Speaker 1: It's the stuff they are pushing. People are talking about
Speaker 1: violent rhetoric against USh, but if we dare to fight back,
Speaker 1: we are the violent one. Fifty five krs the talk station.
Speaker 2: Ato six. It's Friday, and a very happy Friday to you,
Speaker 2: made extra special. I'm happy to welcome to the fifty
Speaker 2: five Carsy Morning to explain the what seems to me
Speaker 2: to be confusing reality the current real estate market and
Speaker 2: how the buyers and sellers agents get paid. Welcome to
Speaker 2: the fifty five Carracy Morning. Sure the only real estate
Speaker 2: agent I would even ever consider if I was considering
Speaker 2: selling my house. Peter Shabria Keller Williams seven Hills, seven
Speaker 2: zero eight three thousand dot com. Peter, Welcome to the program,
Speaker 2: my friend. It's always great talking with you.
Speaker 1: Thanks Brent, thanks for having me on.
Speaker 2: You know everything there is no about the real estate market,
Speaker 2: and I'm pleased to be able to speak on your
Speaker 2: behalf because I know what a wonderful job you and
Speaker 2: your agents do, and you've got such a great team.
Speaker 2: But I saw when this legal challenge came out, and
Speaker 2: I didn't really read a whole lot about it. I
Speaker 2: just knew that the way real estate agents were going
Speaker 2: to be paid. Was going to change because there was
Speaker 2: a legal decision from late last year that discussed the
Speaker 2: situation and said, no, it was unfair that the seller
Speaker 2: had to pay the commissions for both the buyers and
Speaker 2: sellers agent. So explain the way it was, and then
Speaker 2: help me and my listening audience understand how it is now,
Speaker 2: because I think it's gotten more complicated.
Speaker 1: Peter, Well, first of all, thank you for the compliments, Brian,
Speaker 1: I really appreciate that, and we love working with you.
Speaker 1: We love working with your listeners, so thank you as
Speaker 1: always for the support. Happy too, and you're absolutely well,
Speaker 1: thank you very much. You're absolutely right. A little bit
Speaker 1: of a history, lesson a brief one, is valuable here.
Speaker 1: We all have to remember that prior to the early
Speaker 1: nineteen nineties, there was no concept of buyer agency. Sellers
Speaker 1: hired a listing agent. The listing agent would charge a commission,
Speaker 1: and when a buyer called and took a look at
Speaker 1: that home, the listing agent would be the person that
Speaker 1: would show the property and facilitate the sale. There was
Speaker 1: a giant misunderstanding by the buyers, thinking that that agent
Speaker 1: was representing them expensive transaction, and so what happened was
Speaker 1: a lot of buyers were being taken advantage of because
Speaker 1: they had no one to represent their best interests, and
Speaker 1: that's when the concept of buyer agency was introduced in
Speaker 1: the nineteen nineties. And the way that buyer agency was
Speaker 1: compensated was that the listing agents were happy to share
Speaker 1: some of their commission because they had to do less
Speaker 1: work per transaction and the consumer benefited by having representations.
Speaker 1: So that was a great advancement in the advocacy on
Speaker 1: behalf of consumers in our industry. Well.
Speaker 2: It was also to observe that was pre Internet and
Speaker 2: also the access to the MLS, the multiple Listing service
Speaker 2: was limited to people who actually had the license in
Speaker 2: real estate, wasn't It wasn't a real closed system where
Speaker 2: you couldn't just pull up a MLS listing and go
Speaker 2: through them yourself.
Speaker 1: Brian, that's an excellent point. It was a very closed
Speaker 1: systemation was hard to access, pricing information was almost impossible
Speaker 1: if you weren't in the know, and so the consumer,
Speaker 1: the buying consumer, was at a serious disadvantage prior to
Speaker 1: the nineteen nineties when buyer agency was introduced, So that
Speaker 1: was a huge step forward in protecting consumers and the
Speaker 1: acquisition of real estate, and the most recent this NAR
Speaker 1: settlement that we're all starting to experience is another step
Speaker 1: forward in transparency for consumers. What this is really about
Speaker 1: is that consumers didn't understand that. Generally speaking, consumers didn't
Speaker 1: understand that their buyer's agent was being compensated by the seller.
