Unlock the mysteries of the real estate industry with insights from our expert panel, featuring brokerage owner Jeff Garza, high-volume sales agent Robert Elder, and discount real estate company innovator Chris. As the recent lawsuit settlement sends shockwaves through the sector, we dissect the crumbling of the standard 6% commission rate and the imminent rise of commission negotiation innovation. Veteran real estate attorney Doug Miller joins us, providing a legal lens on the shake-up and championing these developments as a catalyst for much-needed transformation.
Embark on a journey through the trenches of real estate with us, where we debunk myths and illuminate the overlooked sacrifices of agents. The discussion delves into the tumultuous work environment of agents, who often go without pay while managing life's most pivotal events. We confront the harsh criticism the industry faces, advocating for the unrecognized value agents bring to the table. This conversation is a testament to the agents' unwavering commitment and a clarion call for a fair evaluation of the commission structure.
As we peer into the future, we're joined by our guests who share their experiences and competitive insights, considering the broader economic ramifications of the evolving real estate landscape. In a world where technology and regulation are in flux, we ponder the rise of more supportive networks within brokerages, the strategic navigation of commission negotiations, and the potential reshaping of professional communities. Don't miss this deep dive into the heart of real estate's transformation, where we invite you to witness the confluence of challenge, innovation, and opportunity.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Unlock the mysteries of the real estate industry with insights from our expert panel, featuring brokerage owner Jeff Garza, high-volume sales agent Robert Elder, and discount real estate company innovator Chris. As the recent lawsuit settlement sends shockwaves through the sector, we dissect the crumbling of the standard 6% commission rate and the imminent rise of commission negotiation innovation. Veteran real estate attorney Doug Miller joins us, providing a legal lens on the shake-up and championing these developments as a catalyst for much-needed transformation.
Embark on a journey through the trenches of real estate with us, where we debunk myths and illuminate the overlooked sacrifices of agents. The discussion delves into the tumultuous work environment of agents, who often go without pay while managing life's most pivotal events. We confront the harsh criticism the industry faces, advocating for the unrecognized value agents bring to the table. This conversation is a testament to the agents' unwavering commitment and a clarion call for a fair evaluation of the commission structure.
As we peer into the future, we're joined by our guests who share their experiences and competitive insights, considering the broader economic ramifications of the evolving real estate landscape. In a world where technology and regulation are in flux, we ponder the rise of more supportive networks within brokerages, the strategic navigation of commission negotiations, and the potential reshaping of professional communities. Don't miss this deep dive into the heart of real estate's transformation, where we invite you to witness the confluence of challenge, innovation, and opportunity.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Sorry about that, had some technical difficulties, but we are back and let's start with those introductions, gentlemen, and on the YouTube version of this I'm going to edit all that shit out. I'll get it Good. Who wants to start?
Speaker 3:All right, I'll take it. So my name is Jeff Garza. I'm the broken owner of Independent Brokerage by the name of Redbird Realty. We're five years old. I sponsor about 175-ish agents on any given day. We are in the central Texas area and also down here in the San Antonio area. San Antonio is our headquarters. That's about it, I mean. I'm sure there's a lot more, but we'll keep it brief for now.
Speaker 4:There you go. I appreciate it, robert. My name is Robert Elder. I'm a second generation agent, stephanie Paxton and I. We run the Ropex Group. It was a tiny group of agents that sell a whole hell of a lot of houses 33 years in the industry and I absolutely love this industry. It's my passion.
Speaker 1:Yes.
Speaker 5:Yes, chris, what's up? Yes, sir, so founder of House of Five, formerly known as Rebate House, and we are doing the, as you guys know, the more volume based discounts. So we were ahead of this curve a little bit, a little bit prepped for what's coming on. But we, same as Robert, do a lot of volume without sacrificing the quality, so not really doing the agent thing, not like Jeff, so just kind of doing a low group.
Speaker 3:That's why you don't have a lot of white hair. Everybody wants to be a broker in San Antonio, but let me, let me. Let me give you, give you the back, give me some really good advice, yeah.
Speaker 4:It's not what it's cracked up to be.
Speaker 1:Well, ladies and gentlemen, I think perspective is the biggest park and the biggest message that I want to provide to you guys. And, as you just witnessed and heard, you've got a top broker here with many agents that he has following leading him. We've got one of the highest volume listing agents in San Antonio and surrounding, and we've got a gentleman that started a broker ship based on rebates, giving back to the customer in some way shape or form of discounts and rebates. I think that's a pretty damn good mix, if you have to ask me. And then you've got a lender that does actually have a dog in this fight, because my wife is a realtor. We predominantly focus on buyers, first time buyers, and this news can affect all of us. We're talking buyers, sellers, the economy, all of the above. Before we get started, I want us to watch a quick video, and this is something that I believe all realtors, brokers, should at least see at some point in time. So, jc, if you could hit us with that video and welcome back.
Speaker 6:Going into this weekend. A real estate lawsuit settlement sends shock waves through the real estate world and decades-long policies that help set agent commissions. Under the terms of the settlement, the National Association of Realtors not only agreed to pay $418 million, but also agreed to eliminate the 6% realtor commission, so this is very big news for a lot of people. Join us now as someone who's been working toward this for decades a real estate attorney, Doug Miller, Thanks for joining us.
Speaker 2:Thank you, thank you.
Speaker 6:So tell us your history with this, because you really, like I said, you've been trying to get to this point for 40 years. Tell us how you got all. I prefer to say 30, it makes me feel younger, but it probably is 40.
Speaker 2:Even in law school I had a broker's license and I got to see how the industry worked and I studied it very carefully while I was in law school and I've actually been very involved in the industry from many different aspects, so I've been able to see all the different things that are wrong with the industry.
Speaker 6:The first case I did was against the Dianarilty for undisclosed duellagency. We won that case on summary judgment.
Speaker 2:Nobody else in the country was doing duellagency and after winning that case I thought I was a huge success and everything was going to change. But the realtor association, being as powerful a lobby group as they are, came in and banked a lobbying effort to legalize duellagency just for realtors. So since then I've been trying to change a lot of things in the industry and I haven't really been successful up until now. I took a long time designing this case and preparing it and finding the right lawyers to handle this case.
Speaker 6:And your thoughts on how they handle this. And you're saying how is this the most complex settlement that you've seen in a long time?
Speaker 2:It is. It's incredibly complex. The lawyers I picked I picked them because they're not the kind of lawyers that are just going to take the money and run. They are very concerned about the injunctive relief, the changes that are going to happen to the industry, and they've been in marathon negotiation sessions trying to make this happen. And the whole idea is to uncouple the commissions. So many times when you have a realtor, you're trying to sell your house, they tell you well, the reason I have to charge you 6% is because I have to share my fee with a buyer's agent.
Speaker 6:Why, why would you be forced to pay someone to?
Speaker 2:negotiate against you, and why?
Speaker 6:is it fixed? Why is it 2.7%?
Speaker 2:for pretty much all agents in town, that's not a negotiable commission. It's like socialized real estate. It shouldn't be that way, and so this case is about uncoupling the commissions. Maybe lawyers can come into the fray and negotiate on behalf of buyers. Now Buyers might be able to do it themselves and instead of sellers having to pay 2.7% to buyer agents.
Speaker 6:they just pay their listing agent Could make huge changes, open up the market to market forces, and so we'll see things become negotiable is our hope.
Speaker 2:I have to really watch out for people trying to do end runs around this If they try to offer commissions on their websites and things like that. There's lots of chatter I've been seeing about ways to try and get around this settlement and so really important for your viewers to keep an eye out for things like that.
Speaker 6:That is good advice and there's a lot more questions that we have running out of time. But what advice do you have for buyers and sellers? Because the judge still needs to approve this settlement, but, assuming that happens, these changes would go into effect in July. What's the?
