Soliciting Off-Market Listings

If your listing doesn’t sell, or your listing agent withdraws it and then ‘refreshes’ it by inputting it a second time into the MLS, don’t be surprised if your phone starts ringing around 7am the next morning – and ring non-stop for hours, days, and weeks.

Did you know that those solicitations are prohibited?

While the listing agents might get a little frosty, they probably won’t do anything about it. Of course, there isn’t any MLS police either, so these solicitations run unabated – you will literally get dozens of calls and mailers, plus agents knocking on your door.

If lawyers want to chase around realtors for all the scummy things that happen, they will be busy!

Hiring A Buyer-Agent

Hopefully the hubbub about realtors’ pay will cause consumers to investigate agents more thoroughly, which I’ve been encouraging for a while. Here’s one of my blog posts from 2009 – check the comment section too:

Most buyers struggle to find a quality realtor to assist them in buying a house, and it’s the realtors’ fault.  The national, state, and local associations are so adamant about protecting the new agents and giving everyone an equal chance, that they provide no help whatsoever to the general public.

Their message?  When trying to find good help, you’re on your own.

So how do you get what you need?

Everyone tells you to ask around, get referrals from friends, go to open houses, go with a big company, go with a small company, new agent, old agent, kickbacks, etc., that it probably doesn’t matter where you get a realtor, what matters is how to evaluate them.

Here are my things to look for when evaluating a realtor’s ability to help you buy a house:

1. ASK ABOUT THEIR RECENT TRACK RECORD OF SALES – Let’s cut to the chase, shall we?

Has the agent been able to successfully guide others to the finish line this year?  The best answer is 1-2 closings per month, if you want an agent who delivers personal service.  Any agent who sells four or more per month is slamming people into houses, and those at zero, well let’s face it, they don’t have anything of value to add to the equation.  Get a testimonial from a past client, and/or at look at the sales they’ve done and judge them to see if they were good deals.  (I’ve assisted 10 buyers with closing their sale this year).

These current market conditions are unlike any seen before.  If your agent has been closing some buyer transactions this year, they must have something of value to share.  Here’s what to look for:

2. ASK THEM, “WHAT/WHERE ARE TODAY’S HOT BUYS?  How they answer that will tell you just about everything you need to know.  If they give you a smart-aleck answer, they probably aren’t the right agent for you, only because they aren’t in the game.  If they can name one, at least they are looking at properties, and those are agents who can provide value – ideally your buyer’s agent is previewing property every day, in person.

3. THEY SHOULD ASK YOU QUALIFYING QUESTIONS – If they jump in the car without asking questions, their time must not be too value to them, and this isn’t a business where wasting a lot of your time makes for good quality realtors.

4.  THEY SHOULD KNOW ABOUT FINANCING – I guess it’s alright if they just hook you up with their lender to get pre-qualified, but if they can ask/answer the qualifying questions themselves, it might help when it comes time to structure an offer.

5. HAVE THEM SHOW YOU SOME HOUSES – Go in their car, and if they don’t need a map to get around, you’ve found an experienced veteran.  It’s not guaranteed that they can help, nor is it required, but it’s a good indicator.  If they are pointing out specific sales/listings along the way (theirs or others), then they know the comps too, which is another great indicator.

6. EVALUATING THE PROPERTY’S CONDITION – They don’t have to be a general contractor, but they should be able to educate you about the property’s condition.  If all they do is point out that “This is the living room”, they’re not going to have much to offer in terms of added value, unless you don’t know what a living room is.

7. HAVE A VENDOR’S LIST – Successful agents know professionals to call to fix stuff – the more thorough the list, the more problems they have encountered.

8.  DO THEY CHARGE FOR THEIR SERVICE? – Ask about “transaction fees”, “processing fees”, or “compliance fees”.  These are junk fees used to pad their bottom line, and are not required.

9.  DO THEY INSIST ON HAVING YOU SIGN A BUYER-BROKER AGREEMENT? – Pass on those, unless you got married after having one conversation too.