Speaker 1: And so, you know, as a species, we humans have
Speaker 1: short memories, short term memories, and we all forget that
Speaker 1: buyer agents was formulated in that agency was formulated in
Speaker 1: the nineties to protect consumers, but those agents that are
Speaker 1: represented buyers still to get compensated, and they were compensated
Speaker 1: by the listing agents sharing their commission. Well, there was
Speaker 1: a perception that prices were inflated to pay for this
Speaker 1: buyer agency representation and that and this is where you're
Speaker 1: absolutely right. Before there was no there was no technology
Speaker 1: that was systemizing all this. Now that the multiple listing
Speaker 1: service exists in all these municipalities municipalities around the country,
Speaker 1: that commission sharing uh business practice kind of became systemized
Speaker 1: and institutionalized through technology, so that all of a sudden,
Speaker 1: it very much can appear as though there's this system
Speaker 1: or this racket that can appear as though agents are
Speaker 1: colluding and fixing commissions. Does that make sense?
Speaker 2: Yeah, I can see that, but there would be it
Speaker 2: becomes why I guess my reaction is, well, it becomes
Speaker 2: widely known you know what an appropriate commission is, whether
Speaker 2: it's you know, three percent, four percent, five percent. That
Speaker 2: information gets out in the market adjusts accordingly. Because if
Speaker 2: there's an agency over there that's charging six or seven
Speaker 2: percent and the world finds out that no, you can
Speaker 2: only you only really have to pay three or four percent,
Speaker 2: clearly people are going to move over to the lower
Speaker 2: commission realm and go there.
Speaker 1: That's exactly right. And that's what this is all about,
Speaker 1: is that, you know, the plaintiffs that ultimately filed suit
Speaker 1: against the National Association of Realtors and all the other
Speaker 1: large brokerages and ultimately Department of Justice feel as though
Speaker 1: there should be more transparency around how real estate agents
Speaker 1: are compensated and who's paying for it. And that's what
Speaker 1: this is all about, is creating additional transparency. And so
Speaker 1: the rules, there's really kind of like two core rules
Speaker 1: that are changing. The first one is that buyer compensation
Speaker 1: buyer agent compensation can no longer be something that is
Speaker 1: shared just between real estate agents and the agent community.
Speaker 1: That's no longer we don't let each other know how
Speaker 1: much we're compensating. In fact, we don't really do that anymore.
Speaker 1: And the second thing is they can no longer look
Speaker 1: at a piece of real estate with the real estate
Speaker 1: agent unless they sign a buyer representation agreement. And in
Speaker 1: that agreement, it's got to disclose a couple of things. One,
Speaker 1: how long they're going to work with that agent, Two,
Speaker 1: how much that agent charges, in three the scenarios of
Speaker 1: how that agent could be paid, and actually force to
Speaker 1: make sure it's clearly disclosed that the concept that real
Speaker 1: estate commissions are negotiable. And so that again brings an
Speaker 1: additional level of transparency to the consumer. And I think
Speaker 1: you're absolutely right. I think different agents are going to
Speaker 1: offer different value to consumers, and ultimately the consumer is
Speaker 1: going to decide how much an agent is worth. And
Speaker 1: again I think that that is healthy for our industry
Speaker 1: and for the consumer.
Speaker 2: It sounds to me like you are going to be
Speaker 2: earning less commission.
Speaker 1: I think it's possible, and I'm the consumers are going
Speaker 1: to be able to have a choice in how much
Speaker 1: they want to pay for representation, and representation takes different forms. Remember,
Speaker 1: on the listing side of things, commissions, well, commissions have
Speaker 1: always been negotiable both the buy side and the list side,
Speaker 1: but consumers had more experienced negotiating listing commissions. When an
Speaker 1: agent shows up in your kitchen and talks about putting
Speaker 1: your home on the market, you have an express conversation
Speaker 1: about what that agent charges, and that is a negotiable moment.
