“You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.” – Admiral Stockdale, former Prisoner of War for 8 years.
I learned about The Stockdale Paradox when COVID happened. It’s a way to deal with the unknown in a powerful way that keeps you in control of your mind in unknown situations. I think it’s time to revisit that.
I offer these predictions for two reasons.
1) We are going to speculate anyway and might as well get it out of the way.
2) I’d rather be aware of a hurricane that is coming but never hits than be blown away without knowing it was coming. Which is what happened to the majority of agents last Friday.
Broken Crystal Ball Predictions
- Nothing changes. Everyone gets about the same commission, listing agents continue to have seller pay about the same they always paid.
- Buyer agents become excellent with their buyer consultation, set standards and expectations like you do in a listing appointment. Nothing changes because value is conveyed and perceived.
- Zillow/Realtor.com offers to list BAC on their site because buyers want to know ahead of time which ones will pay their buyer agent fee. This is unlikely as the MLS will probably have a rule about it if a site has their feed. I wonder how that applies to broker and agent sites though?
- For three months after the new rules come into place, nothing happens, and then boom, a big player (like this guy) or multiple agents/brokerages try different models. Chaos for 18 months with a race to the bottom with profits sliding as well. The remaining players with better systems and models actually raise prices since there is less competition.
- Buyer agents get an upfront fee to start work, a fee along the way and final money at the end. Maybe they charge less this way because guaranteed money is better than contingent.
- Buyer agents skirt the rules and have the buyer sign multiple agreements at different compensation percentages so they can match what listings are offering.
- Listing agents don’t say how much they are offering for a buyer’s agent the first weekend hoping for mulitple offers and what the buyer agent agreed upon fee could be what makes an offer more palatable.
- Lenders, including the VA, allow concessions of buyer agent fee in the settlement statement. Most things stay the same.
- Lawyers take over a chunk of the buyside business at a discount. Maybe they hire or work with showing agents. Think team model or Redfin model.
- Some buyers can’t afford representation and listing agent or seller doesn’t want to do dual agency so the buyer is “unrepresented”. They get fleeced by not understanding the process. Think dealership model. New lawsuits happen saying it’s unfair to buyers, especially low income buyers.
- Redfin starts a new campaign/model. Zillow likes it and wants to shore up their declining revenue from agents leaving so they follow suit. Teams start following the Redfin model. Solo agents are a rarity.
- 40-50% of agents get out of the business. MLS and associations raise dues to stay alive. Lots of consolidation in all areas of real estate services and products. Brokerages with monthly fees feel a pinch. Brick and mortar brokerages feel a punch. Cloud-based brokerages fair the best.
- The buyer agent situation gets so chaotic and devalued that they almost become a gig worker situation. We already have apps for door openers. Listing agents could just send prospective buyers to the service. Buyers sign an agreement with “Gig Realty App”, those agents show homes for a fee and then they either pick a gig agent for another fee to represent them or go to the listing or attorney for next steps.
- The rules change but we find loopholes and ways around the intent of the rules. The DOJ goes after our industry again. The new rules have opened us back up to new issues and we get something akin to the a Frank/Dodd Act like the mortgage industry had which limits our compensation.
- Loan officers use a real estate license to generate more leads for buyers that can’t find an agent they can afford. They charge a smaller amount for the the agent work than a typical agent and get the full deal on the lending side. Getting paid twice for a lead sounds nice. Of course, they kill any chance of an agent giving them clients as they will be competition now.
- One of the other lawsuits or DOJ takes it a step further and says buyer/buyer’s agent has to negotiate with the seller directly and the listing agent isn’t involved. That’s a reach.
- Tiered Commission Offers. Sellers could say, “Full price offers get X%. Below list price is Y%.” There’s been a theory that offering more of a commission could bring agents, maybe they will use that in the reverse.
Being an adult isn’t what you imagined it would be. Being a real estate agent isn’t what you imagined it would be. Right now your expectations are not matching your reality. It’s okay. Just don’t stay stuck or dwell.
The one thing that everyone does is what they feel is best for them. That’s what buyer will do. If you cannot communicate why you are the best option, you will not overcome any of these scenarios.
In the end, it’s about being adaptable and agile. The agents that learned what a short sale was made it through The Great Recession. Those that didn’t, didn’t make it. Our industry has been under pressure for decades and it will continue.
You can’t control the market, the FED, interest rates, heck, we can barely control our clients. You can control your skills and your professionalism. Control what you can control.
Be agile my friends.
Want help navigating this but find you are having trouble following through on your own? Set up a discovery call.
(Did I miss a prediction? Add it to the comments.)
