Author: Eric Block

Data firm ShowingTime found that home showings across the U.S. increased 20.2 percent in January.

The number of home showings across the U.S. jumped 20.2 percent year-over-year in January — the largest spike since data firm ShowingTime first started tracking these numbers in 2016.

Released on Monday, the report found nationwide growth for the sixth consecutive month. The Western region, in particular, saw a dramatic spike in home showings, which are up 34.2 percent. The South saw a 21.6 percent year-over-year increase while the Northeast and the Midwest saw 20.6 and 15.7 increases, respectively.

“We continue to see substantial increases in buyer traffic,” ShowingTime Chief Analytics Officer Daniil Cherkasskiy said in a prepared statement. “While only a portion of the markets showed spikes in November – December 2019, showing traffic increased across the board for almost all markets in January.”

ShowingTime first launched out of Chicago in 1999 and uses data to track and analyze home showings. The numbers relate only to showings — ShowingTime does not analyze sales and closings. That said, the data shows that an increasing number of people are interested in buying homes and are taking active steps to get there, even at a time of year when showings tend to slow down due to factors like weather. Last January, home showings were down 9.6 percent year-over-year.

“It’s important to note that January 2019 traffic was somewhat subdued due to extreme weather conditions in parts of the country at the time, reflecting an exaggerated year-over-year growth for January 2020,” Cherkasski said. “Even so, the number of appointments per listing have gone up to record levels based on activity we see in our systems, suggesting that the housing market will be quite competitive this spring.”

Credit Inman

The 9,000-square-foot space was chosen to fit the life of a high-flying actor.

A Tuscan-style estate that was featured in HBO’s “Entourage” has sold for $5.32 million after two months on the market.

Located in California’s Encino, 5266 Amestoy Avenue appeared as the home of character Vincent Chase in the seventh season of the popular show about an actor trying to reclaim star power. Listing agent Jill Krutchik, of Berkshire Hathaway HomeServices California Properties, told NBC that both the exterior and the interior were used to film scenes from the show.

Indeed, the home is fit for a high-flying actor. The entire space sits at more than 9,000 square feet and boasts a gated courtyard, a pool and multiple patios and verandas. The inside includes seven bedrooms, a chef’s kitchen, six fireplaces, 22-foot ceilings, a bar, sun room and separate wings for the master bedroom and children’s rooms.

A family room with a massive fireplace and a bar table are meant to serve as the center of the house where friends and family gather. The space is also decked out with smart home technology and its own heat generator in the case of a power outage. It was listed in November 2019 for $5.5 million and sold to a buyer who has chosen to remain anonymous.

“Entourage,” which aired from 2004 to 2011, centers around Chase as he and his friends navigate Hollywood with the help of agent Ari Gold. It is loosely based on the life of actor Mark Wahlberg and, after the popularity of the series, inspired a 2015 film.

“Situated on a flat street-to-street lot of almost an acre, you can indulge in the ultimate Southern California lifestyle with rolling lawns, relaxing pool, oversized spa, al fresco dining and entertaining,” the listing description reads.

Phoenix-based 3D aerial photography company has earned patents for its hi-res, high-elevation photography process that accurately puts lat-long coordinates on every pixel. With new funding, 70 markets are on the radar.

AerialSphere creates 360-degree aerial maps for real estate search and marketing.
Platforms: Browser
Ideal for: Brokerages, teams and individual agents; professionals who sell new construction; those in fast-growing markets

Top selling points
Highly unique way to search
More visually informative than Google Earth maps
Patented processess
API integrations
Not limited by drone regulations
Top concerns
Advanced functionality and data overlays are still a ways out, as the company itself has only recently launched. But the flight-plan is expanding quickly as a result of a recent Series A funding round.

What you should know
Why is map search important?

Because homebuyers are more lifestyle-driven than ever before. They want to know how close to the beach a house might be or where the closest middle school is located. People want to walk, bike, and be close to friends and craft breweries.

Maps help online homeshoppers visually determine all this stuff.

Plus, when it’s a map like what AerialSphere offers, it’s also a damn addicting way to keep people on your website.

Think of it as Matterport from a half-mile in the sky: move around, zoom-in, jump to distant parts of a city, zoom in on a listing.

Co-founder DJ Vegh owned a drone business, is a pilot, and helped build the technology behind his company, who he runs alongside Mike Smith.