Speaker 2:Be very careful about what agreements you sign. Most of these agreements are crafted by a group of competitors behind closed doors and they're very anti-consumer. There's no way to cancel them. They build in the fees. There's often hidden fees in these agreements, all kinds of problems with them, and so be very, very careful about what you sign and on the seller side don't ever again allow commissions to be paid to the buyer broker.
Speaker 6:Instead, pay it to the correct person.
Speaker 2:Pay it to the buyer and let the buyer decide if they want to hire a broker, or if they want to hire an attorney, or if they want to do it themselves and save some money.
Speaker 6:Real quickly. If someone's looking to put their home on the market very soon, should they wait, Not knowing where this is going to go exactly? How is this going to check out?
Speaker 2:Maybe Because a lot of the unfair market forces still exist. If you offer less than 2.7% a lot of buyer brokers will boycott your house. It's terrible. It shouldn't be that way. This will hopefully eliminate that reverse incentive. That's enough.
Speaker 6:But let's go back, don't worry about questions.
Speaker 3:But unfortunately, I'm ready to throw up.
Speaker 6:Right.
Speaker 3:I'm just going to start it up. That's some bullshit.
Speaker 1:Now that is coming from one of the attorneys that's spearheading this entire thing.
Speaker 4:That's interesting. I'd love for him to get phone calls to show 25 homes at all hours of the day and miss your kid's baseball game and all that other stuff that buyers' agents have to give up to be able to get their people in.
Speaker 3:I'd also like to know what his hourly rate is.
Speaker 1:There we go. I actually wrote that down. I said let's trade in realtors for A couple of statistics that, in my opinion, needed to be done. We've got $418 million settlement that's pending. It could be approved as of June or July.
Speaker 1:My first thought is who the hell is going to pay for that? I went and looked up the amount of members. They have 1.5 million members Now. They're not all realtors, these are board members and activists, et cetera, et cetera. They charge you guys $150 per year per member. Then they're adding on a $45 fee for some consumer advertising campaign. Then 2024, the amount is $156 that they're going to be charging you guys annually. If you add all that up, it comes out to about $234 million in a year that they bring in revenue to the National Association of Realtors.
Speaker 1:How that is going to affect you, I think it is going to be direct. How it's going to affect the buyer, I think it's also going to be direct. That being the case, I want to open it up to you guys. I've got plenty of questions, but I want to get your feedback as an overall, based on what you're hearing, what you're seeing, what you believe. Jeff, if you don't mind starting, simply because I'm sure when this email came out on the 15th, the next morning your phone blew up with all of your agents. It was blowing up as soon as it came out.
Speaker 3:I guess I'll just set the base for this conversation. If I will. I think the best thing that could happen this morning is that all of us professionals here that know what we're doing and that have a love and a passion for the craft that we're in are able to set aside all the myths and the misnomers about what's going on. Some of these are blatant lies. We are under attack, whether we want to admit it or not. Our livelihoods are under attack, the way that we proactively advocate for our clients. Our clients are buyer, sellers, renters and investors as a whole. That's who we serve. One of the things that I want to start with, because I want to make sure anyone that's listening understands why we get paid once we perform. Let's talk about like birds' eye view. Right, absolutely.
Speaker 1:How about a red bird's eye view? Yeah, a red bird's eye view, that's right. I love that yeah.
Speaker 3:So there's only a small segment of conditions in which someone needs to transact in real estate. I'll tell you exactly what they are Death, disease, divorce, job loss, job transfer and change in family dynamic. Correct, that is it. That's right. There's only one other segment of the population that has to, or chooses to, transact in real estate, and that would be the investor. That's right. And investors transact for profit, for fun, for building empires, legacies, whatever they're going to do. But let's go back to the first six I talked about.
Speaker 3:When someone is sitting with Robert at a listing presentation as an example, right, and he's sitting in front of them and they're saying, hey, my husband, who was very successful in his own regard and whatever he did, right, he just saw the oncologist and he was given nine months and we wanna sell everything and we want you to help us do that. We don't wanna give anything away, we wanna get full retail value, if that's possible. We're not wholesaliness, this is not an investor special, but can you take our life's curveball and can you add your professionalism and can you add your magic to this so that my husband, who's got other things to think about, doesn't have to worry about this Absolutely? And so we need to set the tone. Everyone thinks we are all money hungry and that we're all rolling around in our G-Wagon and all that other stuff. Some may say, some may not, and that's cool, but there's nothing wrong with making money when you perform, because everyone else in this world goes to work with a guarantee of an hourly pay or a salary, bonuses and other things of that nature, but we choose to put food on our family's table by being performers.
Speaker 3:The world would call us like we're closers. You either close or you don't close. Always be closing coffee's for closers. Let's get rid of the Wolf of Wall Street. Let's get rid of that. We either help people or we don't, and people who make it in this industry period Help a shit ton of people. At any of the companies we're at and any other brokerages we're at doesn't matter, though those of us who get paid and figure it out, we figured out how to be service providers and advocates first, and so I'm here to tell you that that guy. I'd love to buy him some Barbaquo Otakus in San Antonio and have a lunch with him, because that was straight bullshit. And I'm saying that for the 16,000 members of San Antonio Border Realtors who work tirelessly every single day to help death, disease, divorce, job loss, job transfer, change of family, dynamic person, individual or family. Who needs people like us who have a real estate brain?
Speaker 4:Right, and they do it all for free until they get paid. No, that's very true.
Speaker 3:Yeah, that's the craziest part All the rubber on the tires, all the oil changes, all the oils, all the gas. You know, I always tell people, if you wanna know how hard it is to sell real estate in the state of Texas, try working with the buyer in July and August, when it is hotter than the devil's armpit in central and south Texas, when we're going to homes, when you're going to custom builds that are just the sticks are up right now and we're standing on cement sweating like stuck pigs for hours. Right, I mean, I have literally myself over the years I have been in homes that were not air conditioned and the client wants to be in that home for two hours and like, truth be told, it's probably unhealthy. They're probably dehydrating, like nobody you know. Like it's crazy, like clearly I haven't lost any weight in real estate, you know.
Speaker 3:But I'm just gonna tell you right now, like it is hard work and it's not for everybody, you know it's not for everybody. So my question to that attorney and we'll go down this stuff, but I'm just gonna be like tongue in cheek a little bit Like my question to that attorney would be did he do that interview for free? I guarantee he didn't.
Speaker 1:And that's a good question. And it almost begs the question of did he do it for free, I mean at the end of the day?
Speaker 3:I'm sure he didn't, because if anyone was listening he threw in there. Maybe you can get an attorney to help you. Exactly, I found that so coincidental. Oh, that's really cool. Hey, that's cool. And who's gonna pay?
Speaker 4:for that? Yeah, who's gonna pay for that? And are they gonna be opening doors? Are they gonna be getting the phone calls? Are they gonna be answering the questions? Cause you can rarely get an attorney on the phone, much less to answer an email. You think they're gonna get one to go. Hey, I just saw this house on 123 Main Street. I just drove by it. Can I see it?
Speaker 3:now, yeah, and then we're gonna go do what he does. I'm gonna my office administrator's gonna send you a link for our retainer. I'm gonna go ahead and take 10 grand and we'll bill against that.
Speaker 1:Yeah, let's do that. I tell you what. What I'd like to do, instead of us just throwing mud at this thing. Yeah, for sure, I just wanted to get things done, and.
Speaker 1:I hope that felt good For sure Getting it off the chest, but I've got a question for Chris and it may be an uncomfortable question, but I'm gonna ask anyway. The concept and the headlines that I have seen over the past several days all stem from the concept of the 6% commission is no longer going to be the standard. The 6% commission is going away With that being the case and, in my opinion and Robert and I spoke about this before you guys got here, but I don't believe that there ever was a 6% that is set in stone type situation- Never, not in Texas, not in Texas.
Speaker 1:Now that begs the question of is 6%, 3%? Is that too much for this day and age? And I say that and I'm gonna preface and this is, devil's advocate, Kristen Jones, my bad, I'm just gonna go there for a moment. The idea that you've got folks in Seattle, california, new York, that they are still working on the 3% because it's a national thing, not just a Texas thing Only have to sell two homes, three homes, to be a part of the 1% club and income earners, our industry as mortgage professionals, we had our day of reckoning After all the financial crisis that took place.