10. “FORECLOSURE SPECIALIST” – Be very leery – we are all foreclosure specialists now.  Any agent who tries to make it sound like they have some special “foreclosure ability” is blowing smoke, unless they are listing REOs and not putting them on the open market.  If they don’t mind breaching their fiduciary duty to their bank-seller, they’ll sell you down the river in a heartbeat.

11.  SHORT SALES – I personally see 2-3 short sales every day that have already found their buyer before MLS input, and it is VERY frustrating.  These agents don’t care about their own reputation amongst their peers, and that alone should make you wonder.

12.  OFF-THE-GRID – Ask about what agents can do to find properties that aren’t on the regular websites.  Any positive response would be a good indicator, and any examples of closing one would be even better.

If they can get through those questions and you still like them, you found a good agent!

NEW AGENTS – A new agent’s zeal and availability can really help buyers who don’t have the time or willingness to search for properties themselves.  Want somebody to do the legwork for you?  Put a new, hungry agent on it, but there may be some struggle clinching the deal if there are competing offers.

OUT-OF-COUNTY AGENTS – You’ll be doing all the work yourself, so your own proficiency in being a realtor needs to be up to par.

RELATIVES – Many deals crash and burn, and hearts are broken over houses.  Want a relative to help you?  Make sure that you’ll accept never wanting to talk to them if they cost you the right house, at the right price.

“GREAT TIME TO BUY” – If you hear that catchy phrase, just walk away.

The inventory of quality homes at good prices is EXTREMELY LOW, causing the buying experience to be full of frustration and disappointment.  You can look for weeks or months without seeing anything attractive, so I don’t know why any agent would call that a great time.

REALTOR TEAMS – No problem, but don’t interview the big dog and then get passed off to the assistant without asking the same questions.  You want to be clear about who is helping you, and what you can count on.  In my case, I may have Richard or another KR realtor help me on occasion, but I’m still the main person in charge, and am responsible for your success.

Realtor Definitions

“Curb Appeal” = The art of making your house look so good from the outside that potential buyers forget they can’t afford it.

“Cozy” = It means you can touch both walls at the same time.

“Open Floor Plan” = Good luck finding a place to hide from your family.

“Ocean View” = You might see water if you stand on your tiptoes and squint really hard.

“Panoramic Ocean View” = Less squinting needed.

“Low-Maintenance Yard” = Prepare to embrace the beauty of gravel and succulents. Your dog will hate it.

“Charming” = The real estate version of “it has a great personality.”

“Improved Pricing” = It’s less of a ripoff now.

“Off-Market” = Everyone has passed on it already.

“Seller Will Carry” = No bank will touch this.

“Bring All Offers” = My seller is nuts, so lowball me.

“Perfect For 1031” = Perfect if you want to overpay.

“Trophy Property” = Overpriced.

“Generational Property” = Way overpriced.

“Call For Price” = We’re embarrassed to publish it.

“Distressed” = Not distressed.

“For Sale By Owner” = For sale by ego.

“Below Replacement Cost” = Meaningless filler words.

“Leasehold Interest” = You’re not buying real estate.

“Fixer-Upper” = A polite term for a house that’s about to be condemned.

“Needs some love” = You might need therapy after seeing the kitchen.

“Rustic Charm” = No Wi-Fi, but plenty of cobwebs to keep you company.

“Open Concept” = No place to hide your junk.

“Vintage Decor” = Previous owners thought you’d enjoy their 1970s design choices as a timeless gift.

“Quaint Neighborhood” = The only exciting thing that happens is the occasional squirrel chase.

“Up-and-Coming Area” = It’s not great now, but just wait until someone opens an artisanal kombucha shop.

Non-Exclusive Representation

One more blog post about the coming changes to the realtor environment.

Regardless of how the commission lawsuits are resolved, there will be a push – and possibly a mandate – for buyers to pay their agent directly. Agents will want buyers to sign an agreement to that effect.

Above is a copy of the verbiage on page one of the standard agreement.

If a buyer agrees and signs this form, and then finds a home on his own, he can ‘cancel this agreement by giving written notice to the other’. But only as long as THE BOXES CIRCLED IN RED AREN’T CHECKED.

