KGCI: Real Estate on Air - The Ripple Effect - Unravelling the NAR Settlement (Part 1)

Episode Date: August 23, 2024

Real tour. Yes. Really torn. Yes. Welcome to the show. Thank you. Thank you. Yeah, yeah.

So I've been rocking with us for a long time. And one of the thing Ed and I talked about is that we want to make sure we stick with our day ones, right? No shots out to new people we meet. And it's all good. But Robin, you've been instrumental and you do, like you work this thing. Like I know you, but you work real estate. Like you truly work and live real estate every day. And that's a testament to you.

So shout out to you. Thank you. I appreciate it. Red hot. So the other thing is, right, y'all don't know. this but today and again this is this is what we're talking about like again i know everything in social media right now and everybody's just it's going crazy out there everybody's uh what do you call it a newscaster man it's like it's like i got to be the first to you know i can't even look at the news in the morning

before i got so many text messages about what's going on and all that kind of stuff and i'm like thanks but you know i got CNN i can go look at it but but today is actually the my 25th alphaversary Oh wow. So 25 alpha. Happy Alpha Versa. Yeah. I've been an Alpha. Yeah, Alpha Phi Alpha, man.

The coldest, oldest. We started this thing. Let's just be real, right? 1906. Okay. And shouts out to John C. Smith University where I graduated, my undergrad, and I crossed over there and all good stuff. But Alpha Almacron.

But 25 years, man. That was, you know, and I'm still in touch with those brothers. So my line brothers, all ten of us, which was pretty super cool. But yeah, March 27th. 1999. Wow. 199. So 25 years, man, number four.

My line name. My line name. Uh-oh. My line name, well, my online name, I got to have two of them, right? So when I was online, they gave me a name, right? So that was monumental. They gave me a line. So shout out to y'all crossing that now.

Do you even still do that? But my online name, what was it? I don't know. It was like something crazy. I don't even remember. But my line is, my line name is crucial conflict. And that's stuck with me, so people understand. So, so appraud.

So, shots out to my DP, Dennis Humphrey, man, because he saw that in me at the young tender age of whatever I was in 1999, but he saw that then. So that kind of stuck with me. So crucial conflict number four. So he saw that you haven't been to go for it or anything. Man, back then. You know what I'm saying?

Back then, right? Yeah. Back then. So, yeah, shots out to them. Shouts out to the Pharaohs, man. We did that. So it's pretty dope. Pretty dope.

Pretty dope. Pretty dope. Pretty dope. But yeah. So, so what's going on in your world, sir? Oh man, it's just a lot of different, you know, potential changes that can take place, you know, the lawsuit with the NAR going on with the, you know. National Association of Realtors. Yes, yes, yes, yes, yes.

So we got right, we got a red hot realtor here to talk about us. Yes, we can balance this thing out. You don't see what her take is on all this testosterone here. And then Robin's going to come in land softly. Yeah. Don't put the pressure on. Gotcha, gotcha. So, so ladies and gentlemen, what you guys don't know.

And again, I'm a mortgage lender. Ed and Robin are both brokers and charges and things that sort. But they're realtors, right? You both been on the listing and the buy side. So they get it. But NAR, that's the National Association of Realtors. And basically what's going on is that there's a lawsuit. And let me just preface this, right, depending on when this airs.

There's other lawsuits out there. But the lawsuit that we're going to speak about that's been out there waiting for a judge to sign is a $418 million lawsuit, where basically there's some folks that it was a class action. So they felt like there's some things that was done wrong or they were things that weren't communicated or whatever the case may be. And some people about to get paid, man. You know, so talk about that $418 million. You know, some people that's getting checks.

Yeah. So, so shouts out to them, right? The thing that I'll say is that for everybody is go read the document. Like if you are a, if you're in this profession, you owe it to yourself to read the document. Like don't go read Diddy's document because with Diddy's document. because what diddy got going on? They ain't got nothing to do with us. Unless you're getting in the music industry.

It had nothing to do with it, right? But definitely, I would say, definitely go read it. And if you don't understand it, digest it, you can chat GPT it. You know, they'll give you the kind of the cliff notes of it. But, you know, it's things that's going to change the industry forever. And it's going to change it, I still say for the good, right? Because every change that we've ever had, it's always been for the good. It's always been for the good.

