Things just keep getting better, according to real estate brokers surveyed for the Q2 2024 HousingWire BrokerPulse survey, with 54% who are “optimistic” about the next three months in residential brokerage, compared to some 48% of those surveyed for the Q1 2024 HousingWire BrokerPulse survey who felt the same.
The same can’t be said about their optimism over interest rates, where 74% said they would be flat and 22% said they would go down in the next three months, compared to some 60% last quarter who said that interest rates will go down in the next three months. What a different a few months makes.
As for the direction of homes sales, the results were mixed with 59% saying they will be up 5% or more and 37% indicating that homes sales will be flat over the second quarter of 2024.
Real estate leaders where mixed when it came to the direction of home prices, as well, with 46% (down from 65% in Q1 2024) saying they would be flat over the next three months and 50% (up from 29% in Q1 2024) indicting they would be up 5% or more.
Training and production top challenges
Training real estate agents on new business practices resulting from the NAR commission settlement is tops when it comes to brokerage challenges. That’s no surprise since agents will have to learn how to articulate their value and be better negotiators when it comes to compensation. “The changes are much needed,” said a broker/owner of an Engel & Völkers firm in the south. “It will level up the professional. My agents are well trained and prepared as we use a Buyer Broker Agreement and have buyers offset any [brokerage compensation] that the sellers do not pay. This will be an easy transition for us.”
Not everyone is optimistic. According to one independent broker in California, there will be a “increase in dual agency with buyers going direct to listing agents.” Another independent broker from Washington said, “There will be commission compression that will lead to decreased revenue within the brokerage model.”
Other top challenges (in order of biggest challenge to smallest) include:
- Increasing per-agent productivity
- Reducing operational expenses
- Pressure on net or gross margin
- Difficulty in recruiting
All are traditional challenges brokerage face.
Changes brokerages are making
When asked what types of changes or new services brokers are considering post-settlement, many commented that they will move to a flat-fee model for buyer agents. “[For] buyers brokers a flat-fee is a good idea,” said a HomeSmart broker. However, many shared the sentiments of this Florida-based teamerage leader, “I’m not sold on the flat-fee business model for buyers. I’m skeptical it can work at scale. Flat-fee options have been around for years and have not had significant traction. Consumers need full service for an infrequent transaction.”
Others said that buyer consultations will become the new normal and be treated just as listing consultations are. But, the majority say they are “waiting for it to play out” or aren’t making any changes. “For now, we will conduct business as usual with our company sharing our real estate fee with cooperating brokerages, always with the seller’s permission in writing,” said a CENTURY 21 broker in Arizona.
Are buy side realtors working on a Plan B? Many are now looking into becoming dual licensed for both real estate sales as well as mortgage, which is now legal in 48 states. Why not subsidize your reduced “buy side” commission by also offering mortgage as well? Borrower wins, realtor wins with lower mortgage pricing by eliminating the mortgage broker. Certainly a smart option! And you can also get a commission on the refinance, which will be realistic in 2025!
The idea of Realtors becoming mortgage brokers stems from having no idea what being a lender entails. The commenter says “subsidize” your commission by being the lender and then later says it will save clients money. If you’re taking the commission of the mortgage broker to subsidize your lower buyer agent revenue, you’re not saving the client money and very likely not doing your client justice. Maybe be the best professional at your job to best serve your clients, know how to communicate your value, and earn your commission? The best at real estate and mortgage aren’t trying to do the job of the other. These changes will require people to be better at their job and if they aren’t, they’ll be gone. Survival of the fittest.