KGCI: Real Estate on Air - 60 Days Later - What We Know Now

Episode Date: June 7, 2024

Well, good afternoon, everybody. My name is Holly Mayberry, and I'm the vice president for brokerage operations at EXP Realty on the West Side. Joining me today, and I'm so very excited. We've got our CEO of EXP Realty, Leo Pereja, as well as Kendrell Bonner. I'm so very excited, our VP of Industry Relations. Welcome, everybody. How's everybody doing? Hey, so excited to be here today. This is awesome. I love it. this well jumping right in we wanted to get back to you it's been 60 days since the n a r settlement and it was really important to us to make sure that we were keeping you as up to date as with the information that we know as we prepare you for what's next and and how we

work together so one of the things that we're going to cover today is is new information right so we went live on march 18th which was the first business day after the settlement was announced, which a lot of new information has come out from enforcement to when the actual start day will be. It's been pushed back from the original date. So we were very thoughtful to make sure that this is not the same conversation we had last time, but we did want to remind you guys of one thing. So under the NAR settlement, every EXP agent is covered by the settlement due to the fact that you

guys were all dues pay member of NAR. So as individuals, which is the biggest concern that most agents had, you are fully released. There were 94 companies that did over $2 billion in volume in a said year that was outlined in the settlement that were exempt from being released, meaning that we had to represent ourselves. But the punchline for you guys to remember is we were already in litigation. We've retained counsel and we're confident in our strategy that we'll get behind this one way or another. But the punchline is for you guys out there that are licensed agents, solo producers, team leaders, you are all released from any and all liability from this lawsuit from the settlement

that NAR negotiated. Let's jump on to the next. And really, we wanted to update you on the practices going forward. And Kendall, you and I've been talking a lot about this. Biggest takeaway, residential only. This is really important for everybody to know as far as we've had a lot of questions around leasing, commercial property, vacant land. It's residential. Yeah. And it's important that we understand, especially when you're working with buyers, what this means for you as a buyer's agent. So of course, the big takeaway from that settlement was no offer of buyer compensation will be living or existing inside of the MLS, right? So compensation is moving off the MLS. And this means agents are going to be responsible for negotiating their own fee for their services. Now,

the big deal here, not only do you have to negotiate your own fee as a buyer's agent, but we must have these agreements signed with the buyer prior to showing properties. Now, the good thing for some states, it was already mandatory for some states and some MLSs, but for others, this is a new change for us. And what that means for you is that these agreements need to have a couple of things in them. Number one, they need to have your rate of compensation and how that's determined as well as it must be definitive, right? So it can't be open-ended.

And then, of course, compensation is capped at the amount that's in the agreement, meaning you can charge less than that or accept less. You cannot charge more than what you agreed to originally in your agreement before touring homes. And then finally, if you state that your services are free, you can do that, assuming, but it must be in fact that you are not collecting fees or compensation from any other resource. Yeah, and definitely there's some changes seller-wise. The offer of compensation coming out of the MLS, we will see buyers, agents be directed by their client to ask for a concession as part of the contract. We're expecting that, and we've got some strategies to assist you as we go forward.

But it's really important as we move. We know we thought things were going to happen in July. We're going to start to see rules start to take effect. So let's break down the timeline real fast. The NAR settlement, of course, was in March. April 23rd, we saw preliminary approval by the judge. And then the NAR practice changes. We're going to start to see these rollout through the month of June, July, and August.

And so really looking at what your state and local forms are doing, the MLS, etc. Now, this is where it gets really interesting and we're going to see more headlines. MSNBC, CNN, everybody's going to pick this up. on or around August 17th. And this is when plaintiffs counsel will be issuing the class action, notifying sellers of their ability to collect money. Usually these are when the postcards go out, right? In a clash of action lawsuit of, hey, please submit

if you've been or sold a house during this timeframe. That's okay. This is part of the process. Now one of the questions we get asked a whole lot is, oh my gosh, is this going to be pushed again? This timeline is pretty, pretty much what the judge has laid out so far. And we do see the final hearing for approval going to be about November. Now, could implementation take a little bit longer past August,

potentially? And that's why we want to stay tuned to what's happening locally, because that's what's going to impact you in your day-to-day business. Now, Kendall, this is, this is where it gets really interesting and breaking down who's going to enforce what goes next. Yeah, I know. Absolutely. It's, It's with the whole change, the question has been, who is going to be responsible for enforcing all these changes? And Holly, you were at NAR mid-year last year and basically they announced that or NAR announced that the MLS is going to be responsible for enforcing these new rules. So, you know, the question becomes, what does that mean? You know, what does that even look like?

Holly, talk to us a little bit about what you learned last week at NAR mid-team. year. Thanks, Kendall. It's interesting. And so we are going to see the rule changes out of the multiple listing. They are going to be the enforcement. And much like we saw with clear cooperation, where honestly we turned each other in, we're a very good organization or industry as far as self policing. And so we could see fines assessed by multiple listing services for showing a property, not having a buyer broker, accessing a lockbox without a buyer broker, So that becomes really important. We've already seen some MLSs that on clear cooperation,

they find and they may remove you from service for a period of time. So you might not have access. That's something that I know many MLSs are considering right now. We haven't seen those rules in writing. And then finally, the last, and this is the one that hits home, is not getting paid. If you don't have a definitive buyer agreement before you start the work, getting paid becomes more difficult.

Most recently in the state of Washington as of January 1, we did see actually legislation that changed requiring a buyer broker in order to get paid prior to consummation of a contract. Well, this is a big deal because we've got agents in Washington state that may be doing work don't have the proper paperwork and are not getting paid. So it's really important to all of us to make sure that you're protected. And Leo, this is something that I know is near and dear to us when we keep talking about what's next and what people are concerned about. And you've been so incredibly articulate about this statement. Thanks, Holly. Yeah. One of the things I've been focused on is coming up with consumable, you know, talking points that if this is only what you remember from this conversation, it's this.

