May is Commission and Compensation Month here at Inman. We’ll sort through the noise and misinformation and provide you with the most up-to-date facts and strategies about how to prosper in the wake of the commission settlements. And look for straight-to-your inbox updates with Inman’s new weekly digest, Commission Chronicles.
The real estate landscape is shifting dramatically, and agents who don’t adapt risk being left behind. Back in March, the National Association of Realtors (NAR) reached a $418 million settlement addressing lawsuits alleging anti-competitive practices related to broker commissions.
The settlement, which is pending final court approval, will bring significant changes to the real estate industry. Key among these changes are mandatory signed buyer representation agreements before buyer’s agents can show properties. These agreements must specify the agent’s compensation. Additionally, NAR-affiliated MLS listings will no longer be permitted to display offers of compensation to buyer’s agents.
These changes stem from lawsuits challenging traditional real estate commission structures, aiming to increase transparency and competition in the industry. The settlement’s impact will be felt across the industry.
These changes will take effect in August 2024 and could lead to broader shifts in how buyer’s agents are compensated and the overall structure of the real estate industry.
According to an Inman-Dig Insights consumer survey published in April, while consumers recognize the value agents bring, they’re increasingly open to exploring alternative commission models. This means agents can’t rely on the status quo.
Now is the time to double down on marketing that clearly communicates your unique expertise, problem-solving skills, and the exceptional client experience that you deliver. I strongly believe agents who adapt will not only survive but thrive by positioning themselves as experts in this evolving market.
The urgency of educating buyers and sellers
In the wake of these seismic shifts, agents must recognize the imperative to educate both buyers and sellers on these changes. Ignoring the transformations underway or downplaying their significance only serves to breed distrust among consumers. In an era where information is readily available and news travels fast, buyers and sellers are well aware of the monumental shifts occurring in the real estate landscape.
Pretending that nothing is changing not only undermines an agent’s credibility but also erodes the trust of fruitful client-agent relationships. Now more than ever, transparency and honesty are essential. Consumers expect their agents to be forthright, and any attempt to gloss over or dismiss these changes only exacerbates skepticism.
The most important action agents can take at this point is to embark on a proactive journey of consumer education. This includes not only explaining the recent settlement’s impact but also crafting and clearly communicating a new value proposition. By emphasizing the specialized skills and expertise you bring to the table, you’ll reassure clients that you are the essential guide in this changing landscape.
Create marketing content that will shed light on the recent changes and explain what they mean for buyers and sellers. Help clients feel confident in this new real estate market.
Below, are the two major areas where agents will need to focus their marketing:
- Education on the settlement’s impact on buyers and sellers: Agents will need to educate consumers, guiding clients through the intricacies of the evolving real estate landscape. By embracing transparency, fostering informed decision-making, and prioritizing consumer education, agents can forge stronger bonds with clients and navigate the changing tides of the industry with confidence and integrity.
- Creation of an expanded value proposition: Justifying your commission means going beyond simply facilitating a transaction. It’s about demonstrating the unique expertise, skills, and tireless work ethic you bring to the table, ensuring clients understand that your services will ultimately save them time, money, and stress.
Let’s dive deeper into both of these below, starting with consumer education.
Top marketing strategies for educating consumers on commission changes
Harnessing the power of marketing communication is essential in the wake of the NAR settlement. Remember, confused clients are unlikely to become confident buyers or sellers.
Below are several proactive strategies you can implement to educate consumers and gain new clients.
- Workshops and seminars: Organize events where you can present the NAR settlement changes in detail. Use visual aids like slideshows to make complex information more digestible. These sessions can be live events or virtual events, Q&A-style, to directly address client concerns.
- Email newsletters: Create a series of newsletters that break down the settlement into understandable segments. Use clear language and examples to illustrate how the changes may affect the buying or selling process.
- Social media: Post regular updates, quick tips, and short videos on platforms like Facebook, Instagram, and LinkedIn. Use hashtags to increase visibility and encourage discussions to engage your audience.
- One-on-one consultations: Offer to meet with clients to discuss their specific needs and how the settlement impacts them. Tailor your advice to their unique situation, which can build trust and rapport.
- Website content: Add a dedicated section on your website for settlement updates. Write blog posts that answer common questions and provide insights into the evolving real estate market.
- Collaborate with other professionals: Partner with industry experts like attorneys or mortgage brokers to give a well-rounded perspective on the changes. Joint webinars or panel discussions can be particularly effective.
Justifying your commission — What to communicate
As the real estate landscape shifts, it’s more important than ever for buyer’s agents to communicate their value proposition to potential clients. The traditional way of justifying commissions is changing. Go beyond the basics. Showcase the specialized knowledge, strategic negotiation tactics, and tireless advocacy you provide, empowering your clients to not only buy a home but to secure the best possible investment for their future.
Please do not use or share those massive lists I’ve seen all over social media listing the 100 or even 170 things a buyer’s agent does. Half the things on that list are administrative. These lists are insulting, and focus attention AWAY from what’s truly important, and what makes you so very valuable.
The first step is to identify all the ways your expertise helps your clients save money and make a sound investment. Here are a few that I think are super important:
Local market expertise
As agents, having a deep understanding of the local landscape is a huge value. From hidden gem neighborhoods to up-and-coming areas, you possess the insider knowledge that helps buyers make informed investments.
- You know the neighborhoods: Which streets are quiet, where’s new construction happening, are there overlooked neighborhoods on the upswing? This knowledge helps buyers find their dream location and avoid potential pitfalls.
- You know the school zones and community resources: Which schools are top-rated, where are the best parks, libraries, etc.? This info is crucial for long-term satisfaction, especially for families.