Is it hard? It's like pruning, right? nobody likes to get pruned. Yeah. You ever, I ain't never pruned a plant, but, and I don't like prunes,

how about that? But, but, but, but, you know, there's some big giant raisins. But when you talk about pruning, right,

Ed, it's things that you go through growth-wise. Like, we are all, can I say we over 40? No, I'm pretty out of that. All right.

So, so we all over 40 at this table, right? We all over 40. Yeah, yeah, and we can say that, you know, we've gone through life.

Right. And life has its challenges and things that sort, but what should take? What is your take? Let me tell you my take. My take is that the change is needed. Yes, the things are it will come down.

We're going to talk about some of the specifics of the changes, right? Right. But at the same time, my take is that it was needed. It was needed. I think that personally, for folks who can't adjust, they may need to exit stage left. Right. And that can be both on the lending side and the realtor side, right? At the same time, though, it's one of those things where we are all professionals, right?

We call ourselves professionals. The other day, I had a question, I had an important question that I wanted to ask my doctor. You know what he told me? Send me an email. Oh, wow. And you know what he said to? Give me 48 hours to respond.

Oh, wow. That's what my doctor said. So guess what I did? Time again a new doctor. Guess what I did, though? What? I sent that damn email. Yeah.

And I'm waiting right now on my 48 hours. You wanted that answer. Yeah, I mean, but that's what it was, right? Right. That's his process. Right. There you go. That's the process.

But he explained that to you. He explained it to me. Up front, right? Even though you didn't like it, you were like, huh? But that's what it was, right? Yeah. I called the office, you know, and she said, hey, Terrence, I know, I know you got an appointment coming up and all that and stuff, but you got to send an email and he'll respond within

48 hours. Now, did he used to respond to you differently? No. Or was this something new? Well, I never really had a question before. Okay. So I didn't know. I didn't know because I didn't have a question while I'll wait to my appointment and go and,

you know, we talked then. Of course, he'll give you answer right now. friend of him, but he said, hey, I got meetings, I got other appointments, send me an email, and I'll respond, I promise. I think all this stuff that's going on, I think if you really, if you really doing the business the way it's intended to be done, it won't be too many changes because you're supposed to be explaining to your client what's what anyway. Right. So I think it's going to make us be more cautious on how we explain to make sure that, um, our sellers know that they have a choice.

Right. You know, people thought that that was the case. Everybody knows that things are negotiable. But with the lawsuits, apparently some people didn't know that they can negotiate their commissions. Now, as far as me,

I sit down with my people. We talk. I find out, like when I'm talking to a seller, I find out why it is they want to sell. You know, how much, what,

you know, how much you want to, You want to talk to a lender so we can get you pre-approved to see where you're going next. And then we figure, we talk about the numbers. Like, how much do you need to make to make this make sense? Yeah. And it may be less than that 6%. And we work it out.

So that's how I've been doing it, you know, for years. Some people, you know, they say, hey, my fee is 6%. Three and three. That's what it is. Right. So what's three and three? Yeah, to explain to the 3%. So if you're charging a seller 6% to list their house,

in most cases it's 3% goes to the listing agent for this in the house and the other 3% will go to the buyer's agent Right so when you When you break down this 6%

Right Because that what is it What do y'all talk freely Like what did this 6% come from Is this a number 3% It could it be 8% Could it be 10% Like what is this

What's this percentage come from? So actually with commissions While we're in this mess now Right Commissions cannot be set Right We can say this is what our firm charges. Correct.

The firm should have a guideline or, you know, a lot of brokers will give agents that freedom to kind of charge in a certain range. Okay. But we have to disclose, like, as to have those conversations, you know, this is what my firm charges or this is what I charge. However, everything is negotiable. Everything is negotiable. Right. So I think the part that got us into this 418 million reasons, of what's going on is that the per negotiable

probably was absent. Yeah, people dropping the chopping block and saying this is what it is and all this stuff. You know, tying the hands. Yeah, because I'm a mortgage lender, right? I've been doing it 20 years. I never knew where the number came from. Yes, I've been in North Carolina majority of my career. Yes, I'm licensed in other states, but I never knew where the 6% number come from, right? Like, show me.