Right. So I think it was a conversation with you two last week where we kind of landed on this, right? buyer agency has been around for since the 90s and most states have a disclosure rule where you know when this all broke people said well in my state we have to sign something most states have a required buyer agency disclosure which is a unilateral form of saying hey I don't work for you or I would like to work for you and I work for the other party but it was not a contract right you were just disclosing who you were actually representing and buyer agency was mostly done through implied representation through the services you rendered.

So it was only a few states that required by representation agreements. And the big distinction between disclosure and representation is one is an employment contract with a said period of time, an amount of consideration that will be exchanged, basically the ingredients that you need for a two-party contract with meeting of the minds. And that's a very legal definition of what a contract is. Where we were protected as an industry is by belonging to the MLSs, an endeavoring, to work together, we agreed to the rules of engagement. And one of the rules of engagement in every MLS was the unilateral offer of compensation. That if that commission was offered, that was due

upon consummation of the contract by using the MLS. And there was this concept called procuring cause. And I said they in past tense because our interpretation of this agreement is that it extinguishes it. So most of us could document through conversations, through law, logs in your MLS by unlocking the lockbox that you in fact were the procuring cause of that transaction. And then if for any reason there was a debate, you could take the other side to arbitration at your MLS and earn the compensation. So that reason is why most people probably did not execute a buyer agency by a representation agreement because there was an implied notion that protected that compensation. So now assume that is gone, right?

This is our interpretation of what we're seeing inside of the agreement, which is now completely opposite where there is no implied protection whatsoever. You need to execute a biorepresentation agreement. And on that last slide, we talk about enforcement. But this is still early days. That is what Polly and the leadership team captured from the conversations having at NAR midyear. But I'd like to remind everybody, there's 600 plus different MLSs in 50 states who may have slight, different interpretations and current rules, like actual rules in their state of how they do business, and more rules coming. We got murmurs from mid-year where people were mentioning that their state

is probably progressing new legal forms of enforcement. And so this is going to be very touch and go where not only do we have to pay attention nationally, but then localizing it for you guys. So if you, there's probably two sentences I want you to remember today, and this is one of them, right? If you do not have the biore representation agreement, per the rules being laid out, you cannot get paid. And if like Kendall mentioned, if you say your services are free, you're not allowed to own or earn compensation. And also you can go down on fee, but you cannot increase. So a very common question is, let's say you agree to X commission and the seller's advertising higher credit than what you agreed to or the builder's offering a higher co-op than what you've agreed to. to you were not able to variably go up but if in the reverse of it you you've agreed to a higher compensation with your client and for any reason at settlement or before settlement there's less

funds available either for a credit you know part of the credit needs to be used for an hvac or a roof you have the ability to lower your fee you just can't increase it so agents will only get paid they have a buyer, assigned buyer or listing agreement, and procuring cause, as we understood it, is gone. There is no more implied earned compensation unless it's in black and white. And again, per the paperwork prior to the showing. I'm still wanting to see this in practice. Anytime there's a rule change, there is what is said, and then there was what is implemented

at the local level. And again, that's just my experience over years and years of seeing this where this is what the statute would say, but the state can localize it, and the MLS rules may vary, right? And that's, back to the enforcement question. That's actually, for some of us who've lived through a couple of market cycles, once upon a time during financial crisis, I would take REO listings, and my seller would instruct certain things like, no one can enter this property because of safety issues unless they they sign this addenda. We cannot review contracts for 14 days. Only owner occupants can bid for the first 10 days, and they, in real behavior went against the MLS rules of that local MLS, and we would

get fined. Right. So we were in between a rock and a hard place where the customer was demanding certain behaviors because they were the federal government in most instances who had specific rules on how to sell their property that went completely, like direct contrast with what the rules of engagement that MLS said. So reaching back into personal experience. I'm fully expecting this to not be a one-size-fits-all

when it comes to enforcement and policing. So one of the advantages of this company is our size and scale. So we'll be getting real-time feedback across the United States. And it's on you guys to be our eyes and ears in the field. If you're seeing a behavior, give it back to your broker team, give it back to your COEs, reach out to leadership, because we want real-time information so we can pivot and agile, I'll respond to it, create new documents for you, amend current documents.

Again, our whole side of this partnership is to support you guys. It's to create the documentation we need in order to be able to navigate the shift. Because one of the things I've learned across my career is life is about 10% what happens and 90% what you react. Because I have these conversations very frequently right now. And there are very strong feelings because this is a, you know, most of us are the opinion, we didn't do anything wrong. And we're now being penalized. And so the realities, probably everybody on this call has very similar feelings, but this is the new information we have.

If we continue to serve families and making the largest decision of their career, which we think is a very noble profession, these are the rules we have to operate with. And for us, it's about being proactive, partnering with you in the field and getting new information as quickly as possible. so we're in the best position to navigate this shift and be able to serve families during this. What will probably be a very confusing time in the beginning, especially with the media, you know, putting out their clickbait headlines as we can expect. You know, I think you hit such a good point there, Leo, because there is clickbait, there is confusion. And so we wanted to make sure that we address procuring cause, but even more so we wanted to make sure that everybody understood,

but hey, what makes a buyer broker? Right? Like what does this actually look like? Because this is one of the questions, Kendall, you and I are getting quite a bit right now. Yeah, absolutely. And I think it is important for agents to understand when they actually need an agreement versus perhaps when they may not need one yet.

So, you know, there are questions about, you know, what does that look like? So what is considered brokerage activities? That's what NAR since in the last 60, 60 days has helped to define for us. And what we're looking at on the screen are the things that they've identified as activities that relate to being and requiring an agreement. Now, I would say what I would add to this, what you see on the screen is also virtual tours count.