- You know where there will be future development and zoning: Anticipating upcoming changes can impact property value significantly. Aa an informed agent, you protect your client’s investment.
- You know the pricing trends and micro-markets: Even within a single town, neighborhoods can have vastly different price points and market dynamics. Your in-depth analysis ensures your clients offer strategically and get the most for their budget.
Negotiation prowess
Skilled negotiation is the key to protecting your client’s interests and maximizing their investment.
- You go beyond the initial offer: You advise clients on inspection counteroffers, appraisal gaps, and repair requests, too.
- You protect your client’s Interests: You don’t just win the house and ensure it’s a sound investment. You also push for necessary repairs, negotiate closing costs to the client’s advantage, and act as their advocate against unreasonable seller demands.
- You save your clients’ money: While a quick win is great, true value lies in securing the best possible terms. Even a few thousand dollars saved on the price or closing costs significantly impacts a buyer’s finances.
Contract expertise
Contracts are the backbone of any real estate transaction. With your in-depth contract expertise, you guide your clients through the complexities, protecting their interests and ensuring a smooth, successful closing.
- You understand the contract: Contracts are densely packed with legal jargon, but you can clearly outline your client’s rights, obligations, and potential risks.
- You can catch potential pitfalls: You have the knowledge to identify clauses that could disadvantage your client. You can ensure contingencies are protective and negotiate for clear deadlines and remedies in the event of issues.
- You can catch errors: Small mistakes in paperwork can cause delays or costly disputes. A meticulous agent ensures everything is completed accurately and on time.
Problem-solving
Real estate transactions rarely run perfectly smoothly. Your ability to anticipate roadblocks and devise creative solutions is a huge asset.
- You can anticipate roadblocks: Your experience allows you to foresee potential issues with appraisals, inspections, financing, title searches, etc., and proactively suggest mitigation strategies.
- You have resourceful solutions: When problems arise, you can offer creative solutions. This may mean finding alternative financing options, negotiating repairs outside of closing, or working with local authorities to resolve unexpected issues.
Access and advocacy
Your network and market knowledge are invaluable assets for your clients. You give your clients a significant advantage.
- You bring a trusted network: You have strong relationships with lenders, inspectors, and other professionals that can streamline the process and can uncover advantageous deals for your clients.
- Where it’s legal, you have access to off-market opportunities: For example, you know about properties before they hit the MLS, giving clients an advantage in competitive markets.
- You represent your clients tirelessly: You are your client’s voice and champion. You respond promptly to questions, negotiate vigorously, and ensure their needs are prioritized at every step.
Justifying your commission — How to communicate it
How do you best communicate this to consumers? The key is to shift focus from the commission percentage to the tangible benefits you provide clients. When buyers understand the immense value you bring, the commission becomes an investment in their successful real estate journey. Let’s look at how to do this in your marketing!
Go beyond testimonials
Testimonials are powerful, but they can be even more impactful. Help potential clients truly understand your value by going beyond generic praise.
- Avoid vague testimonials: When marketing your testimonials, avoid vague testimonials like “Jennifer was great!”. Instead, use specific numbers: “Jennifer negotiated $15,000 off the asking price…” or “Thanks to Jennifer’s network, we found our dream house before it even hit the market.” If necessary, ask some clients to update their testimonials so that this information is included.
- Leverage storytelling: Share client successes in short, visually appealing posts on Instagram/Facebook. Include a client photo (with permission) and highlight their key takeaway (“saved us from a major bidding war,” “found us a home we never would have considered on our own”).
- Use case studies: On your website, have longer stories/case studies for different buyer scenarios (first-time homebuyers, relocations, etc.). This helps clients see themselves reflected in your success stories. These case studies should tell a story of how you help someone. For example, you helped a young couple with a limited budget who were overwhelmed by the process and competitive market find the perfect home.
Be 100% transparent
Transparency is key to building strong client relationships.
- Be proactive: I may get some heat for saying this, but I believe you should proactively address fees on your website. A simple breakdown of your commission and typical buyer costs builds trust.
- Add a “what’s included” list: Pair your fee structure with a detailed account of the services you provide. Tell the story, share your value – don’t just list the 500 things you do. Explain how you’ll save them money at certain points and protect their interests at other points.
- Emphasize your value proposition: During early conversations, explain your fee, then emphasize the value it represents (leverage the “What to communicate” section above).
Leverage infographics and videos
In today’s digital world, engaging content is essential. Here are just a couple of ways you can leverage infographics and videos.
- Demystify the process: It’s way more complicated than most consumers think it is! Create a flowchart infographic of the home buying process, or short videos explaining each step of the transaction and closing process. Highlight your value at each step.
- Market snapshot content: Share regular videos with neighborhood insights, recent pricing trends, and even quick tours of listings. Show you’re the area expert.
Emphasize results
Numbers speak louder than words: Let your impressive results showcase your value to potential clients.
- Stats sell: Track your success metrics: average days on market for your clients’ homes, percentage below asking price secured, etc. Share these proudly.
- Show comparisons: Use charts to compare your results to the overall local market averages. This visually demonstrates your advantage.
- Highlight client quotes about results: Weave in testimonials that mention these stats: “Jennifer negotiated an incredible price for us — $25,000 below asking!”
Change sparks opportunity. Are you ready to transform the way you communicate your value to clients? Let’s reshape the agent-client relationship together, prioritizing clear communication and exceptional results. By focusing on education, transparency, and highlighting your unique value, you’ll position yourself not just as an agent, but as a trusted advisor in a dynamic real estate market.
