Change: Obstacle or Opportunity?
R+K Real Estate was founded on the very principle of adapting to change. Change, as they say, is inevitable. When faced with change, there are two options: Embrace the opportunity that comes with it, or grasp onto a sinking ship and watch the opportunity pass on by.
Recently the National Association of Realtors (NAR) made an announcement of monumental change. As a settlement to ongoing litigation and the increasing threat of more and more legal battles, NAR has promised sweeping changes to the way buyer agents will expect to be paid for their services starting later this year.
Unlike most members of my industry, I was thrilled. On one hand it meant NAR promised to waste no more of our members' dues dollars on fighting an appeal they were almost certain to lose. On the other it means promises of changes I've been advocating for. Those changes include removing offers of buyer agent compensation from the MLS.
Now, there is certainly room here for differences of opinion, but I believe this will increase transparency around buyer agent commission. For too long, many buyer agents have made outrageous claims that they work for free, because the commission is paid by the seller. This problem has become so prevalent that NAR has had to add Code of Ethics rules prohibiting the marketing of buyer agent services as “free” to potential buyer clients. The coming transparency should end this unethical practice for good!
And further, when buyer agents aren’t sure whether their commission is coming from the seller, they’ll need to have more difficult conversations with potential buyer clients on how they get paid for their services. Part of that conversation will be demonstrating their value. This will force buyer agents to compete harder for buyer clients. They’ll either need to provide more service or compete on price.
This brings me to what motivated me to write this entry; online backlash and media representation. Instead of approaching this change with a focus on increasing one’s value or accepting the reality that they’ll have to adjust fees to remain competitive, too many real estate agents are on the attack against “misinformation” in the media. Apparently, the problem isn’t admitting that the old ways of doing things were wrought with issues that spurred the onslaught of lawsuits, it’s the media. And that a war with the media can be won with messaging.
By focusing on attacking misinformation (read: differences of opinion), Realtor members continue to position themselves behind the times. Arguing that there never has been a "standard 6%" commission isn’t an honest place to levy claims of misinformation from. There absolutely has been a standard commission rate for decades. Everyone in the United States of America recognizes and understands a 6% commission. This number is not a figment of everyone else's imagination.
In regard to the 3% for the buyer agent, it’s hard to imagine agents claiming to work for free also offering to negotiate their commission. What’s to negotiate? The longstanding MLS rule requiring sellers to offer a commission to buyer agents has, without a doubt, led to a “fixing” of the “standard” rate of 3%. To deny this is a blatant incredulity to this author.
But wait, could there really be a conspiracy against NAR? One perpetrated by the media to claim commissions were previously un-negotiable? Please. That's theater. Trying to counter the media with “the truth” is splitting hairs. It's grandstanding. It’s engaging in a truth-or-dare sleight of hand. "Commission has always been negotiable, and I dare you to try and get me to negotiate it!" This illusion has been lifted. Attacking the messenger will not put the cat back in the bag. Trying to battle the media over "misinformation" will lead to one thing and one thing only: marking yet another tally in the "L" column.
These arguments do not demonstrate one's value as an agent. Consumers care about value. They want to know what they're getting for what they're being charged. They want choices. Having access to choice benefits consumers by creating and expanding markets. Competition and innovation lead to increased value. In the absence of innovation, competition always forces downward pressure on price. This is what will now happen to buyer agents and they have a choice as to how to face it.
Instead of digging heals in and being dragged along to a conclusion that's already crystal clear, the real estate industry should view these circumstances as an opportunity. There's never been a better time to make this change a win for everyone! It's time to chose: vexation or transformation. To quote a famous film, "get busy living, or get busy dying." Or, as the stoic writer Ryan Holiday stated, "the Obstacle Becomes the Way."
-Ryan Desch is the broker/owner of R+K Real Estate Solutions. In addition to being a Past President of the Lawrence Board of Realtors and Chairperson of the Lawrence Board of Realtors Community Foundation Ryan currently serves on many local and state committees and is currently a Regional
Vice President for the Kansas Association of Realtors. When he's not working with clients or advocating for transparency and consumer-friendly change in the
real estate industry, he spends as much time with his wife and business partner Katie, and their four kids as a life as a real estate broker allows!