So if you are at the home on behalf of a buyer to view, preview, video tour the home, you need to have an agreement in place before doing that virtual tour. Also, I do want to say just taking a phone call, maybe, perhaps, answering a few questions over the phone or performing some activity on behalf of the seller, right? That doesn't necessarily mean you need an agreement yet, right? And I say yet on purpose. But one of the things I do want to say in tying back what we talked about in terms of MLS enforcement and having these agreements, NAR also clarified that the MLS is required to receive a copy of the written agreement. But it can, but it's not required.

to. So, but it can request the copy as a matter of its local enforcement. So understand that it's important to have these agreements because you may have to produce a copy of it. So I think that's really important for agents to understand. Yeah, you know what? We all want the paperwork, right? Your broker wants the paperwork. We are, we already have a paperwork for the listing. And I think this is something that we're so used to having the conversation around. And Leo, you and I talked about it the last time we were all together, treat your buyers like you do your sellers. Absolutely. I think it's the biggest mantra we can remember because, you know, one of the things I've been talking about for the last 60 days is, you know, are we having to imagine the world

completely different from scratch or is it some other behavior that we are familiar with? And I think that's one of the key things when you're learning something or training a new behavior, it's like, hey, is there a parallel in my current practice that I can model? And the answer is absolutely. And, you know, for the folks who've been selling for decades, this is where your skill sets can come through. So what we're saying is in the seller side, in the listing representation side, there are things we can't imagine. We can't imagine taking a listing without a signed listing agreement, mostly because it's required by the MLS. And so, you know, for everyone who's been licensed a couple decades or even a couple weeks,

the concept of taking a listing without a signed listing agreement is unimaginable, right? It goes to a couple reasons why real estate is operates under what's called the statue of frauds, meaning that oral agreements are not enforceable. It has to be in writing to be enforceable. Oral agreements in other industries or in other moments in life are fully enforceable in the United States. Real estate has a specific federal statute that exempts everything from that. So for us in real estate, taking a listing without a listing agreement is unfathomable. It's that same thought process. And the other thing that we're saying to folks is all the behaviors

and systems that you've had on the listing side is what you need to focus on for the buy side. So what do I mean by that? When you show up to an appointment, assume you're in a multiple bidding situation for that piece of business, right? When we show up as a listing agent, especially in the last five, six, seven, eight years, there's such low inventory. We've always assumed walking into that appointment that seller is interviewing multiple people, and you have to show up with a strong value proposition that you can articulate. That's typically done through a solid listing presentation where you actually identify the services you're willing to do, i.e. signing the ground lockbox on the front door, maybe high-end video, maybe drone video. And when you show up,

you articulate your value proposition for the fee you're willing to accept. You also know all of your stats as a listing agent. You know your days on market. You know your market share in a subdivision. You know your list to sales price ratio. You have all of the points that make you stand out against other presentations. And so as an agent, you are prepared to compete and secure that agreement before you spend any money and invest any time in marketing that home. And so put your listing agent hat on and build out your buyer agent process. So I would assume including myself after selling real estate for a very long time,

I don't think any of us are prepared to articulate those numbers and it's going to be a new muscle we need to develop. So the way I'm suggesting you do it is call and interview buyers you put into homes over the last couple of years, right? Ask them what about the services you rendered were amazing? They were impressed with, right? Because there are things already do on a regular basis that you don't actually even put that much value in compared with the consumer experiences, right? So do you know how many times in the last year or two were you in a multiple contract situation and one? Do you know what the average concessions you receive for the buyer in the last 12 months

where it was it an average of two, three, four, six, ten percent, right? Is it is is the brag that you were able to find them a home in a week, in a month? You know, do you know the average showings to contract that you've been carrying? Right. And once you've identified all this stuff, because again, I'm making the assumption that none of us know a model because it's not a conversation we're used to having, right? So it's very important that we now develop this new muscle and develop these presentations that can be in my suggestion is while you have these people on the phone in assuming they're happy past customers of yours, which by the way

statistically most of them are, I would ask them to actually go to your social media preference, you know, digital footprint, meaning Google reviews, Zillow reviews, wherever you guide people towards and specifically ask them to review your buyer representation skills, right? Have them say, we were in a multiple contract situation and Kendall expertly negotiated, not by increasing price, but maybe negotiating a rent back. So it didn't come out of my pocket. I was able to give the seller an item of value that didn't come out of my pocket. and just being able to articulate what most of us take for granted, right?

We do this professionally, and sometimes we forget the level of service that we're delivering to consumers. So it's putting on your listing agent hat from a marketing standpoint, being able to articulate and explain that value proposition, right? Some of you do phenomenal jobs by introducing them to trusted partners that get them a better rate than they found themselves, right? You were able to identify a title or escrow company that had better fees. than what had been recommended them by somebody else, right?

That home inspector who was able to uncover a potential liability and either get them out of the contract, right? Because once we're in contracts, we forget that these are legally binding documents and you have to have solid timelines with solid contingencies to get the buyer out in case something arises. And if they want to move forward, be able to quickly get multiple bids from reputable contractors

and negotiate the proper concession. So again, I'm telling you guys stuff that you do second nature, but now you're going to have to be able to explain itemized. Just like on that listing presentations, I'm going to do X, Y, and Z. As a buyer agent, you need to explain. This is what I do. This is what we get paid for, right? Because we've all been in a conversation where somebody says, well, I just need that little key thing that you have and I can do this myself, not appreciating the fact that the average buyer transaction takes north of 80 hours or the fact that NAR's identified about 100 to 116. 11 specific tasks that we complete prior to.

And even Zillow who puts out a pretty good report about for sale by owner behavior and folks who've gone through the transaction without representation, one of the feedbacks they said that was very hard and it was a full-time job. I love that you crystallized all of that. And because Kendall, you and I've been talking about like, okay, what do buyers want?