Speaker 1:There is no, we are very transparent. We've got one to one and a half percent to play with at most companies and I will tell you it has been shrinking and shrinking every year, with rate compression and things of that nature. I'm not saying we do more work than a realtor, because in my opinion, this crap that's going on only puts more work on my plate. To be honest, if buyers are not being represented by buyers' agents, who else is representing? Now I'm in the crosshairs of the CSPB to determine okay, did he give them real estate advice and he's not a licensed realtor? Whoa, whoa, whoa, whoa, just trying to keep the deal together concept. But that being the case, chris is 6% too much.
Speaker 5:I don't think so. I think because there's a market like, for example, the market that Robertson we don't touch that market at all, right At all, and that requires a lot of spend to market those properties, those luxury homes and to provide those services and those broker open houses and those events. So I think that it really is case by case right and we've been in San Antonio market for years doing the discounts and the rebates. We've not affected any of Jeff's people or Roberts' people because there was always a market for choice.
Speaker 4:There's a market for choice.
Speaker 5:There's a market for choice. I could close five, 600 homes and there's still gonna be 50,000 other people that so many people bought last year, 50,000 homes in San Antonio that need representation. Now what I will say is I do think and this is where the brokers out there might feel a certain way about this comment I do feel like the only reason that the fees were as high as they are is because I feel like the core model of how agents get paid is broken in the sense of yes, of course you need to make 3%. If you have to work for three or four months for $0, driving around with no gas, no base pay, no salary, of course you need to make a $12,000 check, because you wouldn't make it the make up for?
Speaker 1:Yeah, you wouldn't make it. That's valid If you did it.
Speaker 3:And that's a whole different podcast, because you could not be more on the money.
Speaker 5:Yeah, the industry is broken in that regard. Yes, overpaid, the base pays broken Right Amen the day to day.
Speaker 1:That makes good sense and being that that industry model is broken, is this the time that brokers associations are coming together to determine okay, what is that? Because if we were to look at the email that went out, as a matter of fact, if we pull up the National Association of Realtors, let's see if I can get this thing to come back to there you go, jc, if you can go to that reference real quick. National Association of Realtors reaches agreement to resolve nationwide claims brought by home sellers. They essentially, within this, the 1.14, 418 million are basically saying you can't put that in the MLS. You can still do it, but you just can't put it in the MLS. So did they even solve anything by doing this?
Speaker 1:Or did they create more chaos and confusion and fear within buyers. Well, first real estate agents, then secondly brokers, then lenders and, in my opinion, on a mass scale, home buyers and renters. Because the media? If you go over to a simple Google search and type in realtors, it's nothing but doom and gloom. Commissions are changing, 6% going away lawsuit, this changes housing market forever, and the list goes on and on. So, that being the case, what did they solve? I mean, take me through if you could, robert. The morning you got this email, what was that? I think you guys within this room, within this podcast, were a little bit more versed and educated from when it first began and probably had been following it, because you've got folks that are relying on you for feedback. But with you, robert, you and Stephanie are kicking ass, taking names, not really worrying about having agents, but more so worrying about your business and your customers and the way that that's going to work, moving forward.
Speaker 4:Right. Well, so traditionally we are definitely more listing heavy than buyer agent heavy, and not that we don't deal with buyers, we do. So when that news came out we didn't. I honestly thought I would get more phone calls than I did, sure, and first. So, for example, last night I got a phone call from a seller of ours who's got a $1.5 million house, and after I flushed everything out and said what we do know and what we don't know because there's a lot that we don't know all of this news literally just fell on our laps and there's so much disinformation out with the media since then sensationalizing and click baiting and whatnot, and so it's almost like we have to undo what the media, the news media, is doing, to say look guys, there's a lot of moving parts to this and we don't have all the answers. At least I know I don't have all the answers, but this is what I do know.
Speaker 4:And once I presented that to my very affluent client who is used to hiring people paying for quality and whatever it is that they need in their lives, the wife goes oh, wow, so it's pretty much just status quo. I said for right now, yes, it's status quo, nothing is changing, right, you know, and now come July, some things might change and this is how I feel it's going to look like, which. I think and maybe you guys can chime in on this it seems like we'll probably go a little bit more to a commercial style in which either the buyers are paid through there or the buyers, brokers, paid through there person that's hiring them, or the sellers compensating them in some form or fashion, but it's just not in the MLS. That's the one thing I think we can all agree on, that. We just can't advertise it Absolutely. Who's that going to give power?
Speaker 3:to, I'll jump in. So what we know to be true, right, was that the advertisement of a commission being paid to a broker slash buyer's agent who brings forth the buyer, is now decoupled from the MLS. It didn't say it's abolished, correct? It's not abolished, it's just we're gonna be at a point at some there's gonna be a day where we say this is the day we can no longer, when we upload our listing into the MLS, advertise the compensation for the other side of the deal. Correct, which is no different, like Robert was alluding to, which is no different than the way it's pretty much always been in commercial.
Speaker 3:We've probably all done some commercial deals privately, on the side or whatever. I mean. You know most of us make our hay in residential, but you know, commercial has always been that way, where you can go to the Loop Nets, you can go to the co-stars, you can go to all of these, and they're not. That's not what is advertised per se, right? There are some assumptions, there are some norms, for sure, just like there isn't anything else, but those still have to be addressed and negotiated and cemented right, absolutely as part of hey, robert's looking to buy a building. You know you have a building. I just saw the thing. Can we tour the building? Robert's? He's solid, he's good to go and, by the way, if we can come to terms, what is it you feel like?
Speaker 3:your seller is willing to pay me for me bringing forth the buyer right, and then the listing agent on the commercial building says oh bro, we got you. We're actually offering 4%. Okay, well, that wasn't advertised, but we discussed it and we negotiated right. The same thing with the for sell by owner. This is something I really, really want all the agents who are listening to right now, because I don't want, because I think what we need to do, like you said, is let's calm down panic. Everybody. Chill out like, just chill out, like it's gonna be all right. I can guarantee it will.
Speaker 1:But let me frame this real quick and you can continue. Okay, there has been an understanding, to my knowledge, that commissions have always been negotiable, right yep. Now Robert mentioned something a moment ago that I believe triggers a thought that makes me a determiner which route or why the affluent buyer is unfazed, unpanicked, all of that versus the layman buyer, we'll call it, and to me, I believe it has to do with education, simply because that affluent buyer has already purchased multiple times, they've had multiple interactions with a realtor, they've probably had a license at some point in time within their lifespan thus far, and they're fully aware that it's negotiable, matter of fact. That's what they start with when they call you.
Speaker 2:Right.
Speaker 1:In many cases.
Speaker 2:Right.
Speaker 1:Do you guys believe that the disconnect here is the education to the consumer that is being lacked from the realtor directly to them? I'll say that I believe that, and now we're speaking mass we can. Obviously we can't go individually, but yes, on a mass scale.
Speaker 3:I'll say that people over the last I'm gonna use a broad brush here, but I'm gonna call it the last 20 years in real estate, because of how real estate and the real estate agent has been portrayed on reality television Very good, all right. So. And social media, and social media. So, because of the personas and the norms that have been created over the last 20 years and I won't say all the names, but y'all know what I'm talking about let's just call it HGTV, tlc, bravo, diy Network, all that other stuff the last 20 years. Real estate has a heavy hand in cable programming.
Speaker 4:I mean, let's be real.
Speaker 3:And so what has happened over the last two decades, in my opinion, and just being an observer and now a professional, whatever is that we have allowed us and I'm using horrible English in grammar right now but we as a whole, as an industry, have allowed us to look like clowns.