Now, we originated from originally. I don't know. Oh, yeah. That's been the norm. It's been the norm. It's been the norm. Gotcha. So it's the norm. not say this is right so so some some realtors charge more right what I was I was going to say seven eight yeah yeah so it can it can it's a number right but the same time is that do you has it been broken down for folks to understand why I'm being charged six percent or not even why but what goes into the inclusion of it right and I think that's where you started you was like three and

three but I mean I know other brokers they'll say okay time out we're going to break down exactly what I'm going to do for you as far as from selling your house these are the things that's going to go into it from open houses to pictures to stage in homes and things of that sort and so that's 6% that you're paying that's what that goes into

right so if you need me to stage your house guess what it might is going to go into that 6% if you need me to take pictures and post drones and all that kind of stuff matiportes marketing right so so so it's going to go into this number that we're talking about right so a lot of times because again we both have had

conversations when that CD come out, right? Because again, nobody knew, right? Because when people say, and then let's talk about what the lawsuit says. The lawsuit says that going forward, a buyer commission cannot be placed into NMLS. Right. That's what it says. It says a buyer commission cannot, right? So the buyer agent. So what does that mean? That means that if I am a buyer and I am going out to buy a house beginning on July 1, technically me as a buyer, I have to understand that I am responsible for potentially. I'm responsible for my buyer, for the buyer commission. Right. So if I'm going out, looking for a house and I need to, I need to get one of y'all

two services, right? Y'all, we're going to have a conversation when I call you and you're going to say, hey, by the way, my commission is X and yes, you are responsible because beforehand, the seller was responsible. And it wasn't that the seller was responsible because then I'm about to get me, I'm about to get sued. The seller wasn't responsible, right? The seller was already paying for it. So I guess the seller didn't understand or the seller didn't, wasn't told that, hey, to that, let's go back to that breakdown. Let's Rwain again, right?

The breakdown of, hey, our commission is X. Within this commission, it's going to take care of my commission as your seller agent. By the way, it's going to take care of, like you said, staging, marketing, advertising, all that good stuff, right? And then, by the way, also, right, because we want to make your home attractive to other buyers, those buyers, those buyers, is going to co-take care of their agent and their fees. Correct. Correct. Things that sort.

So that's where the missing of the whole part of it. Am I almost there? Yeah, you're there. You're there. So it's just, to your point, just explaining that up front. So maybe some real tours. I wasn't there. I don't know.

Didn't do a good job of explaining that. So come close and they see that 6%. Right. Come out of the proceeds that they're supposed to get. They're like, hey, wait a minute. What is it? What is it? I'm paying you 6%.

No, you know, you're paying me. My broker, you're not paying me. Right. And let me back out. So you're paying my brokerage to list your property. And then you're also, we're co-opping with the buyer's agent and their broker and they're paying the other side. Gotcha. But we shouldn't be having those conversations in closing day a couple of days before closing.

That should be up front. That should be up front. Yeah. Gotcha. When you take, when you sit down and have that conversation and say, hey, I want you to hire me and this is why and break down that agreement. Right. step by step line by line that's what it is

so again right we're sitting here and we're here today right based off of the lack of communication right and I think also to your point right to your points and y'all some OGs in the J like I'm giving them that props you know both Ed and Robin has been doing this a large long time so it's not like they're

new to it and there's nothing wrong with anybody that's new but when you get into this thing it's like you have to understand like the breakdown and intricacies of it ain't what you say right well, it's not what you know is how you articulate it. Right. And if you're not articulate in the correct way, just even me,

right, if you don't articulate the correct way, it can go down a real slippery path because it ain't 6% right, or it's not this, that, and third because I just do it in my small mind, right? If I'm selling a house, I'm not in the position to advertise, right? I'm not in a position

to market. Yes, I'm a mortgage lender, but if I'm selling my house, even me, I'm going to seek a professional to sell my home because one, I don't want nothing to do with it, right? But then at the same time, you know, because I'm cheap, I'm going to make sure that I get what I pay for, but also I want to make sure that it's done just in a professional and it's done in the right kind of manner, right?