Will buyers read the agreement before signing, and be reluctant to check the two boxes?

Otherwise the form is reasonable, with the agent being covered for any properties they recommend to the buyer with analysis (paragraph B1).

All that matters is whether the agent will insist on the two red-circled boxes being checked. I think a buyer will pause at agreeing to exclusive representation, but non-exclusive should be acceptable.

I doubt that I’ll use the form at all, unless Compass requires it. Why bother if you can cancel any time?

Happy Thanksgiving!

NAR Settlement Is The Answer

Hopefully NAR is busy in settlement talks right now, because they just don’t seem to get it, or they have trouble putting it on paper. These are their latest explanations:

https://realestatecommissionfacts.com/

However, there might be hope for settling the case:

Regarding the possibility of a settlement in the case, Katie Johnson, NAR’s chief legal officer said, “For NAR, settlement has always been an option.”

If NAR were to settle it would look for two outcomes, according to Johnson:

1. That homebuyers will continue to be able to access and afford buyer representation, and

2. That all liability from the suit’s claims is eliminated for NAR’s members, associations and MLSs.

“Settlements are always an option if we can achieve those objectives,” Johnson said.

Lesley Muchow, the NAR Deputy General Counsel & Vice President of Legal Affairs and Antitrust Compliance also advised agents to stress that commissions are negotiable. In that vein, she urged NAR members to leave compensation fields blank on forms rather than pre-filling them out — a phenomenon multiple plaintiffs emphasized in their testimony during the Sitzer | Burnett trial.

“Those are conversations you need to have with the consumer,” Muchow said.

“There’s no set amount. Sellers can decide and it’s on the Realtor to educate the seller as to why they might want to elect to make an offer of compensation and how that will work to their benefit in the transaction.”

“A Realtor should never suggest to a seller that if they do not make a certain amount of an offer of compensation that other Realtors will steer buyers away from their property,” she added.

Johnson ended by stressing that NAR’s current legal situation represents an opportunity.

“An opportunity to differentiate yourself from others – from your competitors and colleagues in your area – and an opportunity to improve your practices. An opportunity to think creatively and do things differently, using this delta, this point in time, as a launch pad for innovation.”

Realtor Commissions, 2024 Part 3

Zillow CEO Rich Barton weighed in on the bombshell cases in both an investor call and a shareholder letter. Barton’s key comment came early in the call when he said “We also believe complete disruption to the existence of buyer’s agents is improbable for a few reasons.”

Barton reaffirmed his support for buyer agents and the theme of buyers having their own representation. “We believe a well-lit game is cleaner and more equitable. People deserve and need independent representation,” Barton said. “We’ve seen double-siding in the industry, which is clearly a conflict and is at certain times more expensive to the transaction.”

Damien Eales, CEO of Realtor.com said, “I don’t think that from a consumer perspective, they are paying a great deal of attention to what is occurring more broadly in the industry. And as much as these court cases play out, I think it will be in some respects very much confined to the industry conversation as opposed to the consumer conversation.”

During his own investor call, Compass CEO Robert Reffkin pointed to the Seattle region, where sellers have not been required to offer buyers’ agent commissions for several years. Despite that change, Reffkin said, commissions in the area remain in line with the rest of the country — an outcome that suggests the bombshell lawsuits may not radically upend the status quo.

“I don’t think there’s any evidence to suggest that there will be pressure on commissions,” Reffkin said.

The history of steady commission rates will be mentioned in the lawsuit appeals.

Doesn’t the history suggest a conspiracy? Especially when combined with the ascent of home prices? Lawyers for the plaintiffs will note that the annual home appreciation gives the appearance of realtors getting a raise in income every year – including +40% since 2020.

There is no conspiracy on the street. It’s too competitive between agents!

Any pressure on commission rates will come from agents who are desperate to eat. The perfect storm of market conditions should push hundreds of thousands of agents out of the business. As they exit, they might give a seller a deal – if they can find a listing opportunity.

What do sellers and buyers want – the best rate, or the best agent? It’s one or the other.

Hopefully this mess will cause consumers to thoroughly investigate the choices. Otherwise, this will all blow over in a few months – unless the Department of Justice does something permanent.