Speaker 3:Yes, and so, as a whole, to answer your question, the layman out there only sees us as a door opener, and so those are truths we have to accept and those are the myths we have to bust. When we are in positions of leadership Right and positions of influence and have built names and I hate to use the word cloud but have built the resumes that we have because we have to be the difference maker, so what? Jeff has X amount of agents underneath him. Cool. Well, it's not cool if I'm not helping them, be Leading them properly.
Speaker 3:Better yes, right the best versions of that yeah, the reality TV show to be who they wanted to be and that they need to come from a position of professionalism and service and experience. So to kind of even dig deeper, when you used a great example, like you have an affluent client which you have a ton of those right Like, so this $1.5 million buyer or seller, right, you know they've transacted, they've done tons of stuff in there. They probably are in business investments, all these other things right. So you know what that client, you know what differentiates that client from maybe the from the opposite, is that they're willing to pay for what they believe is strong advocacy and an experience.
Speaker 1:So because saving up their time Right.
Speaker 3:Because Marshall's exists and because Nordstrom's exists, is Nordstrom supposed to no longer provide a personal shopper for someone who wants to pay for that? Sure, does that make sense? Oh, it does. And so we've all laughed about this. I know we have. I mean, I know all of us at this table have what do they call the doctor who graduated last in his class?
Speaker 4:Doctor.
Speaker 3:Doctor. So so I'm here to tell you, and I'm here to tell everybody who's listening especially the the San Antonio board of realtors members here who maybe don't even know their own worth is that we're not all created equal. Realtors were not created equal. So the challenge for every single agent who's a member of NAR is to be able to lead with value. That is undeniable. Okay, period, end of story.
Speaker 1:And that's a lot of the question. One of the conversations that I've been having is is where's the value? You've got to display your value, where's your branding? Have you done so? Is it clear that this is what you offer to your consumers? This is how you save them time, this is how you earn them more money. All of those good things, but, based on what you just mentioned, is it safe to say that if I lumped myself with realtors, we did it to ourselves?
Speaker 3:Are you asking me?
Speaker 5:There's parts that are broken I can take this.
Speaker 3:Does that make sense? There's parts that are broken.
Speaker 5:But what I want to answer that question is who wins here?
Speaker 4:I want to answer that question. I'm the attorney.
Speaker 5:It's not even the attorney. Where I'm looking. I'm telling you guys where I'm looking is real estate tech. The real estate tech companies are the big winner today.
Speaker 1:I have to agree, and I'd love to get into that. So what I want to do, before we do that, I want to clearly define what the changes are. I think thus far we've gone through here. We've talked, we've thrown some mud, we've given a couple of bit of opinions. But I want to come back to just a brief clearly define what changes have been made. You, as a broker, Jeff, what is it that you're having to immediately employ within?
Speaker 3:your Period. Yeah, I'll bullet. I'll outline it real quick. We're going to be decoupling advertised commissions for the buy side. There you go. That's going to be the biggest one and, depending on who you are, you might say that's really the only one. But what the ripple effects are of that is now that agents are going to have to negotiate their pay on the buy side for sure, and listing agents are going to have to now add one more bullet point to their presentation to the sellers. To educate the listing agents I mean the sellers that there's a potential we may have to incentivize in different ways an agent who has your buyer to bring forth that buyer Perfect sense Right.
Speaker 3:And so we're just going to have to have one more layer of the conversation and, truth be told, I can promise you, the three of us at this table have always had it together.
Speaker 3:And so let me lead with one other fact brokers speak right like, like correct speak right, and then because I definitely want to hear more from Robert, you know, and Chris. So Texas has gotten it right years ago because any agent again listening to this podcast needs to know that their buyers rep agreement in the state of Texas, promulgated by the Texas Real Estate Commission, which is a consumer based and consumer advocacy organization organization first, not pro realtor, they are pro consumer, which was completely against what that attorney was saying.
Speaker 6:So he's completely wrong.
Speaker 3:But the buyer rep representation agreement that the Texas Real Estate Commission mandates that all of its members use in order to formulate a representation right, the fiduciary and all that other stuff to make them our client. That buyer's rep agreement has always said for years you can tell you're going to negotiate with your buyer what the cost of your services are right X percent what could be a flat fee, whatever the case may be. And if the seller chooses to offset that by offering a cooperating broker commission, then you could get paid from there, therefore alleviating the buyer from having to pay you. But there is black and white in there that says, in the event they don't offer it, you have to pay me for years.
Speaker 3:It's been there for years. So I will say this I do realize and understand why other states maybe that are not as well as Texas are freaking out, because now they're just like now. You need to tell your buyer you might, they may, have to pay you. I'm like we've been doing that forever in Texas. So thank you, texas, and the Texas Real Estate Commission, for always being front forward and in that way. And so again, a lot's not going to change, but we just can't advertise it. We're going to have to have the conversation with the buyer, we're going to have to have the conversation with the seller and we're going to have to become better negotiators. So I think it actually is going to be great for realtors to now be able to have to express their value more than maybe they had before. And that's it, and that was well said, I agree with you.
Speaker 1:I believe that that is on the money. The only part that I disagree with is the concept that Texas agents have been doing this, and the reason why I say that is because social media speaks volumes. If we, as agents within Texas, were already doing this, I wouldn't see as many fear posts as we see on shift talk right now, and these are agents we interact with daily. Now, I am very versed on top producing agents and I don't hear any of you guys talking about this, worried about this, any of that, because, just like you said, just like you articulated, nothing changes. We've already been talking about these things.
Speaker 3:That's true, that's a good point. That's a good point.
Speaker 1:We've already been showing our value.
Speaker 3:For someone who didn't know how to do it properly. Correct, yes, it's changing for them.
Speaker 1:And it's one of those situations to where even agents that have been in the business for many, many years and never well, you know what I take that back. Agents that jumped into the industry in 2020 and everybody, like I, was saying, fishing a barrel, you're going to catch some fish, but as that trickled off, they now have to learn how to do the basics and understand what it is to sell, understand what it is to brand and show their value. Even all the agents that just jumped into the industry this year, maybe last year, after the heyday, so to speak they don't know what the hell's going on.
Speaker 4:No, they have no plan. I think this is going to be a big differentiating factor for separating the onesie-toosie. Yeah yeah, you all know that they exist. You know one or two transactions here that that part-time, you know person that will transact for their cousin, family, friend. I feel they're probably going to go the way of the dinosaur because they cannot offer any type of value proposition saying, hey, you're hiring me and this is the expectation that I set forth of what my experience, et cetera, et cetera, and what my company can do for you. You good with it. Great, let's go, let's transact.
Speaker 1:And that's a great transition into what will be affected, what will be changed, who will win, like you talked about a moment ago, because let's go down the list, we've got buyers, buyers, agents, sellers, listing agents, lenders, title companies, the economy, renters, institutional investors, your individual mom and pop investors, tech companies there are so many chains they're leaving out repair people.
Speaker 4:Absolutely, our company, furniture company, I mean, there's absolutely you are correct.
Speaker 3:What is real estate? 20% of the GDP. Yes, everybody needs us to wake up so that everything else can move.
Speaker 1:As we go through that list there. Is it even valid to rank them as far as who wins and who loses, or is it just a winner's column and a loser's column?
Speaker 5:I think it's worth it.
Speaker 3:Can I throw out a loser Please? Yes, a potential loser. We don't know, and this is for that what changes are going to be made.
Speaker 3:I pray this doesn't happen, but I've seen a lot of the chatter online, all the commentary right, and some people are saying like you know what. I think this is great because I think maybe we've been charging too much to begin with, right, okay, cool, whatever, you're free to have your opinion. But the problem becomes is if this really shifts the commission to be paid by the buyer. This is going. If it goes that far where the industry adopts that, that just becomes the norm, where the buyer now has to have closing costs, down payment, appraisal, inspections, end, has to pay for the full commission, let's just say of a buyer's agent, their agent representing them, if they're a first time home buyer, if they need down payment assistance, if they're single mom or single dad, we may eliminate an entire segment of buyers who cannot afford to buy anymore.
Speaker 1:And is that the plan?
