NAR Settlement… what happens NOW?

Justin: What I want this recording for is this new NAR ruling, the settlement, and what agents should do. I think there’s a lot like I’ve read 10 freaking articles. There’s some similarities with all of them. And then there’s all these opinions of what’s going to happen and whatever. So I kind of want to get your perspective, but also round table, the idea of what agents can do with investors. Because I firmly believe, and I’ve been saying this forever, all agents should be investors, and they should be either investors themselves or working directly with investor in a similar way that you’re kind of working with Jared like represent the investors, right? Because they’ll help you get paid not just once, like a homeowner would, but like once a month or once a week at some level, right? So, I want to get that perspective. That’s kind of the point. And if we could just run for 20 minutes on your take of it, what you see is happening? What you see your brokerage is saying? What agents are already doing? That kind of stuff. Cool. (Okay, yep, you got it). Okay. Well, cool. Well, this training is for those that are curious about the results from the lawsuit from NAR the settlement, and how supposedly and not supposedly, I think the only thing that I am clearly aware of, is realtors or cannot host buyers commissions on their listings for the agent, for the buyers. So, Marissa, being a high volume agent, being a very experienced agent, what are you seeing within your brokerage? What are you telling your team? And maybe, let’s define some of the actual rules that were placed inside,

Marissa: sure? Well, the first thing that needs to be said is, this doesn’t get finalized until July. So everybody in my opinion needs to pump their brakes. Second of all, nothing’s actually changed, and buyer agency is still allowed. So the whole lawsuit was a disclosure issue, right? So people weren’t disclosing commissions, so it doesn’t say you can’t do buyer agency. So I think that’s number one that needs to get acknowledged, and then on the other side. So the way that Jared and I work together is a lot of off market deals. So there’s off market deals, there’s for sale by owners. Those type of people are non represented right? A for sale by owner is a non represented seller. Typically, another name for a wholesaler is a non represented buyer, right? So this type of stuff has gone on. There has always been our need to negotiate commissions, right? So we always do it on the list side. For me, I’m pretty adept at doing it on the buy side, too. So that’s all that’s changed, is just you have to disclose the commissions if you’re in a state that wasn’t doing it, and then who’s going to pay it? And that’s going to be a negotiation where you can advertise it. That’s also changed. But again, that’s not set in stone until July. What’s going to happen.

Justin: It’s all like, the thing that I think is important to understand is still a nego like, let’s just say it’s July. So now the rules are set in place. The way my perspective of this is, is kind of like something changed, right? So the listing agent can’t promote 2%- 3% commission to the buyer’s agent. However, that’s on the MLS. They can do it on website, right? Like, so if Jared has his own realtor website and he has all his listings on there, he can put 3% commission to buyer’s agent, because Jared negotiated that with the sellers to say, “Hey, we are going to pay out a commission to the buyers”. But my understanding is the only place they can’t say that is on the MLS.

Marissa: Yeah, that’s my understanding as well. And a couple of us were talking, we’re like, how wonderful would it be to advertise the buyer agency commission on the first sale signs, so that all the neighbors know?

Jared: I think the first that is going to be the team that excels the fastest. (I think it’s hysterical). Yeah, but I think the team that is is willing to to take that responsibility first, from a broker standpoint. I mean, you guys are going to hit it, hit home run with it, yeah, start advertising.

Marissa: Wells, yeah, I think. And so it’s like to me, am I concerned about this? No, not at all. Because we’ve always had to disclose and negotiate our commission. Some people are more adept at it than others, where we where we explain that to agents or people that we work with. That’s what’s changing. And so in my opinion, anytime the government has stepped in, you know, we had CFPB step in during the recession, and go from the HUD one, which was a clean, two page document, to now we have the Closing Disclosure the Alta, right? So all that did was the exact same thing, except for about 10 times the amount of paperwork. And I think that’s what’s going to happen here with the buyer agency commissions, like it’s still allowed, just how we disclose it, how it has to be acknowledged in writing, that is what’s changing. Yeah.