How do we crystallize and focus on that? Like market demand, their purchase power, because right now, they're, purchase power, they're not sure. I mean, interest rates are at all time high. Your ability to negotiate as Leo has put down. And this is what I love that you've done for us in kind of breaking down this process and taking charge. Yeah, absolutely. And coach Leo spitting fire, y'all, just telling us how to do the job. I love it. Giving really, really, really great advice. Thank you, Leo. And Holly, you're absolutely right. You and I have been in the trenches really, you know,

working hard thinking about what agents need to know, how they need to rethink the whole process and do what they've already been doing, but take it to that next level, be more intentional, be more proactive, and how they manage their buyer process. So, you know, I would say this. It's important to start having conversations with your buyers prior to showing the house, right? And before that showing phase, you know, normally we go to the first showing and we use that time to build rapport to to build that relationship to get that client to work with us well now we need to build rapport and get them to hire us prior to that appointment and this is the thing guys

we are going to be asking a customer to agree to pay us a significant amount of money i mean just anything it's all relative but but we you know these are what they are in real estate and we are charging a certain fee and if you want to charge any fee that you decide to charge as an agent, you need to be able to show that client why they should agree to pay that to you, right? You've got to be able to articulate that value. And so, you know, you're going to want to change your process in that you're, you know, we're going to start having an appointment first, right? Maybe you want to meet with them in person, if they're available in person at a neutral location, or you can do it over the phone or, I mean, sorry, over Zoom or Google Meet or something

along those lines. So let's park right there because what you just said was really important. The Google Meet or Zoom, tell me why people should be using those two items. Yes. I think that one, I think it's some obnoxious number, but I think it's like 87 or 83% of people hire the first agent they meet. Okay. So getting face to face, getting that visual connection really matters when you're starting to work with a client, especially the fact that some of the people you're going to work with, yes, there's sphere of influence or people that already know you, but we also know there's a lot of people you're going to work with that maybe have only heard of you. They found you online or they were referred to you by a third

party. And so it's your opportunity to sit down with them, build that rapport, discuss their needs and wants. It's important to talk about the market trends. Show your leadership, show your expertise, your knowledge. Go over the numbers with them, what that looks like. Determine their financial comfort zone. Also introduce them to your partners, whether it's your lender partner and all the resources that you bring to the table. And then that will make it so much easier for you to actually negotiate your success fee, right, which you are now going to need in order to go to work for them. So, you know, having that professional strategy meeting with them is going to be critical to getting them to understand your value proposition, feel comfortable and confident in

working with you so that they feel informed, they feel empowered, they feel taken care of. And you need to be thinking about as you go into those meetings, how are your skills, how's your knowledge, how's your technology, how are the resources that you bring to the table going to best help them accomplish those goals. So, you know, thinking about these steps and kind of reordering them, I think is going to be really important for agents to, as they think about how they take charge of that buyer process for the consumer to feel. comfortable and to feel like you know what you're doing. So start to take time, agents, think about that. What is your, how is your new process going to be amplified? How is it going

to be more intentional? And then get comfortable talking about it, right? People will trust and follow a process. We've been taught process since birth, right? Going to school, there was a process. When you go to the grocery store, there's a process. People will trust and follow a process. So the more comfortable you are with a very proactive and intentional process with working with your clients, the easier it will be for your clients to follow you and to follow along with that process. Right. So those things I think are super important for agents to be thinking about. And, you know, so I recommend meeting with them ahead of time. 100%.

And one of the feedback pieces that we heard in concern, right, getting to sign a large. or a heavy buyer broker. And honestly, we've been paying attention to what consumers have been telling us. Like, some of your stuff is confusing. So at EXP, we've recently released the single property buyer broker because we recognize sometimes you just need to meet that person and build a rapport. Maybe you have a quick conversation, quick Zoom meeting, and then you go out and show the property.

And it's just a one time like, hey, are we good together? Are we going to mesh? am I best for you or you best for me kind of thing because that's important the consumer should have a choice and honestly you as a practitioner a business owner you should as well so we created the single property buyer broker and I wanted to give you a script that we've shared when we've met one-on-one and the regional rallies and things like that but we wanted to give it to you because in every state a buyer gets to choose their agent and when they do there's certain

paperwork that they're going to sign and when they sign that paperwork, it's now going to include the buyer representation or buyer broker agreement. And that will be that fee for service. Now, until you sign that, buyers need to know that anything they say could be used against them in a negotiation. Walk into an open house, say, hey, I just won powerball. Guess what? That's working for the seller. And guess what they get to tell the seller? So those are the things that become really important as we're building rapport to share with people, share with a buyer like, this is changed. You do sign these things. This is why it's important, especially if a legislative action is saying you must have a buyer broker agreement.

It's one of those, we order a pizza online on our phone. We know exactly what we're paying for. We order an Uber. We know exactly what we're paying for. It's the same going to any kind of professional service, whether your attorney or your dentist, you name it. You know what it's going, what you're getting. Why not us? Why not us taking advantage and taking care of the client? And that is what was so important to us. We wanted something that was an easy off-ramp for a conversation with the consumer so they can make a good decision and so could you in representation of them. Now, something we've talked a whole lot about. Before you go back to the single property, and this is part of my favorite part about this company's our agility, right? This was a demand

from you all, right? As soon as the settlement broke, you know, we got hundreds and hundreds of emails, direct messages, and people's main concern was, if I get a complete cold opportunity, meaning sign call, internet lead, right? Something's completely different. If it's a sphere of inference, it's a repeat customer,

there's a lot of rapport, they can meet you somewhere, but a lot of people, they're just trying to get into that property, right? And the overwhelming feedback from you all was, signing a six to eight page contract depending on what state you do business in that is exclusive with long-term commits and and you know you owe me the money no matter what was was a very you know not conductive uh form for what the rules came out with we are the first company to put one out period ahead of state associations a sort ahead of mLSs whoever produces the form in

that jurisdiction because we're listening to you right and by the way holly is working on 2.0 coming in weeks because we're getting live feedback. So, you know, we're your platform to support your business. Any feedback you're getting, if it works, what doesn't work, do you guys think we should improve them, amendment, create additional forms, right? Do we need two or three flavors of ice cream like a low, medium high? Right now we have, you know, this lower commit one, and then we have the ones that you guys use in your states.

