Cutting through the Noise: In The Loop, March 2024

Hi clients, friends, & family,

In these days of reality tv shows and social media posts, I gravitate towards data. But even data can be interpreted and presented in ways that support your perspective. This is why I read the Wall Street Journal- sure it’s not perfect, but I love reading it. 

Recently, Realtors are front and center in the Journal. I’ve been a realtor now for 9 years, and have helped clients in 150+ Million in real estate volume. It’s fascinating how even the WSJ can present a skewed view of real estate agents.

A number of you have asked what I think about the changes. First off, change is inevitable. All the time, and everywhere. The tumultuousness in real estate right now will settle back down. Actually, I think this will be for the good in the long run: many agents who treat real estate as a hobby will leave the profession and the professional, hard working ones who strive to bring constant value to their clients with extra efforts will rise to the top.

Here are my insights as to how we got here and where we are.

Where we’re coming from:
For decades, the Sellers of a home listed on the Multiple Listing Service (MLS) generally paid both the commissions for the Listing Agent (the agent representing the Seller) and the Buying Agent (the agent representing the Buyer) at the Close of Escrow. In the Bay Area, the standard rate is 5-6% (split 50%/50%). 
This is part of the Listing Agreement contract.

Some Buyers felt they overpaid for an agent “to just open the door of a listing”. This subset of Buyers did not see the value in their realtors, and they thought (per the news) that in representing themselves, or having a real estate attorney represent themselves, they could save money. This, and a variety of other reasons which I won’t get into, is at the core of the National Association of Realtors’ lawsuit.

In the last 5-10 years, this has set the stage:
*”Reality” Real Estate TV shows often portray real estate agents as lazy, manipulative socializers who want to make a fast buck.
*Social Media which attracts a whole slew of not-so-strong real estate agents driving fast cars and making “easy” money. It’s an unrealistic narrative for so the majority of realtors.

Here’s the irony:
*My job as a realtor is to make the process as low stress as possible for my clients. This means that I am doing a bad job 
of showing my clients every.single.thing. I am doing for them, 
in order to make it less stressful for them. There are plenty of sleepless nights, pacing back and forth my home and/or office untangling complex problems, working at odd hours, and 
shots of cortisol that I don’t share for the sake of my clients.

*I’m paid for the transaction, but my job as real estate advisor is (ideally) a lifelong practice- I love talking real estate, helping clients with remodels, family real estate questions, etc. The average time someone spends in their home is 13 years.

*My value can’t always be measured: sometimes it’s 
preventative intelligence. I recently had clients considering 
making an offer on a Palo Alto townhouse where they’d live 
part time, and rent it out part time. As always, I diligently poured through the disclosures and found out deep in the hundreds of pages of HOA docs that only 2 of the 10 townhomes are allowed to be used as rentals. Then I asked the Listing Agent how many homes in that complex were renting. What do you know- 2! 
So, if these clients had bought this home, they would not have been able to rent it out as planned. (Note- I don’t always pick up every important detail, but I can lend a set of experienced eyes to the buyers. Stories like these happen more often than you’d think.)

Where we’re going:
So much is up in the air, but for now we’re seeing some real estate brokers buying into Seller and Buyer fears of overpaying commissions by positioning their brokerages to represent both Seller and Buyer and cutting commissions (also increasing their market share, volume, $$..follow the green tongue). Some opportunists are trying to jump in and take a piece of the pie that’s still in the oven.

Assuming the NAR settlement is approved by the courts, this summer these two things will happen:
1. Buyer Broker Agreements will be required. This is an exclusivity agreement between buyer(s) and a Realtor. It can be specified for a timeframe and geographical area. The Buyer Broker Agreement will state what the Buyer will pay to their Realtor in case they get into contract on a home where the Seller will not pay the commission. The Buyer’s agent commission could be included in the Purchase Agreement, but Seller may not agree to pay it. The commission is negotiable between the Buyers and Agent.

I actually like this. I’ve spent weeks of time and shared valuable expertise with buyers before, only to have them go into a listing and instead of using me, they used that listing agent’s colleague in order to get into contract on the home. 
That’s a gut punch, but it’s the business.

 2. The Multiple Listing Service (MLS) will not publish the Buyer’s Agent Commission with the listing. This info will be elsewhere.

As for me, I’m focusing on adding value to the experiences of my Sellers and Buyers. I work hard to bring my best effort, network, resources and experience to each of my clients.

The grass always looks greener from the other side of the fence. It will be interesting as this plays out, and buyers, lenders, appraisers and sellers see some of the reality of these changes. Smart Sellers and Buyers understand the value of paying for good service. And that’s what I plan to bring for many years ahead…

On that note, check out my new Real Estate Unfiltered: live, unedited clips of my life behind the scenes as an agent on Instagram: @loribwarrenrealtor  - enjoy!

Happy Spring,

Lori

P.S. Written without AI. 