Despite Realtor assurances their industry is adapting smoothly to new homebuying rules, signs of hiccups, confusion and frustration surfaced last week when more than 7,000 industry professionals gathered in Long Beach for the California Association of Realtors’ annual convention.
Misinformation about the settlement has been rampant on social media, several convention speakers complained. One agent lamented about competitors pirating away clients at open houses.
In some cases, real estate license holders appear unaware of new requirements, which took effect in mid-August, like the need for buyers to sign contracts with their brokers. Others expressed frustration over the amount of paperwork now required.
“For the rest of your life, you’ll be referring to the time before Aug. 17 as the good old days,” CAR Assistant General Counsel Gov Hutchinson told one convention session.
The “good old days” ended when the National Association of Realtors enacted two key changes to comply with a settlement aimed at ending a succession of antitrust lawsuits over sellers paying buyer’s commissions.
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The new rules constrain sellers from making blanket commission offers in Realtor-affiliated listing databases, although they’re allowed elsewhere.
They also compel buyer’s to agree in writing to paying their own agents if they can’t get sellers to cover that cost.
Overwhelmed and exhausted
Seven sessions during the three-day conference addressed various aspects of the settlement.
Although professionals need to guide consumers through this complex new process, agents are feeling “overwhelmed, exhausted, a little confused and uneasy,” said Barbara Betts, chief executive of The RECollective of Long Beach.
“This is the largest fundamental shift we’ve ever seen in our industry,” Betts said.
California Association of Realtors members check out session schedules on wall-sized billboards in the lobby of the Long Beach Convention Center on Thursday, Sept. 26. One month in, agents say they’re still adjusting to new home buying rules that took effect on Aug. 17. (Photo by Jeff Collins, Orange County Register/SCNG)
And while the industry continues to adjust, the new landscape keeps shifting.
A federal judge in Missouri still needs to sign off on the new rules in November before they become official. And California Realtors are looking over their shoulders at an ongoing U.S. Department of Justice investigation that could upend agent compensation even further.
“Everything we’re doing now is still in the maybe-not, maybe-yes phase,” observed Daniel Winkler, an East Bay Area broker.
Nevertheless, most buyers have been requesting “concessions” in their purchase offers since the settlement took effect, Winkler and other brokers said. And most sellers are agreeing to pay them.
Rates mostly unchanged
Commission rates likewise appear unchanged thus far. Attorneys who sued the NAR argued that real estate commissions would come down if buyers pay their agents directly.
But just one agent interviewed in the past month, Rodeo Realty agent Patti Komorita, said she lowered her commissions since Aug. 17, charging buyers 2% instead of her usual 2.5%.
“It’s better that you get something than you get nothing,” Komorita said.
Other agents say they haven’t seen commission cuts, however.
For example, Long Beach agent Lorie Navarra, who has yet to sell a home after a year in real estate, continues to ask for 2.5% to 3% per sale.
“I wouldn’t (lower my commission) because it comes with listing and marketing tools, you have to
print (fliers) and to take pictures,” Navarra said. “So, it’s all included in that compensation.”
Uninformed agents
Other problems include “uneducated agents” on the other side of a transaction, several agents said.
“I don’t think our industry has bad actors. It has people who are uninformed,” said Santa Cruz County broker Robert Bailey. “And you cannot assume that your peers are getting the same education that’s being offered (at your brokerage).”
Tustin-based Seven Gables Real Estate received five offers without requests for buyer-agent compensation since Aug. 17, said Chief Executive Mike Hickman. Four of those offers were from agents who hadn’t signed a contract with their clients.
“You need to go back to these agents … (and) try to help them and their clients,” Hickman said.
Social media influencers, some without any home sales experience, have been spreading misinformation or have been posting comments about practices that are banned in California, agents said.
“So many of my colleagues are listening to friends on social media who don’t know what they’re talking about,” said Betts.
“Agents have a tough time adapting to change, and so agents are struggling with doing the buyer-broker agreement (and) the open house non-agency form because it’s different,” added East Bay broker Winkler. “I think in six months, 12 months, it will be muscle memory. Everybody will have developed their pitch, their explanation, and it will flow smoothly.”
Open house tactics
At a forum with CAR legal counsel, some agents expressed frustration with all the additional paperwork.
“It’s too complicated. It shouldn’t have to come to this,” one agent said.
Another agent warned about open house hosts trying to “ace” her brokerage’s clients.
“When people show up, (some open house hosts) say, ‘Well, I’m not going to show you the house unless you sign a buyer-broker agreement with me,’ ” said the agent at the back of a packed meeting room. “So, if you’re beginning to work with a buyer, and maybe you haven’t gotten that far yet, and … they pop into an open house and they bump into that agent, now you’ve lost your client.”
“But they can do that,” said Hutchinson, the assistant general counsel.
““But it’s not right,” the agent shot back. “I’m just saying, watch out for it.”
It’s the agent’s responsibility to educate home buyers and sellers “about this reality that has changed,” Hutchinson said. “We have to accept this.”