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The real estate industry has been grappling with some tough challenges in the last several months — antitrust lawsuits, significant practice changes, and, now, the National Association of Realtors is contemplating changing or abolishing the Clear Cooperation Policy.
Where does that leave agents during this tumultuous time? Rachel Hocevar, president of the Southwest region at Compass, and Romeo Manzanilla, broker and chief operating officer for @properties Christie’s International Real Estate, discussed the implications of all these changes with Inman reporter and moderator Taylor Anderson during a panel at Inman Connect Austin on Wednesday.
As an exec at the firm helmed by outspoken Clear Cooperation Policy critic Robert Reffkin, Hocevar expressed the opinion that agents should have the flexibility to market a property in whatever way is best for their client — which is often not in line with the CCP, which dictates that agents must list a property on the MLS within 24 hours of publicly marketing it.
Consumers who are forced to list their properties publicly must grapple with the reality that their home’s details will remain “on the internet forever,” Hocevar argued, which is not an attractive option for many.
“Ultimately, what we’re advocating for is to give homesellers the choice on how to list their homes,” she said.
Regarding the question of abolishing the CCP, Manzanilla noted that this outcome would be great for large brokerages, but puts smaller brokerages at a disadvantage.
“We were very vocal about the fact this was unfortunately unfair to small brokerages,” Manzanilla said. “Inherently, large brokerages have the advantage to be able to market off-market listings.”
“I think there’s compromises, I think there’s room for pocket listings, but more so, there has to be transparency,” he added.
Manzanilla noted that this type of business model is similar to the way many international companies sell real estate, which makes it more challenging for agents and consumers. “You have to go to different brokerages to find out what listings they have, and that’s not where we want to be in the U.S.”
Manzanilla did recognize the attractive points of getting rid of the policy, however, like being able to test properties out on the market without having to rack up multiple days on market, which can make a property unappealing to consumers.
Hocevar said she agreed with some of Manzanilla’s points, but said at the end of the day, the issue boils down to “giving agents the freedom to do what’s best for their client.”
Anderson wondered how Hocevar felt things were going with Compass agents since industry practice changes around buyer agreements and the publication of cooperative compensation went into effect on Aug. 17.
“I think we were all intimidated,” Hocevar said. “The reality is that we did not see a material change at all.”
Although it varies by specific market, Hocevar added that there’s much more inventory overall now, which has everyone feeling more hopeful.
“I think we’re all bullish on the new year,” she said.
A variety of market factors, from interest rates to inventory levels, ultimately impact how consumers perceive agent value and how much they’re worth, which can impact how much agents get paid, Manzanilla added.
“I think right now, it’s great — because of high inventory, we haven’t seen much of a change,” he said, despite there potentially being a huge shift underway in how much consumers are willing to pay buyer agents.
Hocevar added that she believes that kind of market competition for business and negotiation over commissions is healthy since it spurs agents to really show off their value, and why they might ask for a certain commission percentage.
Anderson pointed out that some agents on social media, jokingly, for the most part, were sharing cheeky ideas for how to convey the message to consumers that they would pay buyer agents a 3 percent commission, like mowing a “3 percent” into a listing’s yard and displaying it in listing photos.
“Is this an outlier?” Anderson asked. “Are most following the rules post-Aug. 17?”
“Aug. 17 was this crescendo we were expecting, and then it was really a non-event or non-issue,” Hocevar said, noting that Compass displays buyers commissions on its website, as Manzanilla said @properties Christie’s International Real Estate does.
She pointed out that commissions have always been negotiable, but with the increased awareness around this fact now, people in the industry thought this meant commissions would go down. “The reality is, they go both ways,” Hocevar said.
Manzanilla recognized the variety of ways in which people in the industry were getting creative about advertising commissions, but cautioned against practices that go “against the spirit of the settlement,” since it’s those types of actions that put “a huge target on your back.”
“You’re going to find yourself having to defend that,” Manzanilla said. “Ultimately, it’s about providing transparency to the consumer.”
Anderson also brought up the recent controversial sale of MLS REcolorado to a private LLC and its parting ways with Denver Metro Association of Realtors and South Metro Denver Realtors Association. He wondered if this is the future of MLSs.
Private equity knows that it can monetize all the inventory that is essentially “forced” into the MLS through the CCP, Hocevar noted, which is why this deal came about. “They’re the sole owner of that, and then, they will monetize that inventory,” she said.
“So yes, I think there will be more of that happening,” Hocevar continued. “Do I think that’s a good idea? I hope not. But I encourage all of you to be thoughtful and think about where those dollars flow and why decisions are being made to purchase MLSs and make them private.”
As for whether or not all these industry changes have left agents and consumers better off, it seems like the industry still has some processing to do.
Manzanilla conceded that it’s been “a really tough road” and that confusion still permeates the industry, while Hocevar maintained her bullish attitude.
As a member of NAR’s board of directors, Manzanilla said the organization would be having more discussions about Clear Cooperation, commissions and compliance issues next month at its annual meeting in Boston.
“So definitely, it’s on the agenda,” he said.