So there’s two parts of this negotiation. One, the listing agent can and still should negotiate a payout to the buyer’s agent within their listing terms, right? So if listing agent negotiates, hey, Mr. Seller, we’re still going to pay 2% or 3% or 1% whatever it is, to a buyer’s agent, when they bring a buyer, then that is just in the disclosures in terms of the listing agreement, correct? (Marissa: Yes), Right. So that’s (Where it’s advertised? We’ll see). Right. But, but by the way, that’s no different than any agent that’s ever taken a listing agreement, ever in the history of listing agreements.

Marissa: Right. Justin, that’s exactly what I’m saying. I’m like, Guys, there’s always been unwrapped buyers and sellers. There has always been fee only discount brokerage. There has always been a need to disclose. And if a buyer or seller doesn’t want to pay, they don’t have to pay, right? That’s always been the case well, and so here agents choice. But then do we want to work with them? That’s the agent choice, or the wholesaler choice, or the flipper or the buy and hold.

Justin: It’s a 100% your choice. So there’s so much I want to unpack here, right? Because I’m an investor. Jared is an investor, so we owe Marissa. I want to buy one home a week in Charlotte. Okay (Marissa: Yep). Now you might (Done). You might and by the way, I do, so there’s that, but you might go and go to the MLS to try to find deals that fit my buy box you might. Now, I would guess. Tell me, if I’m correct, you would probably reach out to the agents, actually have a conversation with them and figure out, again we’re making assumptions that we’re already in July, right? So, this is already in effect (Marissa: Sure). You probably call the agents and say, Hey, I have an investor buyer that’s looking for investment properties. They fix and flip it. They buy and hold. This looks like a better buy and hold for them. Is there a commission that I would be able to earn if I brought them to the table as a buyer? That agent tells you whatever they tell you “Yes No”, whatever, maybe, maybe there’s a shared commission, maybe there’s a referral fee, whatever you get to say, okay great, here’s the offer. Or you get to say, well, there’s no commission, then my buyer has to pay me. So, the offer is probably going to come in a little bit lower, right? Because he’s paying me a part.

Marissa: Yeah, I mean you have to rewind. Okay, so Jared and I just negotiated about three different sets of fees on some stuff we’re working on. Okay, Jared and I didn’t negotiate that when he’s already looking at deals and going under contract. We talked about it when it’s like, hey, how are you and I going to work together? Okay, some of it just full disclosure, right? Is a flat fee. One of the things I was like, I don’t actually need to get paid on that, because that will create a tremendous ripple effect for the agents that I coach and care about. So cool. Thank you for doing that. And then the third one, it’s like, yeah great full commission wonderful. So, it’s all, it’s always been a negotiation and you have to and this is where I think agents are freaking out. Their negotiation skills are weak and you have to start in the beginning. Because to me, I’m not trying to put a client, a buyer or a seller, in a bad spot. I’m going to pre discuss everything and say, Here, here’s what’s happening. So if you’re repping a buyer and first of all, no agent in the history of time has ever netted 6% so these articles are hysterical to me and just fear mongering. So, I also have to put that out there like I was thinking to myself. I was like, well, wonderful. This is what consumers think buyer agents get 6% everybody get a discount and roll at four.

Justin: Right. I’ll be driving a different car and living in a different house, if buyer’s agent is 6% commission.

Marissa: Yeah, (Right). So anyway, so what you have to do is negotiate it ahead of time. So what’s one way to do it. The way we’ve been doing it for a while, since the 90s, where it’s like the seller pays the commission, great it’s disclosed in MLS. Another way that I’ve done it is the buyer pays it okay. They can pay cash. They can finance it into their loans. So there’s some stuff going on there. You can negotiate it a million different ways. And I think that’s what agents they’re, they’re a one trick pony. I’m a buyer agent. I go to MLS. My comp is right there. That’s all they know how to do.

