This week, Todd Tramonte takes on the NAR lawsuit, breaking down all the major changes agents need to know.

This is Part 3 of our 4-Part series on this topic. In this segment, you'll discover who's really going to be negatively impacted by the NAR settlement, the good and the bad news coming to our world, and Todd's best mindset to navigate through industry changes.

In Part 1 of this series, we discussed the changes coming our way as a result of the National Association of Realtors settlement, and how agents can adjust their activities so that they can turn this new chapter of our industry into a massive opportunity.

In Part 2, we delved deeper into the nitty gritty of adding value, and how to do it early in your interactions with a buyer, so you can quickly close those Buyer Agency Agreements and guarantee a conversion.

This all sounds well and good, but let's not kid ourselves here: this lawsuit is clearly going to have some negative effects for someone, right?

Who the NAR Settlement is Going to Affect the Most

Todd jumps straight into his answer, and warns: "I might actually surprise you."

Because, as it stands, he believes that it's homebuyers who will primarily be hit by the settlement.

Second after that, according to Todd, will be cruddy agents.

"I mean no disrespect – but if you're bad at your job, and you're not trying to get better, I don't think you should be representing people in these huge transactions with monumental implications, anyway." he adds.

Now, what if you're an agent or realtor who's been working hard, but hasn't seen much activity in the last few months?

According to Todd, that's a separate bucket of people. And those professionals might actually see their business grow now that the dirty agents are going to be disappearing.

So let's break this down. 

What will it mean for our industry if homebuyers and not-so-great agents are negatively impacted by the NAR settlement?

How Homebuyers Will be Affected

One would think that more contract transparency and the need to sign a Buyer Agency Agreement early on would mean that the buyer will be better educated on what they're paying for.

And while that's true, it is also true that many agents will be poor at explaining things and delivering the necessary documentation – like they've always been, with things like disclosures or listing agreements.

So, while on the one hand, smart buyers will see through this and will choose agents who are better prepared, many buyers (and especially first time buyers) might end up more confused than before.

Todd believes many buyers will understand this change to mean that they need to pay their own agents out of pocket, and they will either:

1. not do it an be left on their own, or
   
   
2. be left with cheap, cruddy agents, or
   
   
3. because they don't have the cash to pay for an agent, and they don't want to be left on their own, they'll delay buying

While this issue might be solved eventually through the financing window and VA, as it stands, these are three potential solutions buyers might resort to.

How Bad Agents Will Be Affected

This one's pretty self-explanatory.

Lazy, part-time agents that mostly work with buyers will be negatively impacted by the NAR settlement.

A lot of brokerages that are almost entirely funded by those types of agents and those types of clients, will definitely be negatively impacted by the NAR settlement.

And finally, real estate teams running sweatshops with low level training, playing the numbers game, hammering leads and not offering any differentiation in terms of service, will also be negatively impacted by the NAR settlement.

Now, if you're anything like us, you're seeing this as a massive, once-in-a-lifetime opportunity.

The Great News

If there's one thing we want you to take away from this post is this: this new arena of real estate presents a massive opportunity for agents, brokers, and realtors who are great at their job (like you!).

Here's why:

Let's say you have a seller and a buyer, and everyone's assuming that, according to the NAR settlement, they're all going to be paying different commissions. 

The seller thinks: "No, I'm not going to compensate a buyer's agent, and I'm also not going to be dropping my price."

The buyer thinks: "If I have to pay for my own agent, I need a lower price."

There's a thousand ways we can bridge that gap. 

But until we do, we're going to see stagnation in the market, and either we'll lose value because of that, we'll lose demand, or some combination of the two.

So… who will win here? The agent that can educate the customer well enough, and fast enough on this new world order.

And the best way to do this, according to Todd, is to speak like you were teaching a class to a student, so that they not only understand it, but are thrilled to sign these agreements and are excited to have someone advocate for them.

That's what you should be working on, and what your new script should be right now.

How can you explain the new changes in a way that the buyer feels like you're on their side, and are happy to have you representing them and have exclusivity with you, and not be taken advantage of by other agents?

The Concept of "The Remnant" in Real Estate

Now that you know what you should be working on right now to thrive in this new arena, let's ease your worries by breaking down one of Todd Tramonte's concepts called "the Remnant".

Let's assume the worst case scenario happens. 

Whatever that might be for you. Say 95 percent of consumers start hiring agents for $100 just to open doors. Or Zillow takes over the world and 95 percent of consumers flock their way. Or Open Door wins the fight.

And let's assume 95% of the agents run after that 95% of the customers…

"...I'm not going anywhere," says Todd.

Your goal should be to build a business that can survive and thrive with the 5% that's left.

Those people that want to be educated on what's changed and why they need you (rather than the alternative, which is thinking that hiring a buyer agent is useless in the first place).

There's plenty of those people.

"Believe it or not, we have the best opportunity in the world right now because people are asking questions like 'What does a buyer agent actually do, and what am I paying for?'"

Your job right now is to work on a great answer to that question.

But make no mistake – even if it was just 5% of people asking this, and that worst case scenario came true… this is still a lot of people. 

Not just enough for your business to survive. But enough for your business to thrive.

And before you judge us for being overly optimistic, let us leave you with these words from Todd:

"I wouldn't go so far as to say that we're spoiled right now," he states, "But I would say that this will be one of the rare times where hard work will actually pay off."

The Not so Great News

As you can see, Todd believes that when the dust settles, the true great agents will remain in the post-NAR settlement world. 

But he also acknowledges that until then, things are going to be far from easy.

While thinking "I survived 2008, so I can survive anything" is a great positive attitude to have, it might be a bit shortsighted.

Your goal should be to remain agile, and attentive.

Yes, we need to understand the great opportunities that come with these industry changes. But we also need to be humble enough to know that as things change, we might miss some things.

"When the first announcements of the NAR settlements came out, within minutes, you had a lot of people proclaiming their brilliance on social media," Todd reminds us.

Don't be that agent. 

Take some time to think, process, and come up with the different ways you're going to approach this new world order (and you can get some ideas in Part 2 of this series).

Talk to your team if you have one, and remind them to be confident but not cocky.

Opportunistic, but humble.

Because while, yes, as an industry we might've survived bigger changes than this one (remember COVID?), we don't know everything. 

A great way to navigate this new chapter is to stay connected to your community. Talk with other agents, share tips on how you're adapting your workflow. Speak with your teammates. Brainstorm ideas.

And make sure to tune in for Part 4 of this series, because we'll be wrapping up this topic nicely, with the biggest takeaways, and your next action steps as a real estate agent.