Big Money, Big Changes

Angst Arising

It’s no shock that some agents are getting anxious over the impending settlement.

But in the midst of every crisis lies a great opportunity. That’s what Debra Killian points out. Killian, who is the director of mortgage education and training at CLOES.online, says that the impending settlement is an opportunity to enrich referral relationships. “There’s always been an adversarial relationship between real estate agents and brokers,” Killian commented. “I think now more than ever you gotta get together. [LOs and agents] need each other now and the tables have turned.”

One area of opportunity Killian sees as a bridge between LOs and real estate agents is sponsored training. Killian has a course that teaches MLOs how to teach continuing education (CE) to real estate agents. “Real estate agents are sick and tired of hearing the same thing, they’re looking for good speakers and good content,” she said. “Real estate is a fast revolving door, and agents are looking for some guidance while everything is up in the air in terms of the settlement.”

Killian, who was formerly an LO and a Certified Residential Mortgage Specialist (CRMS) since 1994, foresees a few issues arising. “I’m sure dual licensing will be a proposed solution, and I imagine a lot of pushback from originators,” Killian mused. “I don’t believe you can fully represent the buyer and seller at the same time…I also foresee some angst between buyer’s and seller’s agents. The conversation will change because the understanding before [the settlement] was that the buyer-agent commissions were going to come from the seller. But the conversation is now, if the seller doesn’t pay, the buyer is on the hook to fit the bill.” 

Carl Lantz, a Coldwell Banker Realty real estate agent serving West Hartford, Conn., and the surrounding areas and 2024 president of CT REALTORS, is concerned about how real estate agents will prove their value and not being able to see buyer’s agent compensation listed in the multiple listing service (MLS). 

“I still don't think there's going to be a major push of sellers that aren't going to offer compensation to buyer's agents, but there probably will be more. I think the big thing is there was always a choice not to offer it,” Lantz said. “The biggest question we’re getting is sellers asking if they have to offer commission, which they never did. But if they don’t offer it, they’re limiting their pool of buyers since buyers are strapped for cash.”

This, Lantz says, is where the loan officer can step in as an authoritative resource. “​​On the lender side, it's really important that originators understand the methods by which a buyer can build that in, if the buyer does have to compensate their buyer's agent,” he said. “I think the biggest thing that loan officers can do is know their products and be able to give the best advice that they can to their buyers. Make sure you're tailoring that to what they need and foster those relationships with your realtors you work with.” 

Cash And Leads

Lantz laughs at the thought of NAR referring to 6% as a “typical commission.” Lantz admits that it’s typical for him to see a commission that’s 4.5%, maybe 5% if he’s lucky.

“My business is mostly referral; people come to me because they want to work with me, and when I describe it to prospective buyers I say, ‘When you need a heart transplant, you don't look for the cheapest surgeon. You look for the surgeon who can do the job best.’ That's where I show my value to the buyers,” he explained. “I will go to the ends of the earth for you, but there's a bottom line that I need to make to make this worthwhile for me.”  

Lantz recognizes that real estate agents across the country might be worried about how to subsidize their earnings post-settlement. 

Luckily, there are solutions.

InstaMortgage’s program, InstaOffers, provides homeowners with instant cash offer options through its marketing platform. But InstaMortgage’s founder and CEO, Shashank Shekhar, says this is a solution for guaranteed leads. “The idea of InstaOffers came from the place of wanting to help agents get more listings. Almost 58-60% of sellers want cash offers, but less than 5% sell for cash,” Shekhar said. “So how it works is that a company provides cash offer solutions to the seller. InstaMortgage is not an iBuyer, we have a partnership with a company that buys it and we facilitate the transaction. The seller gets offers in seconds… AI powers the entire platform.” 

At first, Shekhar said the solution was for marketability. However, he realized that the platform gives buyers and listing agents power. “Sellers are also buyers, and each listing aggregates buyer leads,” Shekhar explained. 

Brian Rogerson, president and CEO of Wallick & Volk, also proposed cash programs as a solution during the NAR shakeup. One of Wallick & Volk’s programs is the "Cash-to-Win" initiative, designed to help qualified borrowers compete with cash buyers. “The objective of this program is to turn prequalified buyers into cash buyers, leveling the playing field in a competitive market,” Rogerson explained. “By working closely with buyers and agents, Wallick & Volk steps in to make cash offers on behalf of the customers, and we only require an inspection. This approach allows properties to be quickly secured without the usual mortgage and appraisal processes, resulting in a faster closing and immediate payment of the real estate commission.”

Initially, Rogerson explained, the Cash-to-Win program aimed to tackle the challenge posed by cash competitors, but over time, it uncovered even more opportunities. 

“Cash offers not only provide a discount for consumers but also make transactions more enticing for sellers by closing deals within 10-14 days and avoiding contingencies,” he said. “We can buy them property at a cash discount and pay their agent the fee by wrapping it into the purchase price, rather than the consumer being displaced from being able to even consider other properties since they’d have to come up with the commission cash if the other side doesn’t pay.”

Value Proposition

Converting those leads into buyers is another obstacle.

Scott Nicholson, mortgage advisor with NEO Home Loans, developed a platform called Lender Marketing Platform (LMP) designed to fill the gaps in the industry. “It’s a platform that allows the LO to create a digital canvas that allows them to take the tools they have already to create public or private content. It’s essentially presentation software,” Nicholson explained. “I realized this could be positioned to help agents, too. A lot of agents are ill-prepared to have a conversation with their customers about the what-ifs, such as the case where a seller isn’t paying the commission. What LMP can do is help create presentations for both the LO and buyer’s agents to use for the customer.”
Nicholson it all comes down to presenting value to a customer. “A buyer’s agent needs to articulate their value proposition to stay relevant, which they’ve never had to do before,” Nicholson explained. “And the customer is bound to be confused.”

Where the LO can step in and help, Nicholson says, is helping the buyer’s agent explain the options to the consumer, therefore strengthening their value as a thought leader to the consumer. “The lender and agent can work out solutions together such as cash, finance it in the loan, alter the price and get a commission paid on that, etc. So we can show different options on how we can solve that problem for our consumer,” he said. “The old school methods won’t work anymore: calling a listing agent or sending an email with the options just gets buried in the inbox.”

Nicholson says that while using LMP can be an educational resource, it can also be a source of confidence for both the agent and the LO. “The prerequisite of getting a buyer-broker agreement signed up front is a big deal. If you have to get that signed up front and you have to articulate or explain how you're going to get paid, well, you're going to have difficult questions coming your way,” Nicholson remarked. “If you can't answer those, then you're not going to get a buyer-broker agreement signed, period.”