Speaker 3:I hope not, but I hope to God it's. I hope to God it's not either. There's nothing more rewarding as an agent I was going to save this till the end, that you bring a.
Speaker 1:I mean, this in itself provokes a bigger question, and I'm just going to tinfoil hat for a moment. The concept of who is involved with this lawsuit, who is pushing the message or the narrative the way that it is, because the narrative is not. Not much has changed. You just can't market it this way. It's 6%. Commission is going away. The industry and how realtors are going to be paid is changing forever. It has nothing to do with what we're talking about here, which is the truth of what is going to take place or what could take place. But you've got BlackRock, You've got all of these institutions, all of these folks behind the curtain pulling the strings and, just like you said right now which I agree 100% with you there at the top of my list right here, buyers and first time home buyers that can't afford down payment, let alone a realtor or anything else. Is it a conspiracy?
Speaker 4:That's a whole other pod.
Speaker 3:Chris.
Speaker 5:I know you got something, I got all of the, you know. I think that I, like I said, I think real estate tech is a big wear in this column, because we do a lot of instant offer stuff, right, we've delved into that. And how easy would it be for these companies to say, hey, no problem, right, you're going to pay me 5%, 6%, 7%, I'll buy your house today and I'll provide the buyer services now to you at no charge, right, even if the services are not starting to do. And so now you start having these W2 based, you know, hourly people, right, these companies that are providing the sell services and the buy services, and guess what? The sellers technically paying for it. Right, glad, to their equity, but they're getting both transactions Right, yeah, and that's where I see a lot of this kind of going, and I'm glad that you said that simply because in our industry, I see it doing the same thing.
Speaker 1:I saw the writing on the wall many years ago, which is why I founded reviewmymortgagecom. We burned loan bot. All of this is direct to consumer Right. Why? Because it's going to happen anyway. Right, it's either going to be me or somebody else that gives it to them. So when we founded this company, it was the intention of us to give them all of the information they possibly can fathom that a lender typically has and doesn't give loan I'm sorry buyers access to, whereas, on the same token, are they going to be replacing realtors with AI, with technology, with education that we're all talking about, but, as humans, we may forget at times?
Speaker 4:How do they make the human side of when we're dealing with a family member who's passed away and we're dealing with emotion or fear or uncertainty? How does AI accomplish that? I don't disagree, in fact, because I think we can all attest that half the time we're like therapists. Yes, we're therapists. Yes, we're having to walk through this emotional, full of emotional landmines. It's not only are we dealing with appraisers and inspectors and all that other stuff.
Speaker 6:And I'm sorry.
Speaker 4:No, ai can't replace it. I was around. You've been licensed. How long now? 10 years, 10 years. Okay, I'm 33 years, so I'm the old fart in this group. Okay, I was around when realtorcom first came out. That was the big one. And what was everyone talking about? Realtors are gone. They're gone, they're gone. Yeah, guess what? We haven't gone. I am actually more at peace with our industry now that stuff like this is going on, because it will level the playing field. So all the hard work that you guys do and you're educating all of your agents because you want them to be professionals and the best in their fields and everything, well, guess what? They're going to succeed 100%. I really feel that this is actually a massive benefit.
Speaker 1:So you mentioned something that I want to hone in on, and it just provokes something that makes us think a little bit. You mentioned emotion, and this is the largest transaction that most, if not all, buyers consumers go through. If we are simply replacing realtors with something that is accurate, educational, to the point and removing emotion from it completely, does that not beg the question of would that not make purchasing real estate more logical? Then the alternative of having a realtor that has emotion, that has baggage, that has an attitude, that has a great attitude, that has empathy, that has an agenda, that has I can keep going with these words that describe many different realtors, just like you mentioned before, because I play that role as well as the therapist, as the coach, as the and we're talking way down the road. This is not something that is going to happen overnight, but writing starts to become visible on that wall that we always talk about that.
Speaker 1:Okay, what does the future look like? We were supposed to. According to Back to the Future. We were supposed to be driving in the air by now and it hasn't happened. Does that mean it's not going to happen? No, it means we're just not there yet.
Speaker 5:We're going to be just like the mortgage. We're going to be just like mortgages. Can you explain that a little bit? Yes, okay. So if you look at what's happened in the mortgage industry, right, you used to have mortgage files that were fat, right? Oh man, all these people used to have LOA, processor underwriting, and all of those people had managers and all of that. The LOA, I don't think, is going to go away, but the processor is going to go away. The LOA is going to go away More than likely, if they haven't already.
Speaker 1:You're doing great volume. Keep it up, but there are tools that replace that Exactly.
Speaker 1:There is AI that does a better job in checking these documents and making sure. Now, the AI can't make that phone call to your borrower to explain good news, bad news, can't make that phone call to your borrower or send a text message that articulates the expectations that are going to be coming. Deal with a. Like I always say, you don't work with me because I can get the deal done. You work with me because if the shit hits the fan, I can still get the deal done. That's the difference between what AI and the replacements in the future holds and how we bridge that gap. Are you going to be a part of the change or are you going to use the change to leverage in what you're already doing to streamline, to help more buyers, things of that nature? And I think that's kind of where the conversation is going with all of these things, because, let's face it, it's not going away.
Speaker 3:Right, right. You said the right word tools right.
Speaker 2:Yes.
Speaker 3:Chris, I think you're right on. I think our there are side of it, the real estate sales side of it. I think there's going to be some compression, correct, and I think there's going to be a little bit of a turnstile one way out, because not everyone is going to be able to do what's required to be able to bring the value we keep on saying. You know, I think there's also going to be an upward effect maybe that most people are not talking about, because everyone's praying on the realtor's emotion right now. Right, like realtors are like, yeah, like I got news for you. Realtors, like man, y'all are suckers because y'all keep opening the clickbait. Stop it. Stop it Like you're the professional. Stop reading some bullshit article that you already know. The headline is 100% false.
Speaker 1:In addition, I'm just going to sit them down and help you all out. New to the business agents, realtors out there that maybe aren't aware of what's going on too too much Quit posting about it. You're consuming this and you're spreading more fear and not even able to explain or articulate the responses that you're being asked right now.
Speaker 3:So why should you like this? And this is the one thing that's not come out like in terms of like it's there. No one's like advertising this piece, but what's going to happen, I believe and I pray, is that there's an upward push for the art of being a broker to come back.
Speaker 5:Oh, okay, I got to say something. I have to say something on this, so I that was actually on my list a minute ago I went to is that, if you think about the 16,000 people that you mentioned, you were forcing these people because we've had this race. At the bottom, where all the people are at this pay $50 a file, they all have to innovate individually. There's no team, there's no support, and at the top, they need leadership. Yes, which they?
Speaker 3:don't have yes, yeah, I think most of us would agree most of as a whole right.
Speaker 1:Probably less than 2000. If you would, you know like and I love that you mentioned I like where you're going with that, so true. And you articulate it in a layman's term for, let's say, a new to the business realtor Right that can pick up these breadcrumbs that you're laying down. We're dropping bombs, yeah. Now now get us there.
Speaker 5:Okay. So basically what happened is because again, because the law perceived that the commission was set in stone on each of these deals, which it wasn't, but because it's how it was realtors could sell homes and get this commission and it was easy, right. And they felt like, why would I have to pay a percentage of that to Jeff? What is Jeff doing for me? This makes no sense. It's been.
Speaker 5:Our industry has already been in a race to the bottom internally, with these brokerages that have started and said hey, keep all your commission, 100% of your fees. Right, and that's great if you own your own business, like Robert does, right, or you do, jeff. But what's happening with these new agents is now they're in a situation where, cool, you're paying $100 a file, but you're on your own. Every idea, every system, every training, everything that you need. You're going to have to come up with that completely on your own. And I think 100% of what Mark said I would rather if I was not established. I would rather be right now at like a KW or one of those places, or even Redbird, where I know that my money can go to a collective effort to make sure that our branding's out there, or advertising the sellers versus me being on my own.
