I've wanted to add this for awhile but needed a good reason to do it. I think you have been clear that it's the top/best/most qualified agents that are most deserving of the business and it's the lower level/less productive/less committed that are less important in this debate.
While I like it best when we agree, I'd like to share some of my personal experiences that contradict some of your views. I would argue that some of the top salespeople in commission (or salary/bonus) compensation based industries can be the most corrupt.
A past employer of mine, Kidder Peabody & Co., an investment bank owned by GE at the time was brought down by one of the firms top producers. Today, one of the top real estate agents in the country at one of the top real estate firms in the country is a notorious (no pun intended) dual agent and "pocket-lister" and famous for being "shady" (a local agent in my farm). I've been in the commission business for most of my business career and IMO, that's where you'll see the most dodgey characters - at the top.
I think the changes being made now will effect the top agents more than the mediocre as the top agents will be less likely to maintain their way of doing business while that average agent will be more likely to want (and have to) prove their value to customers. It's not a far cry to wonder how a top agent becomes a top agent. The problem, IMO, is commission-based compensation. If "I" only make a living if something happens (a transaction) and the reward for that happening (a closed transaction) is significant ($) it's more likely to see these salespeople operate in grey areas.
The changes coming in buyer's agency compensation will be most hurtful to the best agents. The ones in the middle will benefit the most. This is not meant to be a blanket statement, it's just based on my personal experience in commission based compensation industries. They make movies about this stuff (Wall Street, The Big Short, Glengarry Glen Ross etc.) We'll see. Thanks, Brian
Love the article and I still go back to my past comment as an additional solution. Association dues should be based on closed transactions. Rather than a flat fee to everyone, decreasing the number of people who can fog a mirror, switch to dues based on income. If the associations and NAR income was dependent on helping educate, support, and promote the people who were actually doing the business it would help prioritize great agents. Additionally, can we also stop with all of these “coaches” in the business. That also needs to be regulated as the video proves that coaching in the industry is all about creating “winners’” with power scripts and playbooks. It’s exactly like the health care industry, as it only cares about symptom treatment and not the cause. There is no money in addressing the cause because if you did you would need the coach anymore. Many of the mediocre part time agents you refer to are being taught all the crap tactics by an unregulated industry of so called “Coaching” experts who feed off the fear and promise pipe dreams to make the next quick buck. It’s gross and offensive.
Agree with everything you have written except for part of your advice to associations, specifically this part: “You don’t exist to generate dues income; you generate dues income to serve the consumer, the REALTOR and the public.” Sadly, they seem incapable of thinking of anything EXCEPT generating dues income and are living in abject fear of losing even one dues paying member. Holding on so tight to the status quo, that they are actually strangling their own future - at least in our area. This will sink them, and in turn, this will sink the MLS. That is who should be awarded the orange jumpsuits.
Yes! You are getting to the root cause of the issues in our industry. We cannot paint every realtor with one brush. The issues in our industry start with our state licensing organizations as well. Allowing someone to start working as a Realtor by simply taking a few hours of instruction and a test starts the downward spiral. Other professions that are licensed by a state require a 2 year apprenticeship, not us — simply get a license, pay your association dues and you can call yourself a Realtor. We need to do better and it starts with state licensing.
It's kinda funny you used the car dealership analogy as I was just talking about it with my wife when telling her about this discussion. Unfortunately, we can actually compare or make an argument within the two industries (selling cars and selling RE). Here's my take. If a customer goes into a Lexus dealership wanting to check out a 2024 LS the most likely scenario is the salesman will do everything they can to get the customer to buy one. However, the best in class car in the category is the Mercedes S Class. The question is; should/would the salesman tell his customer to go down the street to check out the S Class before committing to his/her Lexus? It would never happen. No sale, no money, no food.
I could easily be wrong, but I have a sneaking suspicion we will be seeing exactly how much value those best agents add to the transaction and buyer experience when/if they are competing against a really nice and competent agent that will bring comparable abilities for $100 an hour, especially now knowing that there is a way to bring down the purchase price by a significant number (assuming the buy-side compensation is transparent). IMO that is going to happen - but only time will tell when. Thanks, Brian
ROB,
I've wanted to add this for awhile but needed a good reason to do it. I think you have been clear that it's the top/best/most qualified agents that are most deserving of the business and it's the lower level/less productive/less committed that are less important in this debate.