And we're also going to give you language that we think works within the state ones. But again, this is a collaborative process. and we're proud to be proactively leading the way versus waiting until mid-August to find out what's going to happen, right? So we're testing, getting feedback, because ultimately you guys got to remember consumers will decide what happens, right? I think Kendall touched on it earlier where we truly believe we're a platform that supports real estate entrepreneurs to build whatever business they want.

Our three ingredients I look for is legal, ethical, and enforceable according to the rules of engagement. We're not telling you what to charge or what not to charge, what menu of services to offer, what many of services not to offer. We want to give you the tools for you to serve the customers that you serve in the most fiduciary way possible. And what we do know is that different customers have different level of needs. And so there could be a multiple offering. But what you guys need to also remember is this single form, as the feedback we're getting, could be part of a sequence of events, right? the cold lead leads to this agreement, maybe it leads to one or two showings where you kind of,

you know, both parties feel each other out to see if there's, you know, win-win chemistry of working together. And then you would potentially drive them to a full presentation, whether it's at an office or a coffee shop, at the kitchen table, where you actually get to articulate your full value proposition, that consumer fully commits to working with you for months on end where you will actually deploy lots of resources and time and energy. And then you get them to the the fully exclusive one. So don't think of this as an or, but maybe as an and, right? So it could be a first step to get them into rapport. And then, you know, because there's folks who said, hey, I still want to get the exclusive. Good for you. But we wanted to give you a tool so consumers didn't

have one more objection because, you know, even in the comments, I'm seeing folks saying in my area, that's going to be a harder sell. We hear you. And so, but the reality is if these rules go into effect, which we assume they will mid-August, this is what we're being told is required to do the business. So we were trying to give you the tools necessary to continue to serve families. You know, on my team, we have a statement and is having the best mindset, skill set, tool set. And what I want to take a moment to thank you, Leo and Holly and all the team at behind the scenes at DXP is that, you know, I see this as a tool in the tool belt, a part of an overall strategy. And I appreciate that our leadership took the time to think about that and listen to our needs,

our concerns, and try to provide tools in the toolkit so that as an overall strategy, as agents, we can be as best prepared as possible. And, you know, I do want to take a moment to thank you for that because I think that's important. Whether agents decide to use it or not, that's not, it doesn't have to be used 100%. It's not being required, that specific document's not being required to use. but to be used, but it is a great tool in the toolkit for when you need it, right? It's like having a screwdriver. Sometimes you need a flathead.

Sometimes, you know, you need. Absolutely. You have different tools. And that's really what we're about. And thank you, Kendall, and Leo. I think it's so easy to get caught up in what we're doing that, you know, give, we're passionate about giving you what you need. And we're passionate about how we take care of our clients.

and serve them at the highest level. And I know there's a lot of concern out there. Like some clients are coming to the table first time homebuyers and they're scared. That was one of the feedback pieces that we heard on that single property buyer broker. And a guy said, hey, I can't sign that because you're not, you're telling me you're going to ask the seller, but it's not in here. And we took that feedback. We put it into the buyer broker immediately so that at the direction of the client,

we can write this into the purchase. contract. We're asking the seller to credit the buyer at close of escrow. And what I appreciate over the last few weeks, we've seen the GSEs FHA, Fannie Mae, Jenny May all come out and say, look, we recognize that the buyer broker fee should not be part of the loan costs. And so they're keeping those separated, which is huge. But this is the key for you and I going to work on behalf of our buyers, we have to write it in the contract. If it's not an MLS and it won't become mid-August, we have to make sure that if our buyer needs help, we're asking for it. It's just like asking for the washer and dryer. We want to make sure that we're suiting up and showing up in the best way

possible for clients. Yeah, Kendall. Yeah, Holly. And I just want to pause and ask you a question because in all of our conversations over the last couple of weeks, I told you I was probably going to ask you this on air and I hope I don't throw this as a whammy to you, but you are a well-prepared woman. Agents are concerned about getting first-time homebuyers and VA buyers to sign buyer brokerage agreements, right? Or buyer rep agreements. How do what is your advice? Because when you and I talked, you have great wisdom about this. Like, how should agents approach this agreement in in terms of getting this signed off before going to see homes. I think I think two things.

One, when you are working in that segment of the market, first time homebuyers or VA, you have such a passion for those folks that is second to none. And so when you sit with them, the strategy is this is how I help help you. And I think Leo on our last call, he talked about, you know, you walk side by side with that client. You're there, Sherpa. you're their guide through the process. So when you're doing this,

I want you to sit and talk to them about what it looks like in totality of buying the house, right? Because when we talk about affordability, it's not just the price of the house. It's their insurance, right? Is it in a flood zone? It's their utilities. Can they afford the utilities that are on it?

It's maintenance. I've had first time homebuyers back out of buying a property because the home inspection came back and said, the roof's got eight years on it. In my mind, eight years is fantastic. For my first time homebuyer, they're like, we're planning on being here for quite a while. And that is a really expensive thing. If the seller won't work with us on the roof, we can't buy this house. So that's why going back to what you said in the very beginning, Kendall, sitting with your buyers and understanding their need, their concern, walking them through what it looks like from beginning to end. And also, I have

I find giving them permission. Sometimes when we go to buy a house or buy anything, sometimes it's just you have the permission to make the decision and that sometimes it's not a good fit. So let's cancel or let's not go forward. And showing them what this script does that you can write into the contract is empowering. It's like, oh, I've got another negotiating strategy.