Speaker 4:So to that point and I was having this conversation with Stephanie late last night and I'm just curious about your opinion so we see this with, like, electricians and plumbers you know they're not a master electrician, we're a journeyman, I believe that's right or the plumber. I wonder if this will push our industry in which, okay, you're a new agent, you're going to have to work under this particular broker for X amount of time until you become your, whatever that is, and the max you can earn is this, because if we're going to take it.
Speaker 3:So it's those unintended consequences. And not every consequence to these decisions has to be a bad one, correct?
Speaker 6:There you go.
Speaker 3:You know, like, and so I can paint a picture, because, like, I know what you were saying, like in layman's terms, and I don't this is not a shot at anyone. So if you take it that way, then that's, that's on you. But what I'm saying is this if you're a brand new agent at XYZ brokerage, us brokers are diamond dozen.
Speaker 2:Okay.
Speaker 3:But if you're a brand new agent because I know that's what you're kind of really like that's exactly correct. If you're a brand new agent, at whatever brokerage, and you cannot formulate an intellectual, versed, educated opinion about this because you don't have an associate broker who can do the same, or a broker who can do the same, or a broker owner who can do the same, you're in the wrong brokerage. That's a great point, because it we didn't need. We don't need all these town halls. No, I'm being honest, you're correct.
Speaker 3:And unless, if I mean, maybe I'm saying the wrong thing here, but we don't need all these town halls, we don't need all these you know calls at nine o'clock with the owner of XYZ what like really Right, like it, it's man I just can't read.
Speaker 1:to be honest, I don't think people can read. Why, jeff, is it not necessary to have all of that?
Speaker 3:You know what? And this is my skewed viewpoint, because inside my shop, but we've also got their perspective, so it's okay. Yeah, my skewed, because it's mine. Right, that's right. And inside my shop, you know, selfishly speaking, there's leadership Correct and we know how to read. That's right. I didn't need to bring in 10 attorneys on a panel to explain this to my agents, right? I just don't. Maybe that makes me an idiot or maybe that actually makes me a leader in the field.
Speaker 2:Correct.
Speaker 3:Because I know what the hell's going on. I don't need 10 attorneys to come to a town hall to tell a thousand panicked agents how to interpret this.
Speaker 1:But yet we are going to see for the next month, two months, maybe three months, panel class here, presentation over here by this person, and these people are going to give you their two cents based on what they believe or perceive it to be, when I think they clearly articulated what is going to change. Brokers that have been in the industry or understand or study or have a passion for this clearly know how to relay that message or convey that message to their agents. But yet we're going to have rooms filled constantly, Right? Yeah, matter of fact, with the same agents over and over and over joining those classes. Why?
Speaker 3:Well, I got a good buddy of mine who's a big dog in the title industry and he taught me this a long time ago. He's like there are PMAs they're called professional meeting attenders.
Speaker 1:I like that.
Speaker 5:We go to the lunch function, yeah.
Speaker 3:And so again, if the shoe fits. I'm sorry but at the end of the day. Stop. It's not cloudy with the chance of meebles. I like it. Nobody is taking this man out. No, they're not. Chris Marty is just getting started.
Speaker 6:And.
Speaker 3:Jeff Garza, if you haven't paid attention, is just getting started, and we take pride in our brands, in our names, in our value, in our proposition, our professional proposition, what we offer, what we bring to the table. And we're just a fraction. There's so many great, amazing, amazing agents. There's so many great leaders in the city, so many great brokers, so many great broker owners, so many franchise owners that have hundreds of years of collective experience under their belt, absolutely. And so those town halls and all these other things that we know are going to be and I'll just say I don't want to be called a hypocrite, I was invited to go speak at one, but I'm going to tell you right now my duty, my duty, the way I see it for me, is that I need to make sure that, whoever those PMAs are, the professional meeting attenders in that room, I want to make sure that when they drive away, they're calm.
Speaker 3:Yeah that's good and that they understand that there's a piece about what's going on, that ultimately, they're still going to be responsible for being a winner or not. Right right, no matter what the conditions are, because after you know Dodd Frank and all this other stuff did you decide to you know, tuck, tell and run Hell. No, like it's not that way, man.
Speaker 1:For me personally, I didn't know a difference, in a sense that I got into business in 2012, hit the ground running and everybody's going. Man, if you were to be in the business back then, you'd have been retired and I'm like, well, I wasn't, so I'm going to keep on rolling.
Speaker 3:Yeah, we have always heard from everybody who went through 2006, 70, 99. They made the most money in those years and they learned how to be experts with foreclosures, sports cells and everything else. They did the best. Now, hey, try to find an agent right now. That I mean, yeah, there's going to be some outliers, but find someone that was licensed in the last five to seven years who even knows what the hell to do with the short sell. I guarantee they don't. I don't know what it is and I guarantee if they have a broker associate and I'm going to go there who maybe became a broker associate because they sucked in production, I'm just going to go there. Wouldn't know either.
Speaker 1:That makes perfect sense, wouldn't know either. So now we've talked about what it means, clearly, the notice that everybody received, 1.5 million members to be exact. We've talked about how it could change individually, from a buyer's perspective, from a seller's perspective, from Realtors perspective. We really didn't talk about the listing side of things. I'd like to talk a moment about that, but before we do that's that's why I got him here Before we do, I want to ask you guys kind of back to how I kicked this thing off with the idea that NAR is the one that is being sued and the ones that reached the settlement thought they were going to appeal, but they settled 418 million.
Speaker 1:You take the membership fees that are coming in play. You've got additional Realtor associations that are being created. In light of this, what do Realtors like yourselves do on behalf or with the idea that, what does NAR provide you guys in way of assistance, tools, access, etc. Etc. And the reason why I asked that is I know you guys believe that they were going to appeal this. Why? Because they said it. They said it clearly, that's what was in the news, that's what the headlines were after the verdict came in and, all of a sudden, how many of you guys knew that they were going to be settling.
Speaker 5:So NAR for people that don't know was created originally to prevent the government from being involved in real estate to begin with. That was the whole reason that NAR even was existed was because real estate was this weird thing that wasn't really regulated.
Speaker 5:And so the NAR came in to kind of create this pseudo governing body, to make it professional, and so, of course, they assumed they were going to appeal, because this is the entity that represents us Right Now. The one part that we haven't talked about on this lawsuit that is really good is that if you were the people that have under the 1.5 million, like the dollar amount or whatever it was, you are getting a no, double jeopardy. Right, we cannot be retried again for this situation, which is Amen.
Speaker 3:There is a benefit to that. I will tell you that settlement was news to my ears. I mean owning in my own independent. I mean because we can't go back in time anymore, right, correct, so there was a threshold, right. I mean because even some of our local peers, my local peers, some people we know and love like in this city, they were named in the local lawsuit the local copycat. But I will say this because everyone was quick on all these national Facebook things that were in right on the real estate side to be like, oh, nar caved, and where did my dudes go? You know what? Maybe the settlement wasn't the best interest of us.
Speaker 3:Did we need this to be lingering over our heads for?
Speaker 5:another three years, no, no.
Speaker 3:And the other part is the settlement might have been the best opportunity for us to shut this down, turn the page and also not have, for lack of a better word, a conviction on our record.
Speaker 5:That's a present.
Speaker 3:There you go, because we weren't found guilty or Just settled Whatever. You settled, donald Trump settled.
Speaker 4:I think at the end of the day it is going to play out, when the dust settles, that people hopefully will say you know what, this probably wasn't our best interest or wasn't their best interest.
Speaker 3:I have to believe. Until I've seen some other proof, some other body of evidence, I'd have to believe this was the best of all options. I have to do it Good.
Speaker 1:I believe in I have to believe that right now it makes sense. Those breadcrumbs leading up to this, I mean you never thought it would. But then you look at it now hindsight and you go maybe we dodged a bigger bullet at that point.
Speaker 5:Maybe this was coming because remembered like two, three years ago when they said hey, someone has to stop saying my services are at no charge. This was like a two or three year ago thing where that came out and was like hey, you cannot tell buyers that you represent them for free or for no charge.