Justin: I love that you said one trick pony because you heard me speaking Charlotte and I’m a massive advocate of not being a one trick pony.

Marissa: Yes, you’re an amazing speaker.

Justin: Right. They’re so mediocre. What they do. They just do enough to do enough, and so they become a one trick pony. And you know, one of the things that I said on I just posted on social media is like, agents need to start deal hunting. Now, whether it’s for themselves as an investor but at the end of the day, what solves all this where there’s literally nothing else for an agent to do except for go talk to a homeowner, is for them to go directly and find more listing deals, buyer represented deals where they’re direct to the homeowner saying “hey, I need to, you know, help my buyer find properties. Mr. Seller. Mrs. Seller. Are you interested in selling?” Now you have a conversation where you are literally you’re able to create your future versus rely on what other people put out there. You’re waiting as a buyer’s agent. You’re waiting for an agent to put a listing on the MLS. Don’t do that. Why don’t you go feed yourself? Why don’t you actually go out and find your own opportunities? Because then you can represent Jared myself, or even yourself as an investor. And if that doesn’t work out, then you say “Listen, why don’t we just list it?” And now you become a listing agent, right?

Marissa: Justin, from my perspective, you’ll love this. The worst case scenario as an agent is you list a property for commission, worst case scenario.

Justin: Right. You should already have a buyer ready to buy it

Marissa: Well and then you think so it’s like what Jared and I like to work. We call it. It’s like a bridge build between real estate agents and investors. So, you’re exactly right. The whole solve of this is go out and create inventory, right? Learn how to underwrite deals, learn how to cold call, learn how to door knock, work your sphere, all that good stuff. And then once you’ve got a seller that wants to sell, I forget how, what you guys call it in science of flipping, but it the multiple exits, right? So, when I look at it, first question is, do I want to buy it? Right? Then it’s okay. What price can I get it under contract for? Okay, then are we going to wholesale it, list it for commission? Are we going to flip it? Are we going to, you know, buy and hold? Whatever it may be. That’s also dictated by the seller, you know? So, it’s like, does the seller want a retail exit? Does is the seller distressed? Is the property distress? So, it’s like, I do. I must have the one trick pony must have been on my mind, because it’s obviously I’m talking to you. But that, that is the issue with our industry is people have one move and then they’re painted into a corner. And so, what I know the three of us work on is we, you know, we’ve got, we’ve got many, many maneuvers that are win wins for everyone. And it’s, it’s the deal by deal, creativity and imagination that everyone, not everyone, I should say the industry is lacking as a whole.

Justin: It’s gonna. So rightfully. It’s gonna weed out the mediocre agents. And I mean, you know, I don’t know the statistics you might right, like something like 1% of agents make north of six figures that are licensed agents, like some ridiculously low number. And it may not be 1% but it is very low, right? So I think there’s million two licensed Realtors across the United States, something like that. Yeah, right. So, like, 1% is crazy. It’s like 10,000 agents across the the nation make 100 that’s wild, right? Like (Marissa: Right). So, the point being is going to weed out everyone else.

Jared: It is one of the things we’ve been talking about, Marissa and I just even this week, is, is how, again, to your point, Marissa, of not being that one trick point, of having the multiple exit strategy, of knowing how to those different exit strategies, which most agents weren’t used to doing, which was what we’re teaching (Marissa: Right), right? This is what we’re teaching within. (Marissa: We’re doing it) Right? Just to make more investments, not only for themselves, but so that they know what we’re looking for as well, so they know what Justin’s looking for. And you can see how you know this is all because where did I learn from this guy? Right? So, yeah, they’re just having to to not be lazy anymore, is what it boils down to.