Speaker 1: So that's now going to happen on the buy side.
Speaker 1: And there are all different kinds of models on the
Speaker 1: listing side. You know, you have agents that are charging
Speaker 1: premiums and agents that charge so called standard amounts, and
Speaker 1: you have discount agents. When I first got into business
Speaker 1: back in two thousand and two, there were discount brokerages
Speaker 1: where a homeowner could pay five hundred dollars to put
Speaker 1: their home in the MLS and there was no advocacy
Speaker 1: on behalf of the listing agent. That was called a
Speaker 1: discount brokerage model. Well, here we are twenty two years later,
Speaker 1: and those discount brokerages represent less than one percent of
Speaker 1: the transactions and the multiple listening service. So consumers want
Speaker 1: to be protected. They want experts, and they want to
Speaker 1: and they're happy to pay for proper representation where someone
Speaker 1: is advocating for their family and their finances, that's not
Speaker 1: going to go away. I think different levels of advocacy
Speaker 1: expertise will show up now on the buy side of
Speaker 1: the transaction with different corresponding compensation amounts. But at the
Speaker 1: end of the day, we all have to remember, for
Speaker 1: the majority of us listening to your radio program right now,
Speaker 1: buying and selling real estate are some of the most
Speaker 1: expensive I don't want to say high risk, but sort
Speaker 1: of like high value purchases of our lives, and making
Speaker 1: sure that we have someone that can advocate and protect
Speaker 1: us is critical. When you have a major health issue,
Speaker 1: you don't try and find the cheapest doctor. You try
Speaker 1: and find the most experienced doctors that can help you
Speaker 1: navigate back to health. And so yes, it's very possible
Speaker 1: that commissions will be compressed, but ultimately I think that's
Speaker 1: going to be determined by how good agents are at
Speaker 1: communicating their value, at educating their clients and what they do,
Speaker 1: and how good of a job, what their track record
Speaker 1: looks like, and advocating for their clients. So we may
Speaker 1: see a commission compression. I think what we will definitely
Speaker 1: see is less real estate agents in the industry. I
Speaker 1: think it's now going to become a little bit of
Speaker 1: a higher skill industry. And I think I think the
Speaker 1: agents that are doing this like part time, they may
Speaker 1: de select themselves from the industry. And again, I think
Speaker 1: that's probably ultimately a benefit for the consumer as agents
Speaker 1: that more of the agents that are in our industry
Speaker 1: are working full time, have deeper levels of experience and
Speaker 1: are able to best advocate on behalf of their clients.
Speaker 2: Well, and you've been emphasizing. I even wrote the word
Speaker 2: value down. There is such a tremendous value to get
Speaker 2: a truly getting a truly experienced real estate agent, because
Speaker 2: there is. I mean, you could just just give it
Speaker 2: a couple of moments time and think of the unbelievable
Speaker 2: pitfalls that might be waiting for an inexperienced home buyer, like,
Speaker 2: for example, a first time home buyer. Do they know about,
Speaker 2: you know, home warranties, Do they know about buying as is?
Speaker 2: They know about you know, looking at an HVAC system
Speaker 2: and how much life it's got left with it. Sure
Speaker 2: you have a home inspection, but we all know how
Speaker 2: reliable those guys can be, but there's just your experience
Speaker 2: really in yours to the benefit of most notably people
Speaker 2: who are not experienced at all. It's worth paying for
Speaker 2: that because you could I mean you can ultimately save
Speaker 2: your your your clients, but I mean you could save
Speaker 2: them tremendous amounts of money but also keep them out
Speaker 2: of some potentially horrific situations.
