As you learn more about the NAR lawsuit, you’re probably thinking about the future of real estate – and what that means for you. First, we need to take a look back at how we got here.
In short, brokers abdicated their responsibilities. Brokers developed an over-reliance on the NAR and state authorities, and let franchisors do our jobs for us.
We have lost our way as entrepreneurs and stopped taking responsibility for our destinies.
The first step was to abdicate our lead generation to third parties like Realtor.com and Zillow. Who made out on that deal? Not brokers.
Instead of acting as mentors, coaches, and business partners with something to add to our agents’ businesses, we raced to the bottom of the barrel by allowing agents to essentially work for free while accepting all the legal liability.
At best, we urge our agents to pay a personal real estate or business coach to get what we cannot – or are no longer willing or able to provide.
To meet the quotas outlined in our franchise agreements, we started signing up anyone with a pulse. I saw this starting to happen at RE/MAX when I was an affiliate.
Even the brokerages that charge something, like Keller Williams, cap their best people at $72,000 or so. The best of this group meet their obligation in the spring and work the rest of the year for free without the benefit of a broker because he or she has to focus on the agents coming through, who might sell something, of which they will get a share.
State of the Real Estate Industry During the COVID Pandemic
The pandemic was the best and worst thing that ever happened to me as an entrepreneur.
First, it messed with our business – but we did not see the full impact of it until 2022/2023. Unfortunately, we didn’t discover its true impact until it was too late.
Here are four things that many people in the real estate industry – including myself – experienced during the height of the COVID pandemic and immediately after.
- Increased pressure for virtual dealmaking
- The erosion of personal connection
- Numerous challenges in maintaining ethical standards (no peer accountability, nobody to model the way, no looking agents’ in the eyes)
- Covid became everyone’s excuse for everything
A few of us figured it out and set standards for conduct, process, and performance. Those of us who did this tended to come out stronger for it. Most, sadly, did not develop these standards.
Selling houses during the pandemic was torture for the relationship-oriented among us. Realtors® who work by referral couldn’t help our buyer clients like we wanted to. Think about it: How many offers did it take to buy a house during COVID?
Many people had to commit to making up appraisal shortfalls and waiving inspections. As listing agents, all we had to do – and quite frankly, all our sellers wanted us to do – was put a sign in the yard and get out of the way.
If you think about it, after that mess, it’s no wonder our reputation has tanked. Conversely, the pandemic was heaven for the transactionally-oriented among us. Now, we’re going to have to work harder than ever to turn the tides.
Predicting Real Estate Agents’ Future Outlook
If you’re a real estate agent, the future outlook of the profession looks pretty bright even in the wake of the NAR lawsuit. However, before we can see the industry change and swing back in your favor, we need to make some changes to reinvigorate the business.
First, we need to stop signing up those who are only looking for a get-rich-quick opportunity. Real estate is a profession; it’s not a hobby or a job you show up for from 8 to 4:30. You don’t clock in and clock out.
We need to weed out the transactionally-minded who come and go. Instead, we need to focus on those with a long-term outlook built on productive, profitable, and win-win relationships.
Stop with the part-time dilettantes. This includes those looking for a second (or even third) career to tell their friends about. I’m not interested in anyone who thinks being a Realtor® is a status symbol or a way to magically enjoy a lifestyle they watch on HGTV or see on Instagram.
The same thinking applies to investors who get a license to save on their commissions. It’s bad for us and a poor substitute for learning how to run a business.
The agents who do just a handful of deals a year are the ones we have to worry about. They never learn anything or get better at their craft. Those who close a steady stream of units each year are the ones who are getting better and are motivated to protect their business and their license.
Times are tough. It is not a crime if an agent has to get a job to get through a tough year. It’s the coming in and out that is unacceptable.
I have no problem with agents who are committed to building a business needing to get a part-time job while they are getting started or to get through a year like we just had. I’d rather they had to work a few hours a week outside of the industry than make bad decisions based on making their next mortgage payment.
Had more people taken this approach over the last few years, I firmly believe we would have had a lot less “quiet quitting” happening with the most promising among us; we need to work harder to retain good people.
Here’s another hard truth: The brain drain is killing our profession.
We have to be honest about the nature of the business. In my opinion, our job is to talk at least as many people out of the business as we recruit into the business. If we succeeded in doing that part of our jobs, we could shed 30% of the Realtors® in the country and do a far better job for our clients.
However, this line of thinking is contrary to what the Legacy Brokerages, giant franchises, and the NAR want. Why? Their profitability is built on a large number of licensees paying dues and franchise fees. This is why I think the NAR and the mega brokerages will transform or fade away over the next few years – and maybe that’s a good thing.
Final Thoughts
Changes happen. Change is inevitable. However, we don’t have to keep pouring our time, energy, and money into a system that isn’t working for us. We need to come together and make real, sustainable changes in the real estate industry so agents who work by referral and brokers who follow that model can be successful again.
Owning a business is always harder than you think it’s going to be, and I feel like it’s time that all of us just accept that and get back on with it. In my opinion, we restore honor to the profession by talking about transparency, talking about how we get paid, spending more time with our clients, learning, and so forth.
We just don’t do well by ourselves. As a rule, whether you’re an introvert or an extrovert, we don’t do well in isolation.
Real estate agents don’t do well as lone rangers; I think if there’s anything that’s taught us the last four years, it’s that. We’ve lost our ability to relate to customers and clients and each other, and I think that that is the root cause of lawsuits like this. I think we can fix it, but there is likely going to be some drama on the way.
Realtors and brokers have to be held to a higher standard and brokers have to be held to a higher standard. It’s time to take back what is ours as broker-owners and assume our responsibility and the rightful place in this transformation. We are entering the Golden Age of a new real estate professional.
While it may seem scary and you know quote negative this period is, or the last year or so has been. I do believe with all my heart that the next 10, 15, 25, years are going to be wonderful for those of us who want to learn the ways of the new real estate profession.