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As chief operating officer and broker of record for Austin, Texas-based Moreland Properties, Sarah Railey will draw on more than two decades of experience when Inman Connect comes to her city next month.
Railey is set to moderate an Oct. 9 panel discussion at Inman Connect Austin, “Where Do We Go From Here?” exploring strategies and priorities as the real estate industry navigates changes to commission structures, a decelerating economy and the introduction of potentially disruptive technology like AI.
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Industry experts on the panel will include Zillow’s director of industry affairs, Nobu Hata; RedBranch Realty owner Ashley Gentry; and Kathryn Scarborough of Engel & Völkers Austin Westlake.
Since joining Moreland Properties in 2002, Railey is credited with playing a pivotal role in the company’s growth and success, working closely with founder Emily Moreland to oversee all facets of the brokerage, which in July was the recipient of a Golden I Award for top luxury brokerage at Inman Luxury Connect Las Vegas.
Railey took time to discuss her perspective on how the industry, and Moreland Properties, are adapting to change. This interview has been edited and condensed for clarity.
Inman: How has Moreland Properties adapted to the new commission rules? Do the changes the industry is implementing pose more of a challenge for smaller firms?
Railey: I don’t envy the giant firms that are in multiple markets. I feel like we’ve got a little bit of an edge because we’re just dealing with Austin, central Texas.
There’s a lot of noise, so we’ve tried to keep it as simple for the client as possible because this whole thing erupted over clients being confused about how everybody was getting paid, and these conversations were not being had by a lot of agents.
The mass [media] reporting of the topic has been confusing. Whether you turn on “Good Morning America” or you read some article that has a clickbait headline — “You don’t have to pay a commission anymore,” or “Home values are going to plummet” — those articles have made it harder. We are helping reeducate people about how a real estate transaction works and, if you do want an agent involved, how their compensation can or cannot be rolled in.
For our firm, the big thing now is whether you’re working with a listing, a seller or a buyer, you need to talk about representation and compensation. Then within every transaction, you need to disclose the commission structure to all. The compensation is now removed from MLS, so agents are having to understand how to navigate that market in terms of, before showings, they need to call houses and say, “Hey, are you offering compensation or not?” Our firm, we’re happy to disclose that for anybody.
We don’t have that posted online everywhere. I know it’s off the MLS, and you can tout it everywhere if you want to, but we’re just really letting the buyers and sellers navigate that with their individual agent themselves. And when someone says for any of our listings, we are very willing to look at all offers, especially those including buyer compensation. We’re here for that.
How is the Austin market? We’ve seen mortgage rates come down quite a bit since April. But at least on a national level, there hasn’t been a huge response from homebuyers yet. There are still affordability issues in a lot of markets.
We’re reaching more of a balanced market in Austin. We were on every “Top 10 places to move” list, and our prices really did inflate, especially during COVID. People were getting nine or 10 offers on every house, and the prices were going well above market. Now you’re seeing [a perception among consumers that], “Oh, the prices have come down.” Well, I think they’re more balancing out to really just be holding value.
It is slower. The upper end is taking a longer time to sell. We’ve got about a six-month absorption rate in the markets that we serve. And you think, “Oh my gosh, it takes four to six months to sell a house. What am I gonna do?” That’s actually very healthy. I think that’s more normal.
It’s kind of like when you go 100 miles an hour in a car; when it slows down to 70, you’re like, “Whoa. We’re barely moving.” Houses are still changing hands, and people still have lots of reasons to move. But listings are sitting longer, and we’re having to get sellers’ expectations realigned with [the changing market]. Just because you price it well and it only took a week for your neighbor to sell their house a couple of years ago … it’s a little different now.
There are always reasons to move, and it changes price points. There might be a buyer pool that’s on the fence, and [lower] interest rates would help those who are needing loans for those properties, kind of $1.5 million and under, that are kind of waiting. But you don’t want to have to rush in once interest rates fall and compete for these properties. Now you really have some leverage when you go in [as a buyer] in Austin.
There are always those anomalies, where there’s something that was priced well in a market, it’s the perfect street — you still see multiple offers in that case when something is priced right and at the right time.
For Moreland, we are holding steady. I’m not going to sit here and say business has increased. I would say it’s down around 15 percent. So we’re watching those numbers and making sure we’re doing everything we can to position clients to make really educated decisions. And sometimes that is waiting to put your house on the market until next spring. Sometimes it’s, “Hey, maybe you should write an offer before the election.”
Do you think the election is having an effect on the market, or will have an effect, depending on what the outcome is?
It affects people’s behavior. I don’t necessarily think one candidate versus the other means something for the housing market and what people do. I think housing has always been an amazing investment and will continue to be if you have the right agent showing you properties that are going to be good for you. Nov. 5 is a date on a calendar.
I hear people say, “I’ll wait, in case the candidate I don’t want to win wins, because then I may do something else.” And I hear the exact opposite from others. Some people might choose to wait based on their candidate winning, what they think the stock market’s going to do, or different economic forecasts. Those are valid feelings; you can’t change those perspectives.
You just kind of listen and go, “All right, well, here’s what I know now, and here’s what will happen when the sun comes up the next day. Let’s see what happens.” But every four years, no matter what, I hear that same conversation.
There is a lot of talk about whether the Fed can pull off a soft landing, or if we will have a recession. What are your thoughts on what’s likely to happen?
I mean, that’s a zillion-dollar question that if I knew the answer to, I would be using myself. My hope is for a soft landing because I think that’s just better for everyone. But I don’t really have a big answer to that question, because I don’t feel like that’s my place to answer, to be honest.
The pandemic created some unusual conditions that have made it difficult for economists to predict what’s going to happen. It can also be hard to imagine how new technology like AI might impact the real estate industry.
I think paying attention to the tools and resources available to our industry is hugely important. And AI, however an agent can harness that to make their day easier and work smarter — anything from transposing an email or notes from a giant Zoom call that can be thrown in an outline — we’re using it for things like that. You get all the information and put a pretty bow on it, you can disseminate it faster and not miss out on a key takeaway that would have fallen through the cracks.
We don’t have some sort of AI staff that’s working on stuff, but our marketers use it probably more than our agents. There are a lot of different things that AI can save time on the back end for us. It’s optimized activities within our organization for sure, but I wish AI was more.
Copywriting, you’re almost there. We’re really careful — you don’t want some robot to just write stuff [from scratch], but AI sure is great at [editing]. You know, “I need this a little shorter and a little more flattering,” or whatever you want to do. It helps you.
I think there’s something about original creation that we just don’t want to lose sight of. It used to be you were doing 90 percent of the work, and then you’d have 10 percent help at the end of the day. If you can get 90 percent there and then do the 10 percent yourself, by all means.
What are you looking forward to about Connect coming to Austin, or hoping to get out of it?
I’ve only been a reader of Inman, so this is the first time I’ll be participating [as a speaker]. We were thrilled to be named the Top Luxury Brokerage at the Inman Luxury Connect real estate event in Las Vegas. So I think it’s just kind of understanding who all the players are who come to these things, and getting to share ideas.
It’s a really good time to prepare for what’s ahead, and with so much change, there are some things you need to get together to figure out. It’s still just buying and selling a house and navigating for clients. That’s something that never changes. But it’s always good to kind of look each other in the eyes and know “OK, we’ve got this.”