I've got another way forward. I want to empower all of you. you as agents, it doesn't matter if it's a first time home buyer or a VA buyer. This is an opportunity. Now, I know for those of you who are so passionate about our veterans, this statement does not work for our veterans, right? Because this says it's coming from the buyer broker. We've got you. While we're waiting for the VA and we were part of the NAR legislative lobbying last week to our members of Congress around VA and modernization of that program. We are in development and we'll have for you probably in June a document that is a direct

seller to buyer broker payment of commission. So that way, if you're working with a veteran, you can pull that up and say, okay, you can authorize me on whatever house we go to look at before we show it. I'll call the seller, the listing agent, and ask, are you willing to compensate? And if they are, we'll send that over. They'll send it back. And if it meets, everybody's standards, great, then we'll go look at the house. But I'm not going to put you in a position that you're uncomfortable. So we've got that form coming for you. I want to protect our veterans and our agents who protect them as well. So that's coming very, very soon. Love that. Thank you for taking a time to answer that because I think it's just such a critical

question and thought process that every agent is out there concerned and worried about. And we certainly want to make sure we take care of all of our clients, not just any individual one. Absolutely. And so we've talked a lot about buyers, right? This is where we're all going to make the pivot. And and this is something that the three of us are super passionate about having been listing agents in the various markets, right? So when we're prepping a seller and I actually took a listing this last week, really good past client and I was like, all right, let's talk about what's changing. We may not be on the market when all this changes, but let's have the conversation because you're about to be a buyer in another market.

And so we walked through it all. We talked about marketing. We talked about the offer of compensation and what that looks like, concessions that may get asked for because interest rates are still high, what he's willing to do, the process. And then at the end of the day, his net proceeds. Because sometimes all of these things kind of trickle down. So you and I were talking a lot about open houses.

What are people going to do with open houses? as the new rules come across. Yes, yes. It is important to understand that you do not need a buyer brokerage agreement for holding a house open when you are working on behalf of the seller. Okay? So that has been made clear, right? So this is good news.

I know that was in the chat. Agents were asking, what do we do with open houses? If you are holding an open house on behalf of the seller, you don't need a buyer brokerage agreement for every person that wants. walks in the door. If you have an unrepresented customer either call you or, you know, want to to preview the home or an open house buyer wants to make an offer on the home, then of course you need to get something in writing with that buyer if you expect to get paid by that buyer or on the buyer's behalf for the services and the brokerage services that you are

performing on their behalf to help. Okay, let's pause there though. Because there was so there was so much right so one if you're doing an open house nothing needed until the buyer starts to cross that gray line and say you know i think i'd like representation and that's when that's like the trigger right that's why we wanted to set out what makes a buyer broker earlier in our conversation so what if the buyer's like hey i want to make an offer but i don't want an agent. Great question. If they don't want an agent, then I think that it's important that you make that clear with the seller and with the buyer what that means. You also should talk to your state broker because I know that every state is different, especially as it relates to non-representation.

We have that agency status here in Florida. So I definitely recommend you talk to your broker about that, But I would you should expect that without an agreement, you cannot get paid for working on behalf of that buyer. Yeah. And so this is this is the thing that we would say overall, make good choices and who you want to represent. Make good choices in what makes the most sense. If you're representing the seller, seller may not want you to represent a buyer. They may want to stay in single agency in that way. Okay. That same with calls for compensation. I'm in the conversation up front. And this is the other thing I would share.

Please don't make that call for your seller. Always call them. They're the ultimate decision maker. The minute Kendall calls me and says, Hey, Holly, somebody offering compensation on this, and I make the call of yes, no, maybe, oh my goodness, it's a danger zone. So please, please, make sure you're moving forward

on all of these things. And this is what I will share. All of your state brokers, we will be training on this for the next now and forever because it's always going to be an evolving process as new rules are created. We may have new forms that we create to better assist you in your business. But listing agent strategies, the opportunity to visit with your sellers right now is paramount. Beat them before the headlines do. Yeah, absolutely, Holly. And I would say this too, you know, to my listing agents in the audience, I just want to remind you that it's now more important than

ever to have a different type of conversation around compensation, meaning in the past, when you went into a listing appointment, you were advocating to collect a commission for both sides of the transaction. And now your job is to advocate for your compensation. And of course, justified the value that you bring to the seller. And you're going to continue to do that. But now you'll have to explain to the seller that instead of discussing compensation for the buy side today at the listing appointment,

we're likely going to have these. discussions as we receive offers, right? So the process going forward, right, is now that buyers agents are going to be working with their buyers to get on the same page of what that success fee looks like. And then in some cases, not all, but in some, we will see, and probably many, we will see buyers asking you the seller to help them pay their agent. And but again, reminding our sellers, this is always negotiable. And, um, and that, you know the other thing I would say is that offering compensation to the buyer's agent as a seller is also an incentive to the buyer right so now it's not just an incentive to the buyer's agent it's also an incentive to that buyer and so depending on the marketplace and whether it's a buyer's market or seller's market these are again negotiating tools that a seller has in order to get everything else that they want right in the transaction so it's still it's an option and it's just important to recognize the role that that compensation plays in that transaction for both sides.

