This might not be one of my more popular blog posts with Realtors, but there is a harsh reality to face. The days of six percent Realtor commission is in real trouble. As a real estate agent no matter the market, you are likely already fighting for your full 3%. In the DC/Northern Virginia market, 2.5% (or less) is very much normal. There are many factors that go into why Realtors are being asked to lower commissions and I will dig into them shortly. The truth of the matter is technology and other factors start to erode profits and how others make money. We have seen this in other industries. The mortgage industry, for example, was completely revamped after the housing crash. The main changes were in terms of mortgage pricing and how loan officers received compensation. I feel the same type of change is already occurring in the real estate industry.
I think we all can admit changes and disruptions have been making their way into the real estate industry. It seems every few months some innovation is trying to change how we do business. The move to the internet and technology–which I’ve talked about for the last 7 years on this site seems to be leading the way. The difference is I talk about how to leverage and use tech to expand your footprint and grow market share. This new form of tech disruption involves getting rid of the Realtor all together. This affects everyone in our industry in many major markets and soon to be nationwide. The iBuyer pandemic is sweeping the country, so much so, that it was the “item of value” mailer for all Brian Buffini coaching clients this month. If Buffini is telling his clients to push this information to their databases, that means something. Here is what Realtors need to know about ibuyers and how they can best educate their clients.
The real estate market correction is coming. In fact, in some markets we can see signs of it already, and not just because we are heading towards the holidays. There are many signs that correction is on the horizon, and that isn’t necessarily a bad thing. Interest rates at 3.5% is not sustainable or good for the economy long-term. If it was, that’s where rates would always be, or maybe lower. There are many factors that go into a real estate market correction, and I’m not going to get too detailed. I will however talk about some of the major factors, and how a Realtor and Lender can leverage this an opportunity to win clients and business.
There are thousands and thousands of licensed Realtors in the US. Many are “solo agents,” meaning they are on their own. They show homes, market their business, lead generate, order signs, and work with buyers and sellers. Though I named several tasks they do, it is minor in comparison to ALL the responsibilities they truly have. Not that long ago, most Realtors went the way of the solo real estate agent. There was no Social Media, the Internet, YouTube and more to take into consideration when marketing your business. The ability to network, send out TONS of direct mail, door-knocking, and even have the largest advertisement in the local paper were some of the main marketing techniques. In today’s real estate climate, “Teams” seem to be taking over as the most efficient way to expand your real estate business to huge proportions. Does the solo real estate agent have a glass ceiling or are there ways to break the glass ceiling?
It’s a new year, which means new goals and the implementation of new ideas. Having been in the Title business since 2005 and interacting with thousands of Realtors, many like to keep their business models and success secrets close to the chest. I admire people who take the time to share their story and how they built their business, whether that be in real estate or anything else. Last year, at a Realtor “Master Mind Event” I met Karen Briscoe from Keller Williams in McLean, VA. She had just finished writing a real estate book entitled“Real Estate Success in 5 Minutes a Day-Secrets of a Top Agent Revealed.” I found this as pretty remarkable, since most high producing Realtors don’t want to share how they became so successful, let alone in a 400 page book!
I want to begin by saying Realtors are not “forced” to use the joint venture Title Company. With full access to the brokerage’s agents, office meetings, events, and a push from the Broker, the business capture rate on the real estate joint ventures is fairly high. Joint ventures between Title Companies and Realtor brokerages have existed for quite some time and are fairly prevalent today in the Washington DC/Northern Virginia area. Perhaps they exist in your market as well and maybe you currently participate in one. BUT…what if real estate joint ventures were told to disband and can no longer exist–effective tomorrow?
I don’t usually go “political,” but this news story caught my eye today. We have heard that Ben Carson was in the mix to become our nation’s next Housing Secretary but nothing was confirmed. That confirmation occurred today. It seems that in the new Trump cabinet, having little to no experience in the field which you are appointed means little. It appears the winning formula to gaining a place in the upcoming administration is “loyalty” to Trump in the past and ongoing. With that said, Trump seems to be also focusing on top-level professionals and plugging them into positions where they can lend their expertise. Does that mean that having little to zero leadership with government matters? And what does that mean for our real estate market and the people in urban areas who need help? Well…it could mean a lot.
I was at a real estate event this past week and I had a conversation with a top producing agent. She told me she recently went on a listing appointment and the sellers had interviewed 4 agents. She was the last one in the door. She went on and explained that the sellers wanted her to lower her commission from 3% to 2.5% or even 2%. The previous 3 agents that presented before her ALL agreed to lower their commission. I asked her if this is happening more and more…sellers asking Realtors to lower their commission? She said that “Yes” she had seen it more and more over the last couple years. Why are sellers asking Realtors to lower their commission? I believe there are many factors in play. Let’s talk about those factors and how a real estate agent can best educate, and add value to sellers to earn that 3%.
In any job, the feeling of “burnout” hits from time to time. Even those over zealous Realtors, Lenders, and Title Company professionals who rave how much they “love their craft” have hit the wall. That feeling where fatigue hits and we need that extra motivation to keep going at a high level. I have been in the Title Industry since 2005 and there have been several times where I needed to step back and take a deep breath, or find an outside positive influence that was rejuvenating. What do you do when the wall hits and the feeling of burnout surrounds? There are many ways Realtors can seek motivation during these frustrating times, or when they are looking for positive solutions, not only their business, but in life. Here is how Realtors can stay motivated and avoid burn out!
Surround Yourself with Positive People
The economy is improving. Jobs have increased and the unemployment rate has fallen to 5%. This is all great news for our country and real estate. It also means that the Federal Reserve is more inclined to raise interest rates. The “Fed” has had interest rates very low for quite some time. This has allowed homeowners to refinance at even lower rates, and buyers to take advantage of lower mortgage payments. That could all be altered a bit with a December rate hike when the Federal Reserve meets on December 15th and 16th of this year. What does this potential rate hike mean for your buyer clients? It means several things, but the important thing is how do you get your buyer clients motivated enough to make a move before this impending December rate hike?