Marissa: Yeah and you know that’s, and we’ve, we’ve branded them blue ocean brokers, right? Real estate agents that can do the retail work with buyers and sellers and can also do the investment work, because that’s, that’s how I built my entire brand and business was being able to be the bridge between the investment and retail world. And the more agents that do that, the better. And then it’s all negotiation skills, right? Like they need to learn to negotiate commission and deals and deal structure. I think the three of us are in love with deal structure in the creativity of that, and what Jared and I will do locally, right, is kind of plant some of those seeds to get that rolling. (Justin: No doubt). I do want to say, though NAR is there. This is not the end of the story for NAR. Because NAR has not helped real estate agents, nor have they helped consumers. So when you think about Clear, clear cooperation, do you guys know what that is? So as an agent, you have a signed listing agreement with a seller, you have 24 hours, or else you have to put it on MLS. Okay, if your seller doesn’t want it on MLS, what do you do? Firm, exclusive listing so but then that limits you to now you can only cross sell and share it with your buyers and the agents at your firm. So luck. For me, I’ve got over 90,000 agents at my firm. Some agents have three at their firm. So why MLS? Okay, so let’s go to MLS. To have access to MLS as a real estate agent, you have to become a realtor through the National Association. So it’s this whole kind of back and forth. I’ve always thought it was a bit of a racket. So you have to get onto MLS. You have to be a real estate or a realtor, and then Nara dictates clear cooperation, meaning you get a listing agreement. You’ve got 24 hours to put it into MLS. So that whole thing, I’m like, Who does that protect, other than the MLS fees? Okay, so that’s not consumer or real estate agent protection. Now we’re fast forwarding to this lawsuit, where the most hysterical thing to me, and it’s really not funny, is it was a disclosure issue. So it’s like a disclosure issue of buyer, agency compensations. Now in the settlement, they’re saying we can’t disclose commissions. I’m like, Who is the dingbat that came up with that? That doesn’t help anyone, that doesn’t help consumers, that doesn’t help real estate agents, you know? And it’s like, I can see that there’s going to be another set of lawsuits that have to do with fair housing right where buyers are just getting creamed by sellers or listing agents that aren’t listing agents that aren’t doing that. Then, you know, it’s like, okay, let’s just say on some type of loan types, if they can’t finance in the commission because they’re paying their buyer, and then they’re unrepresented, and something goes sideways with the deal, that’s going to create another lawsuit. So my point is, like everyone has been allowed to be unrepresented. Commissions have always had to be disclosed. And I just don’t like this meddling, because it just, it’s the NAR does not have a huge track record, in my opinion, of actually helping agents or consumers.

Justin: Well it’s big business, right? They’re looking out for their pocket, yeah. But and so, and I’ll kind of leave with this, you know, I coach to privy, which is more of a national MLS type, (Marissa: Yes), product. How would you suggest those relationships being built moving forward? You and Jared already have a relationship, so that’s done. But if you’re you know Johnny, new investor and I’m coaching to use privy as a tool to find properties that can work for me, right? What type of conversations need to be had from the investor now and the agent who potentially is going to be making offers on multiple properties for them Investor? How does that conversation? What should it look like? Because I in my head. And I think in everyone’s head, the agent’s always thinking, what’s in it for me? How am I going to make money out of this relationship? And if I can’t see a direct line to making money, then I’m not going to go be a bird dog and submit offers on these properties. Right? So how does that conversation look?

Marissa: So first, first off, every single investor I’ve ever represented has been under a non exclusive buyer agency agreement. That means that if I Marissa can’t find them a deal that fits their Buy Box, I don’t get paid. (Justin: Right) And that works both ways. So, I think that again. It’s the elevated level of education where He who controls the deals makes the money across the board. So, you have to rewind that all the way back to do you know how to underwrite. And like you said, privy national MLS. We’ve got from a brokerage side, we’ve got Zen list, we’ve got raven.re, Zillow and realtor.com are essentially national MLS ‘s. So you can go searching there and it’s networking, it’s relationships, right? So, I met Jared through an agent that coaches with me, went to his panel, loved his mastermind. You were the speaker the next month. Showed up. You just You crushed it. Loved everything that you had to say. And I was like, I like these guys, and what did I do immediately? How do we work together? (Justin: Right). And so that’s what it is. It’s just the question of Justin and Jared. What do you two need? And then let me go back and look and see what puzzle pieces I have. Let me present that to you. If it’s a thumbs up, let’s negotiate comp. And I don’t get paid unless I deliver. So yeah, that’s really what that’s how this business works. And I don’t know where that got twisted.