I want to make sure that it's advertised. I want to make sure that it's staged properly, whether we use my stuff or y'all going to bring your own stuff in. I want to make sure that, guess what, my house sell ASAP, right? I don't want to sit around for a whole lot of time because I'm trying to be too cheap. And then it's written on the proper paperwork to protect you. You want to make sure that, you know,

if somebody's coming to look at your house, then they're being vetted. Like, you know, they're pre-approved. They're not just coming to look around and scope your house out to set you up to wet you up. You know, so you need a buffer there. You need some, you need a professional. Right, because that's the other part.

That's protection, right? Right, that's part of protection. Right, because that's the part of it. in. So when you get the NAR, which again, National Association of Realtors that they chime in here, it's like, okay, you're doing everything to protect the industry, which I hear, but are you doing everything to correct it? And I'm not certain that the results of their decision is actually going to go forward and protecting, right? Because again, if I'm a listing agent, right, and I'm hear from you guys if I'm if I'm a listing agent and I'm going with my client and I'm going to

explain to him okay we got to break down well the client all they hear because the media shouts out to y'all but the media all they're saying is that you don't need a buyer agent you don't need this or or did you know that you needed one or did you know that you that there was I mean so it's all these negatives right and those are the things that have to be overcome because let's just say it right and I'm going to say it because nobody picked us up yet but when you pick us up you know what you're getting we black yeah right we black And we black, and this is not an industry that we've always been so successful in. Shouts out to us and shouts out to our Lord and Savior Jesus Christ for ensuring that we are

successful and ensuring that we get what we need to get. But that's just call it what it is. This has been a good old boy business. Yeah. It's been what it's been. Right. But again, when we come in with our flavor, with my hat backwards, with our hoodies on and with the hat on and all that kind of stuff, and we shout now saying, hey, five, you know,

we've arrived, right? We've arrived. Same as plus. Right. We've arrived. We've arrived. So, again, when you say you've arrived and you're kicking in the door, it's like well time out who are you who's standing to lose the most and i was with regards to

saying that your buyer commission now has to be paid by a buyer who stands let's just be real who stands to lose the most so that's what i was thinking um you know our our community is always hit the hardest um i think we're underserved um so my fear is that a lot of people will get caught up into the hype and feel like they don't need a buyer's agent they don't need to pay for one short short change themselves on that, start purchasing property without protection. Yeah. You know, when you got to pay your due diligence money in North Carolina, that can be anywhere between what, five, you know, 10, 20, 30,000.

So if you don't have an agent protecting you to look over those inspection reports and then negotiate things on your behalf, you can potentially buy a house or lose money and you ain't have to lose money all you had to do is secure an agent and the money that you would have potentially lost is going to be more than what you would have paid just having an agent

so my fear is people get caught up into the hype and think they don't need an agent and end up losing on the back end because you either pay up front or you're going to pay more on the back end and you're going to he just said it, never mind but you give what you pay for.

That's it. That's okay. So, okay. So let's, Let's move into the fun direction, right? What, what, from a listing standpoint, and we give this free game, right? So I'm sorry, Robin, you give them some of your secrets up. But when you are going into a potential listing appointment, one, let's break it down. What is a listing appointment?

How did you even get the listing appointment? And what does that, what does that conversation even sound like? So a listing appointment is when you actually meet up with a potential seller, someone that wants a seller house. It could be a referral, somebody in my spirit of influence, a past, client, a friend's neighbor. It can be a co-lead, somebody who just came on the website, somebody who's listening to free game, you know.

It could be anybody that somebody that wants to sell their home. And you meet up with that person that becomes a listing appointment. Gotcha. And that's when you go over, we uncover, like Ed said, the first thing we want to do, we want to let them talk. We want to uncover why they want to sell what their needs are, what their timeline looks like. Right.

And through that, we build a conversation. and we go into, you know, basically, like, I'd like you to hire me, but if you want to hire me, we got this listing agreement. Correct. That's where that document comes into play. Okay. That outlines every part of what that looks like. And then as a real tour, you know, we go over those intricate parts and we let them know, full disclosure. Everything is negotiable.

Okay. This is, you know, what I'm giving you. This is what I'm offering. Right. Right. And it's up to them to decide if they're, you know, if they want to oblige, we can work it out. We can talk it through. But as agents, as real tours, we're responsible for making sure, you know, this is somebody we want to be our client.