Speaker 1:And at that time it wasn't a you cannot, you should not, and now it's a you cannot. And so I guess, tying this to the transition of listing side since we believe that it will go more towards a commercial type feel atmosphere, logic, would that not deem additional associations to be bred simply because if you're doing commercials they're not in NAR? Right To my understanding, they've got all kinds of different private listing services for the commercial side of things, so don't you think that that would then breed additional associations that may be for profit, that may be.
Speaker 4:I don't know if it necessarily create different associations, but I think, going to his point of AI and tech, it's probably going to create other platforms in which they are allowed to promote whatever type of compensation, et cetera, et cetera. I mean, if you're taking out MLS from that equation, I think it's going to produce other business opportunities that just maybe don't exist right now. I'm an ex-business owner with things that were non-real estate related. I would see that this new era we'll call it a new era is probably going to present some business opportunities in which also heck, I'll just say it there's probably going to be some situations in which maybe a business will flourish that they're financing the buyer broker.
Speaker 5:Right, yeah, I'm thinking like that. A clarinator, yeah exactly.
Speaker 3:A thousand percent. There could be a budding new industry that all they do is advance and collect and take commissions for disbursements. To keep it separate from the loan side. We haven't talked about the loan side yet. I do not think this is going to impact the loan at all. No, we can't even get some homes to appraise Now. We're going to roll in 2% 3% buyer commission into the loan and have that amortized over 30 years and you didn't pay 3%.
Speaker 4:You're correct, but I think all sellers are going to be reducing their price yeah.
Speaker 1:I think the only way that this could affect the lending side is if we do see a large, dramatic decrease in the representation of buyers, and the only way that that would happen is if sellers begin to say I'm not paying that.
Speaker 5:But that's market by market right. So this is the good news Again, my opinion and I get that this is part of why we got here. But realistically, what are you going to do? Just an opinion In San Antonio, one of every two homes that is sold is a new construction home.
Speaker 1:Outside of two builders Right now, right now.
Speaker 5:But outside of other two builders that might aggressively say, hey, let's try this Again. If your neighbor builder is offering a buyer broker commission, are you really going to say I'm not going to offer you or expect your home to sell, yeah, so again part of the problem builders weren't named at all in this. So who's going to go knock on builders door and say, hey, you cannot offer four, five, six percent commission because you're hurting the pre-owned sellers. They're not going to do that. They're not going to do that.
Speaker 1:Well, I mean, in addition, you've got an association that essentially was against dual representation that is now almost inherently promoting dual representation.
Speaker 4:That's the crazy thing. Exactly. You dismantled all of this. I'm not a realtor.
Speaker 1:But am I right?
Speaker 4:here and now. All of a sudden, buyers are supposed to go directly to that listing agent. Well, hold on, wait a second. We have a fiduciary.
Speaker 1:So, that being the case, Robert, if you could for a brief moment and I don't know how your time is, but maybe another 15 minutes we can go on this thing. I'm not saying, take another 15 minutes.
Speaker 5:But I'm 11 o'clock.
Speaker 1:So in the eyes of a mass listing agent, you guys and your team unless the buyers are tuning in to the news which most affluent buyers they do they watch the news, they're aware of what's going on how do you think this could change the listing side of things? And I've heard many things from the listing agent is going to be the one that controls the buyer, because that's who they're coming from, and then they are going to have to get more buyers agents and then they're going to figure out. I've heard many different aspects of this. I know you don't know the right answer because it hasn't been created yet.
Speaker 4:It hasn't been created yet. I mean, the conversation that I had last night with one of our sellers was look, let's prepare for this is the worst case scenario. By worst case, I said all of your fees involved in it, and then we're just going to work backwards from here, because all that what we know to be, I believe, inherently true is that this is just going to be another component in the negotiation process. That's it. We've been negotiating all these other things repairs, price terms, conditions, blah blah. Now we're going to be negotiating commissions. But if we prepare for, hey, it could be up to here and then everything else working back down, I think we'll be okay At the end of the day. We still don't know. I mean, this is not even a week old, that's right.
Speaker 1:We know what changes are made that are needing to be adopted by you guys. How you adapt to them, how do you adapt to them? That's still unknown, because it could then create additional layers or additional practices that could then, down the road, become not usable or frowned upon, et cetera.
Speaker 4:The funny thing is is his example moments ago was the same example that I gave one of my clients as well. I said let's just pretend your house is not $1.5 million, it's a $350,000 house. I gave him that exact, exact example. You talked about what if they're competing against a builder who's offering four or five, six percent right now?
Speaker 5:Even with our model, every time that we've discounted the commission, we've never touched the buyer's agent commission. This would be my conversation, still with the sellers. This would still be my conversation. Okay, seller? Great, I'm Chris Marty, I'm going to save you a lot of money on listing commission. Great, hey, chris, I want to sell my home for top dollar. Excellent, guess what we are going to pay a buyer's agent commission.
Speaker 3:I respect the hell out of you for just saying that.
Speaker 3:I cannot explain to you how meaningful that is for everyone to have just heard that the reason being is because, going back to it was a six percent commission. No, it wasn't. It was always negotiable. They've always been negotiable and I believe they'll always be negotiable In my career and there's different cities, there's different booms, there's different times. The highest I ever charged on a listing to represent a seller was seven percent. There was a time where I was able to do that and I felt like I brought the value brought it. But I've also sold homes pro bono Maybe we have, and maybe in our past for once or twice.
Speaker 1:I hope that doesn't sold is done Exactly.
Speaker 3:And every time they're sold and I don't get it sold, I just lost my ass on professional photos, marketing, door knocking, open houses and everything else. And so I think the range goes from zero to whatever your value is worth. I remember I'm going to say in the Austin boom, which for me was like 14, 15, 16, 17, 18. In that timeframe, man, I used to have friends up in Austin. They're like bro, we're listing for eight or nine percent because it's on fire. It's on fire back then that I knew of and so I was like well, maybe in the Hill country, maybe seven percent, I don't know. I'm trying to understand Takes a while to get a buyer out there. So I tested it and it did work. But again, I advocated and I brought it and saved my client a lot of money and got them top dollar and I felt like I earned it Absolutely.
Speaker 3:But my point is the commission can be zero to whatever it can be, but at the end of the day we just have to realize we are still going to be able to negotiate, we're still going to have to sell our service in ourselves and our availability that we answer calls after hours and on the weekends, that when I'm on a cruise, I still have a proxy in my place and that all the thing. But going back to what Chris was saying, you know in my history you know whether I was a solo, whether a team leader or an hour broker owner. I've always told anyone who I've ever talked to if you want to take a discount on the listing side to whatever, that degree is zero to 100, right. If you want to do it for a discount, don't screw the buyer's agent.
Speaker 3:The buyer's agent is still bringing some major value, because every home that's for sale in essence needs a buyer and when you're a Robert Elder you know, yes, I'm sure he has buyers. You just said you have some buyers, but his model I'm going to just go out on the limit and say is 85% plus listings. So hopefully his listings attract the business pipeline and clientele of an agent, team leader or whatever whose business is 85% by side. We have to work together Whatever epitomize the buyer's agent.
Speaker 5:Yeah, it's not even like I didn't want to use that word To me. And what I'm going to tell sellers is that, guys, this is your competitive advantage. If you are not paying a buyer's agent commission, those people are now shutting off the faucet to the other 16,000 realtors and all their buyers. It's not even. It's not even a hey. We want to take care of these people. It's a competitive advantage for the seller to pay a commission to someone else to bring their buyer. Ief is both.
Speaker 1:You are on the money right there, chris, so I'd like to cap this off with the last and final thought.
Speaker 3:Do we have to? We're going to have lunch.
Speaker 1:I'm telling you we can keep this rolling. There's plenty of avenues to go with this. I love that.
Speaker 3:I feel like we just barely scratched it, we're done.
