Anywhere’s settlement of both class action lawsuits on buyer agent commissions (Moerhl and Sitzer/Burnett) is big news, partly because of the questions surrounding the terms of that settlement, and partly because they were the first to make that move.
Last week’s episode of the Knowledge Brokers Podcast covered the settlement and the changes likely to follow, including what that will mean for real estate agents and for buyers and sellers moving forward.
The fact Anywhere was the first to settle will have a real and lasting impact on the industry. And while NAR seems confident of victory, no one knows yet whether they have any reason to be.
For (Anywhere) to go out as the lone wolf, here, and make a settlement before everybody else, it’s concerning to me because that will set a precedent for these other brokerages, as well as NAR. And what precedent did they just set? That’s what’s unclear. We don’t know the terms of the deal.
It’s not just a financial deal. The attorney made it very clear that there are business/operational changes that Anywhere agreed to in this settlement. We just don’t know what they are. And how’s that going to impact everybody else going forward? What are those changes that Anywhere has agreed to that will have a ripple effect throughout the industry? Nobody knows, as of this moment.
While we wait to learn more about the terms of Anywhere’s settlement, there are a few changes brokerages and real estate agents can make in the way they show their value and discuss commissions with their clients.
How brokerages can adapt to a market with a different commission structure
The biggest changes likely to follow a wholesale settlement on both class action lawsuits involve training and the language agents use when they discuss their value, as well as agent commissions with both buyers and sellers.
Brokerages and team leaders, as well as solo agents, will need to swap out scripting that is no longer—or has never been—helpful for language that better serves the client and shows the agent’s value.
I think it’s going to be a long road to undo the scripting that a lot of agents have historically used…Think about all the typical verbiage that goes into how some agents sell commission to consumers. And I think that, as an industry, we need to undo years of training around that to kind of work around the antitrust stuff. I think Anywhere is probably going to agree to some of that.
Byron brought up NAR’s public comment— ‘We’re going to fight this and win it.’ Whether or not that’s just posturing from their attorneys has yet to be seen. It’s also unclear what sort of “win” NAR leadership has in mind.
But until we know one way or the other, what changes should knowledge brokers be making in the verbiage they use when they get into a seller’s living room?
Some of the big ones that we look at are eliminating the word ‘required.’ I think it’s eliminating the word ‘standard’ – that there is an ‘industry standard to what compensation is.’ I think it’s being super-clear that sellers have options… I think it’s going to require a shift…both for the buyer agent and for the seller’s agents.
Lisa went on to stress the importance of buyer agents articulating their value proposition and their compensation upfront. She also emphasized the need to move away from the old phrasing that it’s free for a buyer to use a buyer agent—phrasing all three of our Knowledge Brokers hosts are happy to leave behind.
What agents should be saying—and not saying—to sellers
When going into sellers’ homes, agents need to make sure it’s very clear that commissions are 100% negotiable. Let consumers know that as an agent, you are basically applying for a job. The payment is up to them.
Byron presented a script example of what an agent could say to a seller:
Here are all the options. One of them is going on to Zillow and capturing about 70% of eyeballs for absolutely free—your sweat equity. Here are some of the charges you might incur.
Here’s what we’re going to do to take all that work off of your plate if you’re interested in hiring us to handle those services for you.
Finally, here’s how we capture another 30% of eyeballs to maximize the price and exceed the fee that we’re charging you, based on the value we’re providing.
Tom also pointed out that agents and brokerages can use this as an opportunity to show their value in ways they didn’t have to before. Yes, it will take more work. But it’s worth it.
Hey, [Name], here’s the current climate right now. I’m going to show you how we can navigate all this.
Because, look, a buyer’s agent that can win a property right now is a valuable commodity. A listing agent that can get the home sold in a tougher market or can sell a property another agent can’t is a valuable commodity. People are willing to pay for proper service… You’re going to have to do a little more work, and it’s going to be about relationship building more than anything else.
This is how you showcase your value: first, present everything the seller could do on their own, if saving money is their top priority and they don’t mind investing a substantial amount of sweat equity in the preparation, marketing, and sale of their home. Then show them everything you can do for them—not just to remove the time-consuming tasks they could do on their own but also to maximize their home’s visibility and appeal, thereby maximizing their final sale price.
If the seller can see how, in the end, they’ll make more with the sale by working with you, they’re far more likely to go that route than to try to do it all themselves.
For buyer agents, the conversation with potential clients will go a bit differently. Obviously, many buyers are keen to explore the options available to them and start the house-hunting process using portals like Zillow and Realtor.com.
Buyer agents who can no longer count on a cut of the listing agent’s commission will need to show the buyer what they can do—and do better than most—to earn their commission.
