Navigating the Proposed NAR Settlement: What Realtors Need to Know

Welcome back. Good morning … to Mike Ferry TV. It is the week of April 22nd, 2024. I wrote down this thought. There’s a lot of speculation. There’s a lot of conversations. I mean, enormous amount of conversations, a lot of videos being produced. And they’re actually seminars being done on something that is not yet been approved. The proposed and the keyword is proposed settlement for the National Association of Realtors. Hopefully, we’ll be done this summer and then we’ll really know what has to be done next.

I think some of the changes that they’re requesting, meaning the government and the Department of Justice, are probably valid. And I don’t think there’s any question that there’s always been a lot of confusion regarding a buyers-brokers agreement, etc., etc. Which will all be determined in this proposed settlement.

So, I want to just take a few minutes and give you my thoughts about what’s going on. And then what I’m going to say to you is, once you’ve listened to today’s Mike Ferry TV, then your job is to go back to work. Working with buyers and sellers, prospecting every day, doing your job at the highest level until we actually have some facts to work with. So here’s my thoughts.

Reviving the Sales Process: Guiding Buyers with Confidence

Number one, the buyer’s agent is going to have to take the potential buyer through the exact process they’re going to use in assisting buyers to buy a house. 25 years ago, and we’re going to reintroduce it once we know what the actual settlement is going to be. I’m going to reintroduce what we call the sales process of selling a home to a buyer. And there were five or six steps that a good agent like yourself would follow if working with a buyer and you need to start your presentation with the buyer by saying, “This is the process that I’m going to take you through to assist you in getting the home of your dreams today.”

Enhancing Buyer Engagement: Crafting Effective Plan of Action

Number two, agents representing buyers will have to do a much better job at presenting their plan of action to a buyer if they expect to get a buyer-broker agreement signed. Pat McVay in 1970 told us, “If you’re going to work with a buyer, get a buyer-broker agreement signed.” Now. the buyer-broker agreement in 1970 looked like this. It was basically just a couple sentences saying, “We’re committing our time to the buyer and expect a commitment in return from that buyer.” So the plan of action, which we have to create and that plan of action will be created by each of you. We’re going to give you a suggested plan of action sales process. Then your job is to follow it.

Empowering Buyer Representation: Strengthening Prequalification Processes

I wrote down number three. The agent represented. The buyer is going to have to become stronger at the prequalifying process. It’s going to be one of the vitally important parts of this whole process of working with buyers. We can’t rely any longer on the house selling itself to the buyer. We have to find out the motivation, the qualifications, etc. and once we do that, then we put our sales skills to work to help that buyer buy a house.

Maximizing Mortgage Affiliates: Strategic Buyer Consultations

I wrote down number four. The mortgage affiliate will become more important to the buyer’s agent and should be talking to their prospective buyer before homes are actually shown. I’m sure you’ve been taught that by your broker in the training that you’ve had.

Empowering Listing Agents: Redefining Commission Dynamics

Number five, listing agents will become more important to the business because they can work directly with their seller in selling the seller prospect on paying part of the commission to the buyer’s agent. See, for example, let’s say that your commission you charge overall is 5%. And let’s say you keep three as the listing agent, give two to the buyer’s agent. You’ll still be able to do that if you want to. Now, a good listing agent will have to deal with the objection. Why would I want to pay that? And the answer would be around the area of well, agents often do look to see what the motivation is. What are they trying to accomplish? Meaning the seller. And as a result, the seller may want to put up some of the money for that potential buyer to buy the house. So listing agents will be the ones that really do set the rules for how a lot of things are going to be done for us.

Reinforcing Sales Fundamentals: Navigating Uncertainty with Confidence

I wrote down last with these thoughts being said, we have to remember that the fundamentals of selling are more important today than they’ve been in the past. We have to understand the weaknesses we have and overcome them, because everybody has weaknesses in the selling process, because there is so much to know and learn, and then concentrating 100% on fulfilling the needs of that buyer. So this will take hopefully a little bit of the speculation conversation out. I guess the most important thing is … It is business as usual until there is a final word being given to all of us as to how this whole thing is going to roll out. In the meantime, keep showing property, keep selling homes, keep listing property, keep prospecting, keep doing your job at the highest level, and I will look forward to talking to you next week. Thanks for today.