Speaker 1: That's exactly right. It's a lot of times the best
Speaker 1: real estate agents make it feel like a smooth process
Speaker 1: and you kind of scratch your head and go, well,
Speaker 1: what did I pay them for? Well, you just paid
Speaker 1: them for nothing, dramatic happening and making sure you should
Speaker 1: you wind up with the right house in the right neighborhood,
Speaker 1: with the right entities that's going to be the right
Speaker 1: fit for your family and its needs over the course
Speaker 1: over the next five to ten years. A lot of
Speaker 1: what a great real estate agent does is block and
Speaker 1: tackle on your behalf without you even knowing it, and
Speaker 1: also being a great consultant to make sure you are
Speaker 1: buying the right real estate because real estate is not
Speaker 1: a liquid asset, right, and so you really need to
Speaker 1: make sure that you're doing all the right do due diligence,
Speaker 1: but also vetting what real estate best compliments where I
Speaker 1: am living my lifestyle today, and also where am I
Speaker 1: heading in my life, and how does that real estate
Speaker 1: reflect my personal journey that I'm going to have over
Speaker 1: the next five to ten years. It can be a
Speaker 1: real mistake to work with an agent that doesn't necessarily
Speaker 1: go as deep with you these questions and you wind
Speaker 1: up in a house two to three years later that
Speaker 1: no longer meet your needs.
Speaker 2: It's I can at a great financial planner, you know, one.
Speaker 1: Hundred percent, Yes, sir, that is exactly right, and that
Speaker 1: is exactly real estate. Good ahead, No, no, no, no. Good.
Speaker 1: Real estate is for the majority of homeowners, the single
Speaker 1: biggest driver of wealth. It's actually interesting. There's a great
Speaker 1: article in the Wall Street Journal two days ago about
Speaker 1: how millennials, who for the longest time were lagging previous
Speaker 1: generations in their acquisition of wealth, just in the last
Speaker 1: few years, are now further ahead than previous generations in
Speaker 1: the amount of wealth that they have acquired, and the
Speaker 1: single greatest driver of their wealth acquisition has been the
Speaker 1: equity that they've seen grow in their homes. So just
Speaker 1: like a financial advisor. Real estate advisors are great in
Speaker 1: great real estate. It's great for advocating and protecting your
Speaker 1: best interests, but also setting you up on the right
Speaker 1: path to home ownership, which is, by the way, the
Speaker 1: fast track to building wealth.
Speaker 2: Indeed, in Peter Ford Park Company, I just lowed you
Speaker 2: one more minute here. Can you give my listeners just
Speaker 2: a general understanding of the current Greater CINCINNTI real estate market?
Speaker 2: Are we still short on housing stock? Are there still
Speaker 2: bidding wars going on? Thumbnail sketch if you don't mind
Speaker 2: for a.
Speaker 1: Moment, Yeah, great question, Brian. Absolutely, we are in an
Speaker 1: acute seller's market. It's softened a little bit, but we
Speaker 1: are still in a seller's market. Some pockets of Cincinnati
Speaker 1: are starting to move towards a balanced market. But if
Speaker 1: a property is priced well and presents well, and it
Speaker 1: is in a market where there is a significant level
Speaker 1: of demand, that property will probably go into multiple offers.
Speaker 2: Multiple offers, and that's where a bidding work can show up.
Speaker 2: And that's where Peter and his team can help you
Speaker 2: out as well. Also as a seller's agent, they knew
Speaker 2: exactly what to do without you as little as money
Speaker 2: as possible to have, what to polish up, what to
Speaker 2: change the where the value shows up for an improvement
Speaker 2: like painting a room or doing this or changing something
Speaker 2: in order to maximize the sell price of your home.
Speaker 2: That's one of the things you get in terms of
Speaker 2: value from great real estate agents. Peter scherbrie A Kellowiams
Speaker 2: seven Hills. You can find them online at seven zero
Speaker 2: eight three thousand dot com or call them up at
Speaker 2: five one three seven zero eight three thousand. Peter, thank
Speaker 2: you so much again for your support of the morning
Speaker 2: show and helping out my little but most fundamentally helping
Speaker 2: out my listeners. I know you are definitely worth the
Speaker 2: val value and the commission.
Speaker 1: My friend, well, thank you, Brian. I really appreciate that
Speaker 1: when we offer tell our clients is prices what you pay,
Speaker 1: the value is what you get.
Speaker 2: Amen, brother, we'll talk soon. My friends, stay well. Best
Speaker 2: to you and your team. It's eight twenty right now.
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