While I like it best when we agree, I'd like to share some of my personal experiences that contradict some of your views. I would argue that some of the top salespeople in commission (or salary/bonus) compensation based industries can be the most corrupt.
A past employer of mine, Kidder Peabody & Co., an investment bank owned by GE at the time was brought down by one of the firms top producers. Today, one of the top real estate agents in the country at one of the top real estate firms in the country is a notorious (no pun intended) dual agent and "pocket-lister" and famous for being "shady" (a local agent in my farm). I've been in the commission business for most of my business career and IMO, that's where you'll see the most dodgey characters - at the top.
I think the changes being made now will effect the top agents more than the mediocre as the top agents will be less likely to maintain their way of doing business while that average agent will be more likely to want (and have to) prove their value to customers. It's not a far cry to wonder how a top agent becomes a top agent. The problem, IMO, is commission-based compensation. If "I" only make a living if something happens (a transaction) and the reward for that happening (a closed transaction) is significant ($) it's more likely to see these salespeople operate in grey areas.
The changes coming in buyer's agency compensation will be most hurtful to the best agents. The ones in the middle will benefit the most. This is not meant to be a blanket statement, it's just based on my personal experience in commission based compensation industries. They make movies about this stuff (Wall Street, The Big Short, Glengarry Glen Ross etc.) We'll see. Thanks, Brian
Love the article and I still go back to my past comment as an additional solution. Association dues should be based on closed transactions. Rather than a flat fee to everyone, decreasing the number of people who can fog a mirror, switch to dues based on income. If the associations and NAR income was dependent on helping educate, support, and promote the people who were actually doing the business it would help prioritize great agents. Additionally, can we also stop with all of these “coaches” in the business. That also needs to be regulated as the video proves that coaching in the industry is all about creating “winners’” with power scripts and playbooks. It’s exactly like the health care industry, as it only cares about symptom treatment and not the cause. There is no money in addressing the cause because if you did you would need the coach anymore. Many of the mediocre part time agents you refer to are being taught all the crap tactics by an unregulated industry of so called “Coaching” experts who feed off the fear and promise pipe dreams to make the next quick buck. It’s gross and offensive.
Agree with everything you have written except for part of your advice to associations, specifically this part: “You don’t exist to generate dues income; you generate dues income to serve the consumer, the REALTOR and the public.” Sadly, they seem incapable of thinking of anything EXCEPT generating dues income and are living in abject fear of losing even one dues paying member. Holding on so tight to the status quo, that they are actually strangling their own future - at least in our area. This will sink them, and in turn, this will sink the MLS. That is who should be awarded the orange jumpsuits.
Yes! You are getting to the root cause of the issues in our industry. We cannot paint every realtor with one brush. The issues in our industry start with our state licensing organizations as well. Allowing someone to start working as a Realtor by simply taking a few hours of instruction and a test starts the downward spiral. Other professions that are licensed by a state require a 2 year apprenticeship, not us — simply get a license, pay your association dues and you can call yourself a Realtor. We need to do better and it starts with state licensing.
Hey ROB,
It's kinda funny you used the car dealership analogy as I was just talking about it with my wife when telling her about this discussion. Unfortunately, we can actually compare or make an argument within the two industries (selling cars and selling RE). Here's my take. If a customer goes into a Lexus dealership wanting to check out a 2024 LS the most likely scenario is the salesman will do everything they can to get the customer to buy one. However, the best in class car in the category is the Mercedes S Class. The question is; should/would the salesman tell his customer to go down the street to check out the S Class before committing to his/her Lexus? It would never happen. No sale, no money, no food.
I could easily be wrong, but I have a sneaking suspicion we will be seeing exactly how much value those best agents add to the transaction and buyer experience when/if they are competing against a really nice and competent agent that will bring comparable abilities for $100 an hour, especially now knowing that there is a way to bring down the purchase price by a significant number (assuming the buy-side compensation is transparent). IMO that is going to happen - but only time will tell when. Thanks, Brian