Is the sky really falling?
If you’ve been listening to the usual industry grifters—masquerading as experts—you might think so. But what happens when click-bait theories meet main street practice?
Indiana’s early adoption of the NAR settlement changes on July 1st offers a unique opportunity to separate fact from fiction.
As industry leaders, we’ve heard dire predictions and seen elaborate solutions. But what actually happened when the industry moved from theory to practice?
On July 1st, Indiana was the first state to implement the NAR settlement changes, opting for a 45-day head start into the ‘dark ages’ of reduced transparency. Drawing on the early data, we’ve gained unique insights into the real-world impact of these changes.
And guess what? The predicted Realtor apocalypse never happened.
Sure, some daily tasks have changed, but none significantly. Although the process for communicating and dispersing buyer agent compensation has shifted, the industry adapted calmly within a couple of weeks. Instead of chaos and calamity, we’ve seen the resilience of Realtors and conviction of consumers.
Sellers keep selling
In the first month, nearly 98% of sellers continued to offer compensation to buyer’s agents—some agents even reported an increase in income by clearly defining their fee structure upfront and with each offer.
Surprise! Incentives drive demand, water is wet, and industry forecasters are one recession away from becoming tarot card readers.
Realtors in Indiana aren’t in chaos after the changes. We’ve adapted. Realtors are now communicating more proactively and responsibly given the state of uncertainty. Many who rarely answer phones are responding to calls, texts, and emails.
Friction slows down sales
While sellers have maintained the status quo, realtors have had to adapt quickly. The real friction hasn’t come from new communication methods. Instead, it stems from the need to formally consult and contract with potential buyers before opening any doors.
For many Realtors, the biggest challenge so far has been convincing strangers to meet in a strange place to discuss strange topics—buying a home, getting a mortgage, negotiating inspections, etc.
Early experiences show that many unmet buyers prefer touring homes without the added pressure of a salesperson. The consumers’ desire for a smooth home-buying process and Realtors’ obligation to adhere to regulations has created tension and revealed a skill gap.
Interestingly, unmet prospects are less resistant to the terms and amount of compensation than they are to the duration of the contract.
Realtors who predominantly work with MET clients are experiencing less friction, while agents who rely heavily on portal leads are facing increased challenges.
I’ve had a front-row seat to these changes. The data and observations reveal a concerning trend worth watching: a universal decline in the conversion rate of contacts made to appointments set, which has ultimately reduced the total number of contracts written. The first month’s data shows a drop of 22%.
This firsthand experience underscores the need for practiced improvement in our industry. The early decline at the local level is likely to severely impact lead aggregators like Zillow, RDC, and Redfin, as they’ve failed to adapt their consumer messaging and agent training. At the same time, Realtors’ communication skills haven’t kept pace with regulatory changes.
The way forward
Instead of forecasting anarchy and desiring system upheaval, industry leaders should focus on closing the skill gap that hinders agents from consulting with unmet buyers. The time spent on elaborate commission communication methods and semantic debates, would be best used on training programs that prepare Realtors with the mindset and communication skills to succeed within the new regulatory framework.
In times of uncertainty, true leadership isn’t about making bold, inaccurate predictions. As Napoleon said, “A leader is one who can consistently do the average thing when everyone else is losing their mind.”
So, to the naysayers and grifters, you can keep debating hypotheticals and rewriting forms, but we Realtors have real work to do. And the path forward is through evolution, not revolution.
Eric Forney is the SVP of Industry and Innovation at Livian.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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