” he said. “I think you’re going to see a specialization. I think you’re going to have a group of brokers out there that are going to be known as specializing for first-time homebuyers. They will charge a little bit more, but they develop a reputation as a person that in the long run can save you money.”
By contrast, experienced buyers may only want an agent to help them with negotiations – and a correspondingly lower real estate commission rate or fee.
Tozer also believes the same could be said for the seller side of the transaction. While some sellers might need help staging a home and negotiating, experienced sellers might not need as much assistance.
It’s a lesson that individual agents can also take to heart, Rideout Hartwick said.
“We’ve always talked about first having a niche,” she said. “So even stopping and thinking, ‘What is my niche? what is the thing that I can truly give provide value to my clients on?’ and focusing in on that. I do think you can get a premium for that.”