Get Good Help!

JtR Takes The Stand

I am willing to take the stand if it will help the realtor commission lawsuits, but the defense might have second thoughts. The complaint is that realtors have conspired to force sellers to pay a standard, non-negotiable commission rate to the buyer’s agent. My testimony could go like this:

Plaintiff Attorney: You look like you’ve been around a while. Have you ever sold a house to a buyer that cost less than $100,000?

JtR: Yes

PA: Was the commission rate offered by the seller and publicized in the MLS in the 2.5% to 3% range?

JtR: Yes

PA: Have you ever sold a house to a buyer that cost more than $2,000,000?

JtR: Yes

PA: Was the commission rate offered in the MLS in the same 2.5% to 3% range?

JtR: Yes

PA: Have you ever sold a house to a buyer on the first day you met them?

JtR: Yes

PA: Has it ever taken one to two years to sell a house to a buyer?

JtR: Yes

PA: Were the commissions in both cases in the same 2.5% to 3% range?

JtR: Yes

PA: As a buyer-agent, have you ever negotiated your commission rate with the seller or listing agent?

JtR: No

PA: No? Why not?

JtR: It is strictly forbidden by the rules.

PA: The rules? What rules?

JtR: The NAR Code of Ethics forbids any negotiation of the buyer-agent’s commission paid by the seller.

PA: Is that the strict Code of Ethics that all NAR Realtors abide by, and what makes them different then all other licensees? The Code of Ethics that NAR has advertised on TV ad nauseum for decades?

JtR: Yes

PA: Judge, I rest my case.

Go Direct to Listing Agent


It’s been over two weeks since the verdict was announced on the commission lawsuit, and the response from the realtor community has been tepid, to say the least.

Agents are waiting to see a strong example of how to convince buyers to sign a buyer-broker agreement. It’s easy for management to just say, “Have your buyers pay you directly”. But will you furnish us with anything besides the cheesy 179-point list?

The annual Compass convention starts today in San Diego, and we’ll see what management has to say.

Meanwhile, CoStar senses an opportunity, and have ramped up their advertising of homes.com to agents. They say their search portal had 100 million unique visitors last month, passing realtor.dud and pulling into the #2 slot behind Zillow.

Their pitch? They send buyers to the listing agent directly.

When Zillow visitors inquire about getting more information or seeing a home, they get sent to the call center where Zillow employees scrub the leads, and send them out to agents who have agreed to pay 30% to 40% of their total commission to Zillow.

Homes.com will send those leads directly to the listing agent, no charge.

How long will it be before agents migrate their advertising budgets to homes.com? The buyer-broker agreement should be a complete failure by next summer, and instead the march towards single agency will be well underway by then.

The conversion to single agency will look like an obvious solution to the casual observers like judges, juries, and the DOJ because it will give the illusion that fees are coming down. But it will just add to the trouncing of buyers that has been going on for years.

Just when quality buyer representation will really be needed, the trend will be in the other direction.

Realtor Commissions 2024 Part 2

There are three ways to get exposure to realtors.

  1. Word-of-mouth from friends and family.
  2. Personal experience or investigation.
  3. Realtor-paid advertising.

First, let’s identify how realtors get their business.

Either they earn the business (#1&2 above), or they buy the business (#3 above).

They earn it by creating relationships with friends and family that turn into sales. Those results create word-of-mouth endorsements that will hopefully be the foundation of the realtor’s business.

Or agents can buy the business through advertising.

There are several realtors in our area who spend $25,000 to $50,000 per month on advertising, which means they need to charge the higher commission rates – and that probably won’t change.

Billboards, bus benches, trailers in movie theaters, grocery store carts, etc. all lathered with realtor advertising that supplement their online ads, social media, and mailers to the neighborhood. These realtors hope to subconsciously create a positive image in the homeowners’ minds, which causes them to reach out to the ‘local expert’ when the time comes.

Which realtor will help you the most, and be deserving of their pay?