I love the net and the negotiating strategy. And so one of the things that we, as we can get close to the end of our time together, the three of us, we were really passionate about hitting on some key things in the market that we get a lot of questions around. And so market strategies, I know Leo, that the three of us had a really healthy debate around aligning your paperwork with what we're,

was going on depending on the market you serve and kicking it off right away with new construction. Kendall, I know you see it a lot in your market. Leo, you've been asked the question a whole lot. What does that look like where we sit today and what we think is going to happen? Yeah, so depending on your market, new construction could be a massive amount of the inventory available to you or it could be a limited amount. And again, just very specifically what the rules say. you can go down, but you cannot go up. So what that translates to you is once you start showing new construction or potentially showing new construction, what would probably behoove you is to just be aware of the

compensation that's available, explain that to your buyer, and have an agreement that's representative of it because you cannot go up. So if you agree to a certain fee and the builder's offering more than that, you would not be eligible to collect that. So, you know, again, in practice, once a buyer chooses new inventory, they normally don't go back and forth between resell and new construction. So it'll, and again, anyone who says they haven't figured out is making stuff up because none of us have been through this new normal. And this is one of, this is a perfect example of we believe that will emerge best practices, but all we can do is work with the information we have today. So the information is,

an educated agent should know the inventory available in your market and educating your consumer. And that also translates to because a lot of the times the new construction bonuses are specific to your relationship with the builder. Meaning did you sell one, two, three, four transactions in a said period of 12 months? And so the bonuses are typically because of your performance. And again, it's all about education and transparency that you can actually educate the consumer. Again, depending on the market and the relationship, that might not be eligible to them. if they were walking the door and represented.

So what I think is going to come out of this whole process is transparency, transparency, transparency. The more completely upfront you are with your consumers and explain how you earn a fee for the services rendered, the less murkiness, the less confusion that will come from this process. Yeah, and just to add to that and piggyback with Leo saying, you know, agents, it goes back to being proactive in your process. If you know that a customer through your consultation or your marketing or your your meeting strategy call or that you've had with them that they're interested in new construction, do your homework ahead of time. And let me tell you why.

In fact, just recently, an agent on one of my team just went under contract on new construction and it offered a flat fee, a very low flat fee. I'll just say that much. And so knowing ahead of time what builders are offering is super important to you having those very relevant conversations with the buyer. Right. And so that way you know up front what it looks like. Again, if they're offering bonuses above and beyond what your agreement typically would say, you should do that homework before you have those conversations with your client. Know your market, know your inventory. That is part of our job.

That's part of our business. So this doesn't change. It's just a matter of being more proactive and intentional about knowing that information to how to time so you can have those very relevant conversations with your client. Absolutely. And the same goes when you start to strategically think about resort or second home markets. And a lot of our second home markets, folks come in and they're there for a vacation, they're there for the weekend, and their mindset is different.

And so you're playing the long-end. the long game. On average, it takes about five years for somebody to make a commitment on a second home because it's such a luxury thing to have. And so what I want you to consider is maybe you do a weekend or a week buyer broker, but your follow-up is so incredibly strategic, right? They wouldn't think of going anywhere else because of the value. You can continue to provide in your follow-up and your messaging and how you contact and reach out. And then when they say, hey, I'm coming up this weekend. You send them a buyer broker for the weekend.

You send them a buyer broker for the week. That way you're constantly in, in action with them, and you're having those conversations openly. But they get used to you. You get used to them. It becomes really important. We talked a lot about first-time homebuyer and VA. And I can't stress it enough, Kendall.

Like, with it comes to first-time homebuyer, set them for success. Walk them through the process. they don't know what they don't know. And so I love, we've got so many of our great agents that do videos online, explaining the process. And those are great things to drip on people to get them started, don't you think? Absolutely. Absolutely.

Anytime we can communicate with our client, we are building trust and rapport, right? So, you know, so much of communication is in what they see, you know, is in our our actions and the vision of seeing and meeting us. So definitely do those videos, do those pieces of content, allow that customer to experience working with you before they ever work with you. As one of the things my coaches always taught me. And it has been so important for allowing people to know like and trust me, sometimes even before they actually ever meet me because I give them quality content

I had at the time. So definitely such a good piece of advice. Love it. Now let's shift to investors. Leo, you worked a lot with investors. Kendall, I know you have to. So there's some nuances here to just explore strategy wise. Yeah. Again, investors have become over the last couple of years a bigger piece of the market. Right. So, you know, knowing your inventory of new construction versus if you were as a resort home or resale, understanding if they're active investors in your in your market, whether it's buy and hold or buy fix and sell. these institutional-minded folks have already baked in their expenses, right? So if you are now having these active conversations with investors in your market, it would be really good to understand the variability, right? Very large institutional customers who could potentially give you one, two,

three, 10, 20 transactions per year may have an amount that's already in their budget for this. And again, with those investors, if you can surface and identify off-market opportunities leading into ex ex-exp exclusives where again, one of the best use cases I've seen for XP exclusives is listing a rental property that could have six, eight, 12 months left on the lease. And because of that and not being able to show it with moments notice, it actually would violate the MLS rules to stick it in the MLS. You can market into XP exclusives and then find another investor in that town to potentially acquire it.

And when you're actually surfacing properties that are not on the MLS, that becomes of higher value activity for an investor who's looking for an edge in expanding their portfolio. So again, this new change gives you the ammunition to have different conversations you may not have had in the past because these rules are required in order to practice in the markets that we're going to practice. And so, you know, again, 10% of life is what happens and 90% is our reaction to it. I'm with most of you on the call that, you know, we completely agree. We were taking care of folks and not doing anything wrong, but these are the new rules that we're, you know, left to deal with. And so make sure that you're building the systems, you're building the talk tracks, you're educating yourself and the buyers and sellers in your market for the opportunities

that could be available to them. For sure. So let's set you all for success. What can you expect from your company? Right now we've got coming soon, several forms. Leo referenced the exclusive buyer broker, our 2.0 version. We're really focused on making it consumer-centric and easy to sign. We're under the firm belief that if it's confusing to you or the consumer, nobody should sign it. And that actually is a script we want you to use.