Justin: Well, do you think there’s anything different that a newer investor or an investor, let’s just say they want to go open up a market like. So Jared wants to go open up Indianapolis. Let’s just use right? (Marissa: Sure) He doesn’t really know. So he uses a privy or a Zillow, it doesn’t matter. And he calls agents he’s not familiar with and says, What does the conversation need to change because of this ruling or is it still? Hey, I’m an investor. I’m looking to open up a footprint in Indiana and Indianapolis, looking for investment properties, fix and flips, buying holds. You know, now, again, we’re making the assumption it’s July already. So does the conversation have to change or agents? Just gonna do what they do, and they’re gonna call the agent about the listing and say, Hey, is there any money in there for me? No, there’s not, because whatever happened. Okay, great. Then the agent calls Jared back saying, Hey, we can put in an offer here, but there’s no like, you’re gonna have to pay my commission on this home because there is no commission to the buyer’s agent.

Marissa: Yeah, I think that that’s exactly right. So it has to be that discuss. So from Jared perspective, it’s this, it’s the same talk track, it’s meeting people, it’s reaching out. Hey, I’m an investor. Here’s my Buy Box. Here’s what I’m looking for, right? And just building, building that reputation, both of you close. So that’s an important thing, right? As soon as you start closing in markets, people like it. They want to bring you deals. Secondly, that’s on the agent to discuss that with Jared. And then Jared, if he knows he’s making an offer on a deal that he’s got to pay the buyer agency comp, right? You guys talk about the Bubba math all the time, right? We’re doing 75% of ARV, minus our repairs, minus our assignments or whatever we need. And guess what? We might need to add another box in that training, minus buyer, agent commission, okay, as is offer.

Justin: There you go. That’s a really good, really good point. That might have to be something in the calculation of the mayo, right? Which I don’t love just using mayo, but you might have to have that like, where I see the biggest impact, frankly, is not really in the markets I invested. It’s in the million dollar markets. It’s in the markets where a seller’s like, why am I paying this agent that I don’t know, $30,000 to bring me a buyer? That’s where I can see there being some discrepancy. But to your point, Marissa, that is 100% of the agents to negotiate with the seller, right? And if the listing agent doesn’t do their job, or at least just wants to get the listing, and I want to make sure I have it, then the listing might fold and say, Yeah, we don’t have to pay the let the buyer pay the agent, just so I can get the listing. So it sounds better.

Marissa: Well, the buyer has always paid the agent. Guys, like, that’s where I’m like, again, duh, it was built into the financing. So fine, do it the other direction? Right? Seller gets offered a little bit less. Buyer finances in the Commission or however that may play out. But again, Justin, everyone has always had the opportunity to FSBO or be an unrepresented buyer. So, if they want, I don’t see that, that’s where I’m like, people want representation and they want to pay for representation. And typically you see it on both ends of the spectrum, right? First time home buyers, first time home sellers, people that are only going to transact maybe three houses in their entire lifetime, definitely need representation. And then for me, I’ve worked with ultra high net worth individuals my entire career and guess what? Are they smarter than me and know more about real estate? A thousand percent and guess who gets paid to do the real estate broker work me, cuz they don’t want to deal with it. They’re running their businesses and their careers and they’re managing teams of people. They want to be like, Marissa here is my order. And I’m like, I I’ll let you know when it’s done. (Justin: Yeah, I think). So this is it’s just, it’s ridiculous to say, like, I just don’t see everything changing overnight, because it’s like, if you haven’t wanted representation, you didn’t have to have it. And then there has always been fee only brokers. This also reminds me of when I buyers started to become popular, and I’m like, Guys, there have always been large cash buyers since the beginning of time. Now they’re just wrapped up in sexy marketing with websites.

