‘Real Estate Insiders’ role play with objections from buyer and seller
A newly released episode of the Real Estate Insiders Unfiltered Podcast examines the future state of buyer and seller relationships in the post-crisis housing market. National Association of Real Estate Agents‘ (NAR) Business practice changes take effect on August 17.
Co-hosts James Dwiggins and Keith Robinson chatted with industry expert Ed Zorn to answer the top questions real estate agents may have in the wake of the recent Department of Justice investigations targeting various organizations, including the California Association of Realtors.
Dwiggins and Robinson started the episode by diving into Zorn’s thoughts on the DOJ lawsuits. According to Zorn, the DOJ has issued Civil Investigative Requirements (CIDs), which allow the agency to request information on a specific subject from a company or organization not involved in active litigation. The DOJ is continuing an investigation initiated in 2019 into NAR’s commission practices, including its cooperative compensation model.
Following the changes in commission policy at the Multiple Listing Service (MLS) level, the DOJ is now attempting to address the use of standardized forms designed by competing MLSs. Standardized forms can save consumers money on legal fees and other previously required elements. But there is a risk that offers of compensation will disappear.
“Forms that are standardized by the industry are fantastic and great for the consumer,” Zorn said. “However, there is a risk that the offers of compensation will continue, as will the criticism and cause of perpetuation of the alleged conspiracy through the forms mechanism.”
Buyer agents can inquire about compensation offers over the phone and possibly decline offers based on the seller’s offer, essentially allowing the agent to steer a buyer toward offers that offer more favorable compensation.
Dwiggins intervened and asked if steering without standardized forms would be less of a problem. Zorn said it would be harder to allege commission bias and there would be less controversy over concessions if brokers created their own forms.
The discussion shifted to scenarios for handling objections in the new consumer-facing model that emerged after the commission lawsuits. Zorn explained how he would approach a seller in the new market. When Zorn spoke with a seller, he shared his services, experience and other common elements of a listing presentation.
To attract advertising traffic, Zorn would tailor the presentation based on three factors: market conditions, potential buyers and the type of property being offered. For example, an entry-level home that could be attractive Federal Housing Administration (FHA) lenders can offer concessions and other deals to help first-time buyers cover costs.
Dwiggins then asked about the value of franchise data collected by an MLS, and whether a lack of data could hinder the review process. A lack of concession data could encourage sellers to set prices based solely on comparable market offers. Zorn describes that risk as minimal and expresses the usefulness of concession data for agents in a given market.
“If you want this consumer-centric approach to work, as a listing agent and a buyer’s agent, I need the data to know the components of that transaction so that I can give good advice to my seller and to my buyer about what kind of offer to make and how to approach and complete a transaction,” says Zorn.
Robinson also suggested another scenario in which a listing agent receives a call from a buyer’s agent asking for compensation. Zorn stated that he would not offer or accept compensation from an agent. Instead, he would include an offset percentage in the sales price to help the buyer get into the house.
The episode ended with a discussion about the importance of creating a clear buyer representation agreement and advice for navigating buyer-agent relationships.
