The dust hasn’t even begun to settle on the NAR lawsuit settlement, but builders don’t have the luxury of time when it comes to deciding how to make changes to their business.
Given consumer awareness on buyer’s commissions, builders have an opportunity to educate them on the benefits of buying direct. Builders should also consider only supporting the Realtors that are well informed, who bring strong buyers to the table.
Hundreds of building professionals came together on a webinar March 27 to consider the ramifications of a deal that abolished all rules allowing sellers’ agents to set compensation for buyers’ agents. The $418 million settlement—which still needs to be officially signed off on by a judge before being enacted—also says MLS participants working with buyers must enter into a written buyer-broker agreement.
The verdict will have a profound effect on how homes are bought and sold and the building industry could save billions of dollars. That’s money that could be reinvested in the business, offered to buyers to help offset costs, put toward option/upgrade allowances, used for mortgage rate buydowns, or to pay closing costs for valued buyers.
Here are five takeaways on what builders need to do today to prepare for the new world of real estate commissions.
- Be ready to engage with consumers before they sign a buyer-broker agreement. Revisit your incentives, and make the case for why new homes are better homes. Convince them to deal with you directly before they contract with a buyer’s agent. Just one builder—D.R. Horton—paid $1 billion to real estate agents in the last two years in commissions, according to one of its recent LinkedIn posts.
- Don’t overreact or act prematurely. There are still so many things to be understood around the settlement, which isn’t final yet (ratification is expected in July).
- Review your processes and systems to be able to handle and or incorporate buyer-broker agreements. Buyer-broker agreements seem to be here to stay and will be an important part in how you engage buyers and consumers going forward. Make sure you are ready for them.
- Revisit your data capture platforms and systems so that you have transparency into when you first engage consumers and track them through the process. Disciplined data systems and processes can do more to lower broker co-op payments then nearly any other approach.
- Builders could offer a preferred broker program for those that drive volume to the builder, rather than those who bring in a single deal. A rewards program could be a great way to work with large volume partners.
