Pro Bono Real Estate: Why and How

It's past time we really dug into the need for pro bono programs in real estate

Back in 2021, I wrote a post titled, “Do the Rich Need Buyer Agents?” In it, I talked about how nobody cares if someone who bought a Lamborghini “got screwed” because he was unrepresented at the dealership. Then I wrote:

The more interesting question, of course, is once we apply that to houses. REALTORS often talk about how unrepresented buyers would be taken advantage of, get screwed, overpay, or otherwise end up in a world of hurt when purchasing the biggest asset most of them own with a 30-year debt commitment. That sentiment underlies much of the discussion and debate around the current commission kerfuffle with private litigants, the Department of Justice, and I expect regulators and legislators soon enough.

Fast forward to today, after the plaintiffs in Sitzer winning at trial, after the NAR settlement, and on the eve of the biggest changes to the industry in my lifetime… and I am hearing all kinds of concern about the poor low-income buyer who is about to get shafted from either (a) lack of representation, or (b) uncompetitive offers because they have to ask for compensation from the seller.

As it happens, NAR’s “defense” in the commission lawsuits heavily relied on the idea that racial minorities and lower-income consumers will be hurt if the system of cooperative compensation was destroyed. NAR continues to say that, while telling its members that compensation is A-OK, as long as it’s off the MLS.

Thing is, all of that seems like fake concern to me. I wrote in this post from May about NWMLS opting out of the NAR settlement and actually defending offers of compensation:

We can safely ignore the palaver about “disadvantaged buyers and minorities” and such since none of the people talking that talk has actually taken any actual action to help such disadvantaged buyers. You know, like offering pro bono services, or scaling commissions based on client ability to pay, or whatever else. That’s just PR spin, and we all get that.

Over the years, I have written and spoken about pro bono work for real estate — or at least for REALTORS who have a Code of Ethics. I found this in one of my earliest posts from 2010 saying goodbye to Joe Ferrara (an early OG of the RE.net):

I will never forget that Joe was a font of ideas and innovation.   Although not a wealthy man, Joe was constantly thinking about helping those less fortunate than himself.  We must have discussed the idea of pro bono real estate for hours, days, weeks.  He was the first person I remember proposing a “Hot Ladies of the RE.net Calendar” to raise money for various charitable causes, like Habitat for Humanity.  His ideas were often great, sometimes not, but always, always interesting.

Most recently, in a post about agent compensation post-lawsuits from February of this year, I wrote:

If the whole racial angle is an issue, what prevents an agent or a brokerage firm from deciding to offer steeply discounted (or pro bono) representation to people of color? The world is filled with companies and organizations who offer preferential pricing for low-income people, for under-represented minorities, and the like.

If you care so much about low income buyers and people of color, then how’s the saying go? Put your money where your mouth is. Otherwise, you’re just using “impoverished buyers” as human shields for your greed. Kindly have a STFU sandwich instead of yapping about inequality in representation.

My friend James Dwiggins pointed out that while my complaints may be valid, it isn’t as if I have a lot of suggestions about how to fix things. He suggested that I actually offer solutions. Why should we do pro bono work? How would we go about it?

It’s a fair criticism, so I resolved to offer up some concrete ways that the industry could offer pro bono real estate. How do we do this?

We begin, however, with the Why the industry should do this.

The Big Why: Doing Well by Doing Good

The most important Big Why, of course, is genuine concern. Agents should do pro bono work, because they genuinely care about helping low-income buyers and underrepresented communities. You know, the consumers who most need representation to avoid getting screwed?

The best answer is that you should do pro bono work because being of genuine service to others will make you feel great about yourself as a professional.

However, there are real benefits to doing pro bono work. The world I know best is the legal world, where law firms and lawyers at least pay lip service to pro bono work. Sometimes, they do some really great work pro bono that change the world for the better.

And oftentimes, there are real business benefits from working for free. A consultancy that specializes in the legal industry, Firm Forward, lists two main benefits. They both apply to real estate.

1. Professional Development:

Pro Bono is a fantastic approach to have professional development related to pro bono work while also allowing younger attorneys to gain experience with cases and clients that they would not otherwise have access to.

If they were paying clients, they would expect so much more from the start, so if you have a practice and attorneys ready to go but don’t have the years of experience that a paying client would expect, you have a brilliant opportunity. It’s the best way to provide experience and knowledge to new attorneys by volunteering for these clients in need.

Every brokerage and real state company has training programs. It is a major recruiting tool, and a huge reason why agents join one firm over another. But classroom lectures and motivational speeches are not training. Training means doing the thing you were just taught and practicing it. As a competitive shooter, I know that training means actually shooting and doing drills, instead of just watching instructional videos on how to shoot and move. You have to put the actual reps in - put the theory into practice.

Real estate is no different. Professional development does not mean simply listening; it means doing. Pro bono offers a way for newer agents to do the work and learn the skills necessary at far lower risk. Just like lawyers do. And all under the supervision of a more seasoned practitioner.

2. Publicity and Marketing Benefits:

Offering these pro bono programs has a marketing value since it allows you to expand the messaging linked to the services you’re providing and around professional development to the public in a way that you cannot always do with paying clients.

You will continue to be held to the same confidentiality and ethical standards as a paying client. Clients who are unable to pay for your services, on the other hand, are typically thankful and more flexible when it comes to you receiving publicity from them in the form of an interview or a testimonial. It can provide recognition and appreciation from the client, turning it into a marketing moment.

These things not only make you happy but also provide a way in which your current clients can appreciate you and the way your services benefit them. They are more likely to use paid services if they know you are doing something for the larger good of people and corporations and are willing to invest in them.

There is a reason why companies like KW have “Red Day” or other charitable programs. The positive PR from such programs is invaluable.

I honestly don’t think I need to go over all of the PR and marketing benefits of doing pro bono. You already get it.

3. Company Culture:

I will add a third that law firms don’t really care about, but brokerages do: company culture.

KW Red Day is the perfect example of this benefit, actually.

That looks like the kind of company you might want to work for, no?

My personal experience with pro bono — from my brief stint in the law firm world — is that the impact on culture is far greater than the actual cost of pro bono. Not every lawyer is thrilled to be working on yet another M&A document for some Fortune 500 company to buy a smaller company. But they are proud of the pro bono work of the firm — especially if they are personally involved in doing the work.

I distinctly remember the lawyers in the firm’s real estate department — whose day jobs were invariably giant corporate leases for hundreds of millions of dollars, or big time development deals — get most excited at lunch talking about the tenant-landlord case they’re doing pro bono, helping some deserving family avoid eviction.

I believe that real estate companies will find their company culture improved dramatically by launching a pro bono program.

4. Pivot Point for the Industry

Final Big Why. Consider what the industry has been going through at the hands of the corporate press thanks to the sexual harassment scandals, commission lawsuits and the DOJ’s investigation. Average brokers and agents are painted as selfish greedy near-criminals. Every narrative is about how agents are overpaid. Media focus is on how agents are driving luxury cars, dressed in designer clothing, or behaving badly in the workplace while forcing consumers to pay thousands and thousands of dollars for doing very little.

If the industry is going to argue that consumers need and deserve representation by an agent who is a fiduciary of the consumer, and then trot out “minorities and disadvantaged buyers” as the reason why agents are necessary… then a pro bono program of some kind is absolutely necessary. We have to walk it like we talk it at least a little bit, in order to make the talk not seem like a total self-serving narrative.

So those are the Why the industry should embrace pro bono representation.

How do we go about it?