We have to have their best interests at heart. So we can't go into it thinking about their commission. We have to go into it really uncovering their needs. But the most important thing you said to, communication. It's communication. Communication, disclosure, breaking everything down. And learning your clients, you know, we wear so many hats. Right.

Relationship. We wear so many. And we have to put on that kind of psychology hat, like figure out what type of client I have here. Okay. You know, how do they like to be massaged? How do they like to conversation? How do they like to receive communication? So you learn all that or learn as much as you can through that.

Right. So you'll know, because some people understand off the back, and you know that because of the feedback they get back. Right. And then some people, you sit in a couple. you're sitting across the table or wherever and they're looking at you sideways so don't take that we can't take that for granted we have to go back and explain

explain explain explain because we want to make sure we put all our cards on the table that protects us that protects them so I like and I'm sorry I love what she just illustrated and broke down right because that's the way it's supposed to be done ladies and gentlemen straight up and

for me right because again I've worked with a ton of folks that's just not how it is No. And, I mean, it's very transactional, Ed. Like, I mean, folks are just in this where it's like, hey, you ready to sell your house now? Because we're in a microwave society, so everything is done quick. So that's the way it's supposed to be done.

Right. But if somebody's like, yeah, Lane, I got to get this house on the market. I got to get it. I got to get it. Sometimes the way that it happens is that, you know, okay, you lock it down over the phone. And you send them, you can send them paperwork through DocuSign. but they don't even know what they sign it. So that's where I think the confusion is.

It's still our responsibility, even though we send it through docusign to spell out the number. I mean, at least the numbers. What you're paying, what you're getting for what you're paying, how long the term is. It's a contract, but it's a contract where I can be fired. You know, some people don't even know that. So how legit is this contract? And I don't like to call it contract. Paper word.

It says agreement because it says agreement. Because people get, you know, it's a contract. Oh, my God, you're going to lock me in. I'm, you know, be in jail. No, it's an agreement. Okay. But there are stipulations in that agreement and there are things in that agreement that say,

if I'm not doing my job, hell, if you're not doing your job, you're calling me at 2 o'clock in morning. Texting me, responding to my messages at 3 a.m. When you get up to party in the middle of the night. Right. You're going to respond back? It wouldn't be godly. But, you know, we have that.

to allow someone to walk away if they're not serving either, but that agreement lays all that out. I'll fiduciary duties to that person, but also what we expect from you as a client. Yes. I like it. I mean, no, it's broken down the right way, and when it's broken down and it makes me understand, then I'm more susceptible to be good with the agreement, right? Because like you said, it's an agreement. It's something that we're sitting down talking about, and we're going through there. So let me just go back again, right? So, okay, in the agreement, you've broken down and saying, hey, this is what my responsibility is, this is what it is. But now here comes this part of the commission part, right?

I'm going to keep hammer it. Here's the part of the commission part. My brokerage or the brokerage of EXP or the brokerage of Realty One or whomever, we charge X percent, right? So we charge 6 percent, right? Understand, we charge 6 percent. But because of this new change where it's now you're talking about me listing agent, right? Right. Are you, do you go into it?

And I know y'all answer, y'all going to say yes. But now you've got to be going into it where it's like, hey, I'm including an inclusive amount of commission so that your house will sell. Correct. Right. I'm including that we got a buyer on other side that do you have to pay for the buyer? No, you don't. However.

That's the important. Right. Right. Right. Do you have to pay for the buyer? Right. Right. Do you have to pay for the buyer?

No, you don't. Ladies and gentlemen, you do not have to pay for the buyer commission. However, do you want to sell your house by the date that we just talked to about it? Do you want to make sure that you, you know, that when people pull your house up, they're going to pull up the first one and they're going to see it? Because to your point, the NAR said, you can't even put in there. There's a buyer commission. Right. Right. You can't put in there. So nobody knows. So people don't know until they do what, until they come. Right. Which what we know today. What's going to happen tomorrow when it's still left the drop? I don't

know. But what we know today is that they can't put that language in there anymore. Yeah. Just explaining to them that this is, you know, these are the advantages of you co-opping and paying a buyer agent. Right. You can, you know, dies, you know, potential lawsuits. Because the lawsuits are coming. I know we're talking. We started talking about lawsuits. Right. My problem is that you can... I'm looking at a fly drone girls. I'm waiting for to give me the eyes.