Speaker 1:So. There's a saying that goes change breeds opportunity. Okay, now here's the forefront change. And you guys helped me with the opportunity piece. Before buyers and I'm going to use an example from Dave Perry shout out. Before buyers were being given some $7,000 shoes. Okay, here you go In the box, open it up, holy cow, those are some nice shoes. Now they are being given these shoes and being asked to pay. We'll call it seven grand. In that case scenario, they're going to go. Well, wait a minute, what do these shoes do for seven grand? That being the case, change breeding opportunity. What opportunity do you guys see? This potential lawsuit settlement? Breeding in our environment. It can be direct, it can be on a mass scale, but what opportunities do you guys see out there?
Speaker 4:I feel this is one thing I've always said from the client's perspective, that maybe it was not educated as to the value that a good agent would bring in their mind. Sally Sue or Jimmy John got their license five hours before they met me in their mind equals.
Speaker 5:Yeah, you're not. That was one of the things I was going to leave with is I think that you like, if I'm going to go buy a million dollar home, you should be paid significantly more than an agent that just got their license recently. Our industry, it's weird. It was like a flat scale where everyone was valued the same. I think now it's something where it's like hey, if you're a Robert Elder, if you're a Lisa Guzman or one of these names, like you got to get paid more because you have more skills.
Speaker 4:Yeah, and it's not an arrogance thing, it's just like I have thousands of transactions and I have 33 years. I don't go to a physician that's going to open my chest up and be like I don't know. Man, it goes back to what. Do you call the guy last of his place? I'm going to that physician because they're the best at what they do and damn it.
Speaker 1:I want to live and I want to make sure I have a good point, robert, but then I have to bring us back to reality, in the sense that mortgage already went through something like this, and right now everybody's fighting for the lowest rate. As a buyer, no matter what doesn't matter. We're cutting fees and you get lowest rate, and that almost contradicts the idea of go to school, get the best degree so that you can get out there in the world and give discounts.
Speaker 5:I think there's a balance. I think that people are still going to want to pay for extra fees.
Speaker 3:The consumer base is so broad that there is going to be an appeal for all that we provide. Okay, through the markets we play to Sure. The crowd that's going to KFC at 10 o'clock at night is not the same crowd that would go to Jay Brown Southerly fried chicken. You get what I'm saying. I do. I was just thinking fried chicken. If I'm going to get a fried chicken, I'm going to MK Davis.
Speaker 3:I'm saying whatever, but there's different crowds and there's different needs, right, which is completely fine. We don't all want to have where they're the same shoe. We don't all want to pay the same little or the same more. We all want variety. All of us are in different chapters of our lives.
Speaker 3:What I can do today, in my mid-40s, is not what I was able to do in my mid-20s. We progress, we grow, ideally. But to answer your question, what do I think is going to change? I think these are. Things are going to change. I think consumers, when this is all said and done, will understand us better. I agree, that's a great point. I think, when this is all said and done, brokrig's across the US I'm not trying to beat up on San Antonio Brokrig's across the US that don't train had better start training. Or I'm taking all their agents. I think Brokrig's who say they train had better change their 10 year old training curriculum to be modernized to today's issues. So what those three alone encompass, what A better agent, a better versed, knowledgeable consumer, which I believe is gonna be the unintended cause.
Speaker 3:I think the intended was to break us. The unintended is that it's gonna solidify us. We're gonna be known as the professionals we should have been for many, many, many years. And then we are all not doctors in a lineup. We are doctors that, if I was to like, and Robert to a heart surgeon, I'm probably get.
Speaker 3:If I don't know him, I'm calling you because you know him and you're gonna be able to get me a personal referral to him and you're gonna be able to even beat my medical, my medical insurance, on that referral because he has a line and I need to get in his line because I'm not trying to get my heart opened up by a guy who's sitting in his office and has nothing to do. I wanna go with the guy who's got it Now. That doesn't mean that for a brand new agent you're screwed not at all. That means that if you're a brand new agent, you had better be intellectual. You had better be a student of the game. You had better dig in on learning the craft. You had better realize that you still can make it too if you will follow people who are where you wanna be.
Speaker 1:Absolutely. There's an analogy that comes to mind and I hate to say it, but it does hit the same way, because I'm passionate about this industry 9-11,. You guys remember what happened when 9-11 happened. Yes, it was tragic, it was news, it was like holy shit.
Speaker 3:We don't travel the same. No, we don't and we never will. It changed. It changed everything, and it's become our norm.
Speaker 1:But let me remind us what took place immediately after 9-11. The United States was more united than we had ever been in history. I believe that that is what this settlement will do to our industry. I agree.
Speaker 5:Those were my top three leaving points. It was number one. I think real estate will have a clear progression path now. It will no longer just be this weird hey, you're in there with everyone else. I think it will have a clear progression path and I think it will have a very high barrier to entry. Now where the very busy people are not in their lives are too busy to work consistently, it will no longer be a run on the mill job like that. And number two wait till the lawsuits start pouring in from double ending deals.
Speaker 5:Wait till the lawsuits start pouring in.
Speaker 4:That's coming, that fictitious buyers, the scammers, we see them all. We know how to. We know how to. Hey, recently one got passed to us. Admittedly, that's how good they are. Wait till those lawsuits start happening.
Speaker 5:And then the third one is just gonna be like the whole, like the whole know your value, like that's really gonna come down to. People are gonna have to build a brand. They're gonna have to just like you said like an attorney. Guys, we know the number is the fives, the four Like we know them.
Speaker 3:That's right exactly.
Speaker 5:But what consumer really knows a realtor in San Antonio Really truly Like which of any of us are like the known agents in San Antonio? Nobody.
Speaker 2:Oh, you're on the money but.
Speaker 5:I think that this breeds the opportunity for agents to now become oh shit, that's Jeff Garza.
Speaker 3:And when they get it, they're gonna start to realize that they need to be okay with you. Know what I'm gonna plaster this city with my face? Allah, thomas J Henry, that's right, because when you do, that and your phone never stops ringing. Truth be told, as long as the consumer is willing to pay what they're willing to pay, you can charge whatever you wanna charge, Because they've always been negotiable and they will continue to be negotiable in terms of commissions.
Speaker 1:I guess it's time for me to bring my truck back, guys.
Speaker 5:I got my Cybertruck.
Speaker 1:I got my.
Speaker 5:Cybertruck, but I'm gonna grab it.
Speaker 1:That's awesome. Well, gentlemen, if there's anything that you guys would like to add to the end of this, by all means now is the time. I think that this was a great discussion, with education. We had plenty of passion showing through on this. There was a lot of opinion, plenty of perspective that is given to new agents, seasoned agents, buyers, sellers whoever's out there consuming this information.
Speaker 1:I have to say some of the takeaways from this. To recap Major change, or is it? I think there's a lot of agents out there that this is business as usual. Those that have built their brand, that stand behind their value, that can clearly articulate their value, matter of fact, those that, in many cases, don't even have to articulate their value because they've done such a good job of branding in their career.
Speaker 1:For those of you that have not created value, those of you that are struggling with trying to figure out what the next step is that's something that I would maybe get with your broker on have a group discussion, go to all of the panels that you can possibly go through. Don't mean to do that and, honestly, I think it is a moment where we can reshape our industry for the better and, as mentioned, change breeds opportunity. The opportunity is gonna be up to us individually and those leaders within the brokerages that represent you. Gentlemen, I wanna thank you for being transparent, for showing your passion, totally obvious in this conversation. We could go on for hours about many different at the whole topics, but I think within the hour, hour and a half that we gave to folks, they were able to consume some value. Matter of fact, we should have charged for this, you know. Ha, ha ha.
Speaker 4:Bill's going out. My Venmo is.
Speaker 1:Go. You guys listening. I really appreciate you tuning into this. If you got some value at it, make sure to share it like subscribe. Run over to YouTube and go to Key Factors Podcast. We're also on Spotify, apple Podcasts and all other podcast platforms where you can consume. That being the case, happy Tuesday and we will see you on the next one 万 Thanks for watching, guys.