This January marks Inman’s fifth annual Agent Appreciation Month, which culminates at Inman Connect New York in a celebration of agents at the end of January. Plus, we’re rolling out the coveted Inman Power Player Awards, as well as the New York Power Brokers and MLS Innovators awards.
This year’s Inman CEO Connect offered insights on markets, mindset, lead gen, commission litigation and a possible rivalry brewing between the National Association of Realtors and the newly launched American Real Estate Association (AREA) with its National Listing Service (NLS). If you weren’t there, here’s what you missed.
It’s time to prepare for the inevitable upturn
Sue Yannaccone, CEO and president at Anywhere Brands and Advisors, believes that there are plenty of reasons to be positive about the real estate market in the mid- to long-term. While inventory shortages and high interest rates are still an issue today, she made a strong argument that it’s time to prepare for a market shift.
“We have a supply issue that we need to address, but the demand for houses is still out there,” Yannaccone said.
“The longer we are out from a market with 3 [percent or] 4 percent interest rates, the more rates will normalize at 6 [percent] or 7 percent, with 5 percent being the ideal.”
To illustrate this point, Yannaccone’s parents recently sold their 50-year-old house for over asking price to an all-cash buyer with a three-day closing date. People were lined up outside the house to view the property.
“I think people are coming off the fence because circumstances often drive them to move,” she said.
“Also, there are a lot of cash buyers out there. People are buying and taking advantage, so there are a lot of reasons to be positive in the mid- to long-term.”
In terms of how brokers and agents should address the 2024 market going forward, Yannaccone recommended that the leaders in the room start positioning themselves for the “inevitable upturn.”
Reguarding agents who are struggling right now, Yannaccone made these two observations about the Anywhere agents who are successful in today’s market: They have a positive mindset and have positioned themselves as the hyperlocal experts in their market area.
Diapers, diplomas, diamonds, divorce, death
Compass CEO Robert Reffkin emphasized that people still need to move and that you can “only hold life events back for so long.” He then reminded everyone about the “five D’s” that drive real estate sales in any market: diapers, diplomas, diamonds, divorce and death.
To take full advantage of today’s market, Reffkin encouraged both agents and sales managers to focus on building strong relationships one at a time.
“This has been the cornerstone of the industry, but I think the average agent and sales manager has forgotten that the job for salespeople is to get in person and be emotionally connected,” Reffkin said.
“It’s also the same reason agents stay with an office — they are emotionally connected to the manager in that office.”
2 little-known truths about buying a home in Australia
A substantial proportion of ICNY was devoted to the commission lawsuits. This topic came up in a surprising way as Brad Inman interviewed Realtor.com CEO Damian Eales about the lawsuits.
Inman asked Eales if it was possible that the U.S. would move to something more like “the Australian model where you have a lot of DIY [for-sale-by-owner] and where sellers also pay for the marketing of their listing.”
Eales made it crystal clear that he believes the American model is best. He also warned, “It’s very dangerous to compare the U.S. model to the Australian model — there are so many differences.”
He then shared two ugly truths about being a homebuyer in Australia.
“What they don’t tell you is that when I go and buy a home in Australia, [there’s] a 5 percent tax in stamp duty, and I don’t get any buyer representation.”
What the Sitzer | Burnett jury didn’t hear, but the juries in the copycat lawsuits should hear
Clearly, the 5 percent tax in stamp duty alone in Australia would cover the amount of commission U.S. sellers pay in a large percentage of transactions. This raises some very serious questions about how the plaintiffs represented the Australian model to the Sitzer | Burnett jury.
The truth of the matter is that selling a home in Australia often costs significantly more as compared to selling a home in the U.S. — not less.
Furthermore, Eales was right about there being virtually no buyer representation in Australia. According to Business Research & Insights from a survey conducted in 2022 by the National Australia Bank (NAB), “Up to 3 percent of residential purchases are now made through buyer’s agents.” In other words, 97 percent or more of the transactions in Australia do not involve a buyer’s agent.
In addition, despite not having to pay a buyer’s agent, Australian sellers still pay more than U.S. sellers.
Here’s the breakdown.
- Commission fee: 1.6 percent to 4 percent. Fees increase as the value of the house increases.
- Marketing fee: 0.5 percent to 1 percent.
- Auction fee: Depending upon the location, up to 50 percent of all sales in Australia take place via auction. Those fees run from 4.5 percent to 10 percent of the property’s value.
- Tax stamp duty: 5 percent based upon the purchase price.
Using the minimum numbers from above, an Australian seller pays 6.1 percent in fees if they sell without an auction, and 11.6 percent in fees with an auction. Using the maximum fees, they could pay up to 20 percent if they sell using an auction.
Clearly, the research conducted by the plaintiff’s attorney, Michael Ketchmark, and his expert witnesses into how agents are compensated outside the U.S., where only a small number of countries have a multiple listing service, appears to be seriously lacking.
Nevertheless, Eales was optimistic about the benefits to both consumers and the industry once the lawsuits are resolved. The new normal will bring greater transparency and more robust disclosures, and it will require Realtors to do a better job of articulating their value propositions, he said.
He also believes that the days of real estate being a side hustle will come to an end and that real estate will evolve into a “full-blown professional career.”
The American Real Estate Association and the National Listing Service
Brad Inman interviewed New York Times reporter Debra Kamin about her story the morning of CEO Connect, “National Association of Realtors Faces Competition from New Group.”
NAR Accountability Project founder Jason Haber and The Agency founder Mauricio Umansky just launched a new group called the American Real Estate Association (AREA), “Built by Realtors, for Realtors.”
Participating agents and brokers will be able the join the National Listing Service, a national database of home listings built upon the technology Umansky used to power his private listing service for his company. Currently, membership is free, but it will probably be between $400 and $500 per year going forward.
The NLS will allow agents to set their own commission rates and will not require listing agents to compensate buyer agents who bring a successful offer. Thus far, Haber and Umansky have used their own money to fund this initiative but hope to raise between $50 million to $100 million from investors.
In terms of the leaders in the room, most didn’t see a path for AREA to replace NAR.
On the main stage of Connect the next day, however, Umansky shared how devastating L.A.’s new mansion tax on properties priced at $5 million or more has been to the luxury market. He then explained what the AREA initiative is really about.
“We need an association that is advocating on a national basis and on a local basis — we need to improve, we need to care,” Umansky said.
He went on to explain how NAR is completely unresponsive. “Have you ever tried calling NAR?” he asked at the main conference. “Did anyone get a call back?”
Umansky’s AREA partner Jason Haber has sent 70 letters to NAR with zero response. This is part of what is driving the creation of AREA. Umansky simply wants to make things better, whether it’s through his new association or through NAR.
“If what we do is help them [NAR] be better and AREA does not exist and the Realtors decide that NAR is the best way to go, let’s go with NAR,” Umansky said.
“I don’t care, OK, but let’s make it better, and let’s make them work for us.”
What’s ahead?
The speakers at CEO Connect, like those throughout the main ICNY conference, seem to be cautiously optimistic about lower interest rates, more inventory coming on the market, and the importance of agents building strong personal relationships with their clients, and for sales managers, with their agents.
While no one has a crystal ball on what will happen with the commission lawsuits, the new normal will likely result in a more professional environment that benefits both consumers and industry professionals.
Bernice Ross, president and CEO of BrokerageUP and RealEstateC