So we're still good. Okay. All right. So she's going to wave her hand when she says chill. But go-hoo. So if a buyer is suing you because they said they didn't, that you listed the house and you knew that the HVAC system wasn't working and you sold it to me, here we go right back to the lawsuits.

Right. So you want to explain to your seller just the advantages of them co-op. And they still can say, no, I ain't paying nothing. Right. So that's just another set of issues, but it's their call. It's their call. Right. But it's always been their call, though.

And it's always been their call. I just think that it's going to be hard. And I know we're going to have part two here and we might have even more parts and all that after that. But part two, we'll talk about the buyer's side. So buyers, please stay tuned because we're going to talk about y'all. And I promise you it's going to get. it's going to get funky in here.

But with that part of it, though, from a seller standpoint, it's just going back to the seller has to understand too because you said, hey, well, we're going to sell this house where you're going. Well, that seller is going to be on the other side of this transaction too. Because they're going to be looking to buy something, right? And they're going to have to be coming somewhere if you,

and we're talking about existing homes. I haven't talked to no builders. I don't know what the builders even stance is right now. I think they wait and see how things shake out. But again, when folks want to continue to move this inventory, right, when they want to move the things, they're like, look, I've got to do what I need to do to make sure that that buyer is comfortable enough to get into this transaction. And what makes a buyer comfortable, mostly is their pockets.

So if you can help them with their pockets, then that's what's going to help move the thing. But I guess the part of it is that, okay, if I'm selling a house and I've negotiated the commission, we're going this, that, and the third, right? Why wouldn't a seller want to pay a buyer commission? because what advantage is that? Because they get to keep more money in their pocket. So they get to keep more money in their pocket and maybe they can make more adjustments with the price that they're listing their house.

So a seller would say, I like that. So you said, hey, they get to keep more money in their pocket. But at the end of the day, it's all about mortgaging, it's all about your equity in your house, right? What you could have sold the house for. Right. So I hear you, you're right. but that amount that you you potentially keeping is to do what like you know I mean I get it but

it's like what am I sacrifice in the other end right everything has you know if it's so 500,000 five times six right that's that's 30 right so we're talking about if we're found a 500,000 on house y'all come to me y'all telling me y'all charge me 30 grand right so 30 grand off the top so with that 30 grand technically maybe 15 to the buyer 15 to the seller agent right right and I'm looking like man that happened quick you know 30 grand 30 grand is going. Okay. So 30 grand is gone. Maybe I save 15, but let's talk about the struggles. To your point, I got to save my money, Ed. But what's some of the struggles that I'm going to, if I save this money from not paying a buyer agent, what are the things that I'm at risk for real quick?

And can we do this within 90 seconds? No, we're probably going to have to hit that part too. All right, but at least start it. But what things am I at risk with? you're at risk of having a buyer come to your house that's not actually a buyer. Thank you. Right. That's what I'm going with it, right? And you went down, so thank you for taking the bait because I think it's a protection standpoint now, right?

It's a protection where, okay, you've got buyers who haven't been, like you said, haven't been vetted. Who I know this might be dude that just got out of jail. Respectfully, I'm sorry, but it could be the crazy person that just said, oh, I'm just here to buy, look at the house and all that. And all of a sudden it's like they're not, and they're not represented on the other side because guess what? They don't have the money to represent them.

If I just show up at my house right now and say, hey, I'm here to see your house and all good stuff, you hear what? Right? Because again, right? Think about this, right? Who's there to make the appointment? Thank you.

That's what you're, right? Or to know that you are who you say you are. So but guess what? But guess what happens? Guess who that becomes? Becomes you, list an agent. It becomes you. Yeah.

All of a sudden is you. All of a sudden is you showing and having to represent this person, but not receive no compensation. Nah. But he's going to say it. I let him say it. We ain't doing it. There ain't the way to doing that.

Yeah. Yeah. But that's where we at, right? Yeah. You feel me? I'm talking about you listing agent. Yeah. All of a sudden.

All of a sign is in it. Oh, your son. Hey, Robin, where are you at? Where are you at? That's what I'm doing, right? Yeah. Because the first thing I'm going to say, have you spoken to your agent?

Exactly. I ain't got one. Exactly. You got this, you got my money.