If you're looking at some of the forms that are out there, if it's confusing, you shouldn't use it, you shouldn't sign it. And we really want to be able to help you through that. We're also working on the direct pay seller directly to a buyer broker. That way we can work for our veteran buyers and take care of them while we wait for the modernization of the VA loans. We are also working on the EXP listing agreement. We're going to be taking that state by state because it's a pretty big lift. But we're passionate about it because we've seen some of the preview of the listing agreements that state associations are rolling out. and quite frankly, they don't meet our standard.

This is a brave new world, and we made the decision strategically as a company that we wanted to make sure that we are taking care of you, our agent, and our client. And so we are going to be rolling out listing agreements through the summer to better take care of our clients directly. And then, of course, as we get closer to the implementation rules and the offer of compensation in a buyer broker, coming out of the MLS. Most of your listing agreements have that now.

And so we will have to do a modification. And so we'll have that for you. It'll be super easy. We will be training on all of these things. Like I say, through the summer, we absolutely have your back. But marketing wise, I'm really excited because the marketing team has been very passionate

working with broker jobs on a buyer presentation, which is now live in the marketing center for you all. So if you didn't have a buyer presentation, Now you do. And we want to invite you to customize that to your need. We want you to play with it. Give it give us feedback so we can improve it for everyone. Also updates on exp realty.com. We've been writing, shooting videos with many of your peers throughout the US to actually feature walking through what it takes to buy a home.

See, we want to be able to speak to consumers as well and invite them to hire an an EXP agent, that is live on our EXPrealti.com website and we're going to continue to add to that. We want to be a resource to our consumers. We want to be a resource to all of you. So if you don't have the time to build those videos, great. We've got your back. And then finally listing presentations, we continue to improve those. Please customize these things to yourself and use them in your business. If you see something or you would like something more, please reach out. Let Kendall know, let me know, Leo.

We are happy to go to marketing and help improve that for you as we go forward. But we're just coming to the end of our time. We really wanted to leave you with some best practice tips. And Leo, you hit this earlier, but it's such solid goal. Will you break it down for us? Very simple. Treat your buyers like you treat your sellers, which translates to having a buyer presentation. as good as your listing presentation.

Know your stats. Go research them. We'll find out. And again, this is where mastermining with your peers, whether they're within our company, without outside our company, we will come up with the buzzwords like we have for listings, and you have to know them cold.

Don't be afraid of agreements. Knowing your contracts makes you have more powerful tools in your tool. Again, I'm reading as many of the comments as I can. Some folks said, I'm never going to use that. That's perfectly okay. You can actually choose to operate your business as long as it's illegal, ethical, and within the rules, however you see fit.

We're trying to empower you with as many tools. And again, some of your states will probably have different specific guidelines. Give that feedback to us as quickly as possible so we can, you know, make your specific agreements compliant with your states, which just so you all know, we've gotten feedback that there is legislation. So actual law progressing in many states as we speak that will probably, supersede some of the rules in the NAR settlement agreement that we will have to localize for your state. And again, when I was an agent, I would actually explain that 90% of the value I offered was after we identified the property, right? It's down to scripts, like, especially the first time home buyers, because my team would do biore representation presentations.

We would say, you know, now that you're actively looking for a home, understand that everyone you know is going to become a real estate. expert. And there's a high probability that the home we ultimately write a contract on, you will find online on a portal or one of your family or friends will send it to you. Once we identify the property, that's when my job actually starts, is executing that purchase-as-sale agreement, navigating potentially multiple contracts, getting you the best possible terms, getting you through multiple inspections, depending on what type of property in the location, navigating the negotiations, and getting you to a successful settlement with the terms that are best for. your family. So you need to proactively explain where the value you deliver is. Because if someone

thinks all you do is unlock a door, this is going to be a much, much harder conversation to have going forward. Yeah, Kendall, you and I were really passionate as we were putting these best practices together, the don't be afraid of agreements. You feel so strongly about this. Yeah, I know a lot of you out there are ultimately just scared, right? These are big changes. They, they, they, sound small, but they're huge. They literally change so much about how we've always done things, right? And it has nothing to do with the impact they were intended to have, right? This isn't about how much we charge. This is just the way we've done business. It's changing a little bit. And I want to tell you guys that don't be afraid. Get knowledgeable, get educated, right?

The education, and honestly, too, when we think about what it's just a lot of times a lack of experience and this is the beautiful thing is it's new for all of us this new world is is new for all of us so there's no brokers that has an advantage except for us because we're out there talking about it and we're out there doing something about it but you know there really is you know an opportunity here for everyone to really have a huge impact on how we help our customers right and that's what's about at the end of the day it's the consumer it's the customer, right? And as we do our job exceptionally well, we will prevail, right? We will thrive in

this environment. So get comfortable with your agreements, learn them, understand them, leverage them, use them to get the job done, right? They can work for you and the benefit of the customer. And honestly, go to the state broker trainings. We have some fabulous state brokers in our company. I mean, truly, they care. And they work so hard. I've sat in so many, already in these last couple of weeks with them. And they are doing everything that they can to be as prepared as possible ahead of the game and ahead of the changes so that we can support you and help you through and help you navigate all of these changes.

So don't embrace fear, embrace courage and embrace the change. And let's move forward together. We're so grateful that you guys would take time out of your day to be with us. And truly, we are in a professional's market. As we go forward together, we are committed to helping you thrive. We're committed to helping you communicate better. And we are also incredibly committed to receptive and of your feedback. So if you see something, please reach out to your broker.

Please reach out to any of us. We want to take care of you as we go forward into this new next. And of course, as we learn more, we are going to be front and center to be sharing with you because we're not afraid to talk to you directly about what we see, where it's and that we're going to learn everything together. So thank you all for your time today. I just so incredibly honored to spend any time with you. Thank you, guys.

Thank you, everybody. Yes.