Justin: Yep.

Jared:, I’d say the one thing pivot to do with, with my team and with the on market acquisitions, when we’re not already connected to Marissa and we’re going into a new market, is we’ll probably do a lot more of the unrepresented, like, just have, we’re going to go into each offer the unrepresented. So it just doesn’t become part of the conversation necessarily.

Justin: Yeah, I think well in for the agent perspective, is true in all sales, right? You get paid for your value, so provide enough value to justify payment period. And that’s why I said there’s going to be this widening of a gap of the best realtors and everyone else. And everyone else is going to be out there. Oh my god, this is we’re over this is terrible. But if you can provide high value and you’re a Marissa and you’re really in the trenches, grinding for your client, your buyer, negotiating a deal, renegotiating because this inspection came up, and there’s $40,000 worth of costs that, you know, because of the, you know, sewage and whatever, I’m making it up. But now Marissa needs to go back and renegotiate with like, there’s value doing that for someone like me, for someone like Jared, like I don’t have time to go do that, per se, right?

Marissa: That’s what it is. So that’s it. Justin, it’s time and expertise. That’s why you pay a real estate agent. Either you don’t have the time or you don’t have the expertise if you do have fun.

Justin: Right and again, when you’re dealing with price points that I like, under 300,000 like, there’s not, I don’t need a whole lot of expert. Like, there’s not a lot. A harms way, right? I looking for dumpster fire properties that need a full remodel. I know I’m going to spend 80 grand on the damn home.

Jarred: That’s not gonna matter a whole lot to you.

Justin: Right. But I’m not taking away from realtor, I’m just saying when Jared goes into Indianapolis or I going into the market, I don’t need I’ve never bought into me needing a buyer. I would rather my team go directly to the agent, build the same type of rapport. And we just know our numbers. We know where we need to buy at, which brings me full circle. (Marissa: Yep). I think all agents need to go be deal finders. You guys, and you already do this. You know this.

Marissa: Acquisition army is what I call them. Yes, you and I are building an acquisition army.

Justin: Right. Whether it’s door knocking, cold calling, Rocketly, whether it’s whatever, right? Like agents should be doing it because it’s going to help them. I have agents that work directly with us. They literally are. They will buy homes so they can get a commission, essentially, because that’s how hard the market is right now. Hate to say it, but they will literally buy a home so they can list the new thing to get a commission. (Marissa: Yeah, exactly same here. Yep) You know what I mean.

Marissa: The other piece too, is you have to have, who are your allies in this industry? So the two of you are allies to me, right? So it’s like, as soon as all this stuff happened with NAR, I was talking to the top dogs, agents at exp, compass, Keller, Williams, real, Sotheby’s, etc, and just being like, and guess what? Every single top person, every single company, is like, Guys, we’re good. (Justin: Yeah). Let’s see what happens in July, and we’ll follow the new rules.

Justin: It’s not that big of a deal, but it is very, it’s very click baity for someone who’s a marketer.

Marissa: Oh, it’s extreme. So I was digging that. So, I actually screenshotted some of that. I was like, this is amazing marketing. Because I was like, Yeah, nothing has actually happened, and they’re just scaring everyone, and people are up in a tizzy. And it’s like and then I’m also thinking too, it’s like our profession has never been a favorite of the general population. So, I’m like, also the sentiment around real estate agents, I’m like, That’s not new news.

Justin: Post I posted this morning. The post I posted yesterday got 2000 views. The one I did this morning already has 6000. Because click baby, people want to hear the the news of it, right? So anyway, I know you gotta jump. I gotta jump, Jared gotta jump. I completely spending some time. And hopefully this recording, I’ll give it to you, in case you want it for any purposes, but appreciate you spend some time with us.

Marissa: Yeah, thanks guys. You’re the best.

Justin: Thank you.

Jared: Later. See you. Bye.