Dallas real estate leaders explain how to adapt to coming NAR settlement changes

by Patrick Regan

Some local brokerages addressed buyer agent compensation issues head on, even before the litigation settlement by the National Association of REALTORS® (NAR) put a spotlight on real estate industry commissions.

Buyer agent agreements and compensation conversations with clients were already the norm at Briggs Freeman Sotheby’s International Real Estate, President and CEO Russ Anderson said.

In an interview shortly before the NAR settlement was announced, Anderson told Dallas Agent that he is glad the topic of buyer agent compensation is gaining traction.

“In the past, it didn’t get the time that it really deserved and needed,” Anderson said. “We’ve really tried to get in front of it and have these conversations up front.”

The message agents should be sharing with clients, he said, is “I’m committed to helping you find the house of your dreams, but I’m a professional, and I need to get compensated.

“(Let’s) create a partnership. What I’m bringing to you is helping you find the house of your dreams, and you’re helping me be fairly compensated.”

Anderson’s firm created a booklet to help show the benefits of buyer representation, giving agents a starting point for those conversations with clients.

Might be ‘chaotic’

Starting Aug. 17, Realtors will need to use a buyer agent agreement, and commissions will no longer be disclosed on the MLS, according to the terms of NAR’s settlement agreement.

When those rules take effect, Allie Beth Allman & Associates President and CEO Keith Conlon expects some challenges at first. 

“Not putting the commission out there [on the MLS], I think the first few months might be kind of chaotic, but I think eventually it will be business as usual,” Conlon told Dallas Agent last week.

Conlon’s company has held meetings and training on what’s to come and what agents will need to present to buyers, “but from my perspective and most agents’ perspectives, not much has changed,” he said.

Conlon’s primary concern involve first-time buyers or buyers in lower price points. Those buyers may not be able to afford to pay an agent for their services, or they might be able to pay only a discount broker. Navigating a home transaction with little experience and no professional representation is risky.

“A first-time seller needs someone to guide them through the process, and they might not be willing to pay for it,” Conlon said. “It’s the biggest asset they own, and they’ve never [bought or sold a home] or only done it one time. Someone who is trying to navigate that, it’s not an ideal situation.

“You’re discouraging people from getting help who truly need help, and it’s going to be a mess.” 

Buyer agreements

NAR’s buyer agreement requirement is something Anderson already endorsed and encouraged for his agents to eliminate the risk of a client leaving them behind during the buying process.

“I think it’s dangerous to show people houses without a contract,” he said. “People are going to get left high and dry. We tell agents that’s going to happen unless there’s a contract. It’s one of those hard life lessons that’s out there.”

Realtor Tamra Holden of The Tamra Holden Group used to wait until her buyer clients made an offer on a home before introducing a buyer’s contract. Her viewpoint, she said, was that her service itself should make her value clear, so no buyer would consider finalizing their purchase without Holden’s help.

Holden also didn’t want buyers to feel pressured to lock in with her by signing anything at the outset. Her thinking, though, changed during the NAR lawsuit, even before the settlement was reached.

“All of us, our eyes have been opened with this lawsuit,” Holden said. “I have been very intentional about having a buyers’ agreement signed up front, explaining to them what that means and what it looks like.”

What’s next?

Holden knew changes were on the horizon when she spoke to Dallas Agent shortly before the NAR settlement and the new rules were made public. 

“I don’t think the sky is falling,” she said. “All industries have change. As Realtors, we have to change with it. We have to be open to the idea of change. I think everything is going to be fine.

“The good side of it is that disclosure to clients is good. I don’t think that’s bad … Those of us who are serious about this being a business are hopefully going to make good changes along the way.”

Conlon has heard some concerns from agents about the coming changes and even whether this is the end of the real estate industry in its current form. “I’ve heard this is the end and time to go find a new job,” Conlon said. “I think it’s more of a fear of the unknown.”

He said there’s a lot of room for optimism, especially the demand for real estate representation and the overall strength of the industry in the Metroplex.

“Dallas-Fort Worth and Texas in general is a great place to do business,” said Conlon, who noted that outsiders continue to be drawn to and relocate to the area. “You look at relocation buyers, they need someone to guide them. Realtors are always going to be needed. This is a great community, and we’re extremely fortunate to be in the Metroplex.”

Similarly, Anderson said removing commissions from the MLS and requiring buyer agreements are industry shifts but not a sizable industry reset.

“I believe it’s more of an evolution,” he said. “I believe this is a bigger little step. But I don’t believe that this is a watershed moment where the whole real estate industry starts operating in a different way.

“It’s probably the first big push for the industry to re-regulate itself. And that’s a good thing.”


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