The best part of the realtor lawsuits is that they might cause consumers to investigate the choices more thoroughly. It is a daunting task because of the number of realtors out there, and the lack of hiring knowledge available. It’s why 80% of consumers hire the first agent they meet – they haven’t moved in a while, and in the microwave society they just want to grab an agent and go. Plus, the realtor industry provides virtually no guidance on the selection process, so you’re on your own.

My General Tips:

Those who spend the big money are vunerable to investigations – they hope that you grab and go instead. Once a team gets to 10 people or more, you have to wonder who is doing the heavy lifting. There are many top producers now in North County who have retired – but you wouldn’t know it because they leave everything in place, and just let the assistants run the machine. See if you can get the team leader on the phone, and check their reviews on Google and Zillow to see which agent is being acknowledged for the work. It’s not a bad thing to work with the assistants, but you’d like to know that up front.

The bigger the team, the less personal attention you will get. Their expertise will hopefully make up for it, but you should know that if your sale doesn’t work out, it’s not going to change their lifestyle.

Realtor websites look the same – brags about their sales, a button to search for your ‘dream’ home, and another for a computerized value of your home. With both buttons, you give up your contact information so they can pester you. Do they provide any helpful content on their website or social media? Their published content is a direct reflection of their expertise, and awareness of current market conditions.

Are they too busy for you? Simple way to find out. Call their phone number, and see what happens.

Every agent has their sales history on Zillow (whether they like it or not, because Zillow auto-loads them).  If you are looking to conduct a full analysis, you’ll have fun with this data. One sale per month is a good sign, and check their mix of buyers and sellers, mix of price points, the SP:LP ratio on their sold listings, their listing presentations (quantity/quality of photos) and days on market. It’s takes work, but time well spent.

Do you want to hire the local expert? Rarely do they go into detail on what that means for you, and besides, every agent calls themselves the local expert.

Do you want to hire a long-time veteran? Only if they are still on their game (minimum one sale per month, etc.). More than half of all realtors are 60+ years old, and you don’t want to be their last sale.

Are they available? Deals are being done 24/7, so how the agent handles that is important.

Can they put a few sentences together to describe the current market conditions? It means you have to talk to them live, but it’s a terrific way to judge a realtor’s competency.

My big hope is that the realtor lawsuits give consumers the idea that they should shop around more, and they search for the best combination of quality realtor and commission rate. My guess is that the commission rates won’t change much, and they sure won’t be advertised. It should mean more scrutiny on what a realtor does for you – which is a great thing, and how the decision should be made!

Get Good Help!

Realtor Commissions 2024

A simple analogy for realtor commissions is a long-distance flight abroad.

Someone who was booking a flight from San Diego to Phoenix probably wouldn’t be too concerned about the quality. Because the flight only takes an hour, most can endure the inconveniences…..mostly due to the generally lousy service we get in every industry. We’ve become accustomed to not expecting much.

But when it comes to a long-distance flight, we might look harder at the differences.

Buying or selling a higher-end home is like flying to Australia.

A non-stop flight from LAX to Sydney, Australia is 15.5 hours, which should make people think harder about the choices. Not only does the airline, the staff, the type of airplane, the quality of the food, reviews, etc. get more scrutiny, but so does the seating chart.

Sitting in the economy section can be endured for an hour on a flight to Phoenix, but will you put up with screaming kids, the barking dog, and the guy who fills up more of his share of the seat for 15.5 hours?

Or do you deserve first class?

The problem with realtor commissions is that the agents all get paid the same, regardless of the quality of service provided. It’s as if every buyer and seller pays for a first-class seat, but then only 10% to 20% of them get that level of service. It’s why there are so many complaints about realtors not being worth it – most don’t live up to the expectations, or their fee.

The commission lawsuits intend to change that, and they think they will cause the rates to go down.

But realtors intend to convince you that they are worth the usual fee by improving their presentations. The consumers who are willing to investigate will probably find something like this:

The 179 ways realtors are worth it

The exceptional realtors probably aren’t too interested in lowering their fee, so let’s examine the hiring of a realtor in the post-lawsuit era. Note that after years of using a pixel phone, I have finally switched to the iphone15promax – my first video with the new phone will start the inquiry:

Pin It on Pinterest