When the National Association of Realtors announced changes to broker commissions earlier this year, a panic ensued about what it would mean for the industry.
Aug. 18, the day the changes would take effect, loomed large in the minds of agents and brokerage heads fearful of potential decimation. But the day came and went, changes took hold, deals continued closing and agents kept getting paid.
“It was like Y2K,” said Mike Pappas, CEO of the Keyes Family of Companies, comparing the NAR change to overblown fears of a digital crash in the new millennium.
Beth Butler, Compass’ senior regional director of operations and marketing, and American Real Estate Association co-founder and Compass agent Jason Haber enthusiastically agreed with Pappas at The Real Deal South Florida Real Estate Forum. Pappas, Butler and Haber discussed the gamut of major changes and challenges facing the industry, speaking on the panel, “The Business of Brokerage: Can You Survive the Shake Ups?”
Haber, who launched AREA with the Agency’s Mauricio Umansky in February, insisted the industry should pursue change beyond broker commission structure.
“The barrier to entry in our industry is very low,” Haber said, adding that the easy process for becoming a licensed realtor creates a large population of undereducated, inexperienced brokers, and opens the door for unscrupulous actors. “They bring our industry down. They hurt our industry and our reputation.”
He also argued that the easy licensing process is a boon to NAR, which earns more on dues from every new member of the tradegroup.
“It’s time for this paradigm to change,” Haber said.
Butler also pushed a revisionist agenda, parroting Compass CEO Robert Reffkin’s campaign against NAR’s Clear Cooperation Policy. Reffkin, along with leaders at Anywhere Real Estate, have recently urged NAR leadership to abandon the policy, which requires agents to list homes on the Multiple Listing Service.
Proponents of Clear Cooperation say abolishing the rule will allow industry giants to create secret gardens of listings, hurting housing fairness and smaller brokerages, as well as buyers and sellers. Opponents say it strips home sellers of control over how their house is marketed.
“I think it’s high time we let our sellers have a seat at the table,” Butler said. “Allow us to be more strategic.”
Pappas disagreed. “If you take Clear Cooperation away, you’re basically going to break down the system of fairness and equality,” he said. “I don’t know what the government is going to say about that.”
South Florida has seen an unparalleled market boom in recent years, but higher interest rates and new condo laws are contributing to a tougher market environment. No matter the conditions, though, continued expansion is imperative, the panelists said.
“It’s a fascinating business. There’s no one way to succeed,” Butler said. “There’s more opportunity [in a tougher market]. A lot of the people who got their license five minutes ago, they can’t compete.”
Pappas said despite the more challenging market, he was heading west to close an acquisition in Sarasota this weekend.
“If you don’t grow, you’ll die,” he said.