The two managed to earn five patents for the four-camera attachment and photography process they use to capture their vivid, informational landscapes.

Able to fly between 1,500 feet and 2,000 feet, the team’s Cessna 206 does 50-mile-long, 1-mile-wide serpentine loops of an urban area to capture every pixel of the market. It took them under a day and six tanks of fuel to photograph greater Phoenix. And that’s sprawl-city.

What makes AerialSphere so unique, beyond the patents, is that its image processing “geo-rectifies” each fly-by capture, resulting in a latitude and longitude reading of every pixel in an image — that means they can give the exact coordinates of a fire hydrant. Or, more practically speaking, it means every single property in a scanned MSA is in their database.

That’s an absurd amount of property data.

Think about what that can mean when they eventually partner with rich data miners such as TopHap or forward-thinking portals like Homesnap.

Ifoundagent.com, a real estate website developer and marketing technology provider, has fully integrated AerialSphere’s imagery via its API into more than 400 client sites throughout Phoenix and Tuscon and embedded live MLS data.

While the company is mapping itself a future full of new features and ways to leverage its aerial imagery, it already has some slick tools ready to go.

In addition to the MLS data overlays, I was shown a use of the Google Places API that enables queries for neighborhood amenities around a subject property, such as “nearby dog parks.” It can also instantly jump to a Google Street View of a specific property or screenshot a high-resolution view of your listing’s neighborhood.

With its recent funding, AerialSphere plans to add five more planes to its fleet to start knocking out flights over 60-70 metros, starting with Las Vegas. It is almost finished with San Diego. Vegh told me they sometimes use a helicopter.

Whereas drones are able to quickly capture a single home or small community, they are very limited in distance and altitude, not to mention meta-data absorption. In fact, AerialSphere makes standard drone footage seem rather rudimentary.

Practically speaking, there are marketing advantages to this kind of map content, as well as higher concept usages like appraisal, environmental assessments and site selection.

AerialSphere has great applications for listing presentations. And agents who specialize in corporate relocation can use its tools to fly around communities as they relate to the subject company’s location.

AerialSphere’s technology has been around a while, but its developers are just now understanding its applications and putting them to use for the real estate industry.

It’s no doubt a slick, captivating way to search for homes and, eventually, visually share acres of visual demographic data, and I’m excited see what’s on their radar 12 months from now.

Credit: Inman

When your business feels like a moving target, take aim at measurable data points

When it comes to spreading a message in the luxury real estate space, agents are often covering familiar ground. They treasure each and every existing client and spend time and resources nurturing those relationships — yet bringing in new leads is what truly keeps businesses alive. So how can agents ensure they’re reaching the broad yet exclusive audience they want? How can they guarantee that their marketing efforts are really working?

Looking at lead generation is the most basic indicator that outreach is being received by the right stakeholders. But Frank and Dawn Bodenchak, Real Estate Professionals with Sotheby’s International Realty in Bridgehampton, New York, recognize that today’s marketing can go so much further. Gone are the days when agents put their promotional materials out into the world and wait passively to hear back: the digital age has brought better data-driven metrics that help agents get a much more granular look at how their content is performing. Here are some of the key performance indicators to keep an eye on.

Start with simple math

It’s still important to begin with the essentials. “I track the number of phone and email inquiries on a listing, the number of showing requests per week, and the percentage conversion of showings into interested parties,” says Frank Bodenchak of his monitoring process. In luxury real estate, metrics like these have always been the easiest way to see, at a glance, whether your marketing efforts are generating the results you want.

But there are two more simple stats that ought to be monitored: the number of days a home has been on the market, and the number of showings per home. “If you aren’t getting enough showings, or if showings aren’t generating offers, then marketing, product offering, and price need to be revisited to improve these metrics,” notes Dawn Bodenchak. The longer a property sits, the likelier potential buyers will expect that either the seller will lower the price or that there is something amiss with the home.

No one likes to wait

If you have a customer relationship management (CRM) system, chances are it’s measuring how often you correspond with your leads and clients, and reminding you periodically to follow up with them. If you’re not using a CRM system, then it’s critical to proactively track your email, phone, and in-person exchanges. The Bodenchaks make a habit of always tracking response time — how much time has elapsed since a lead’s initial inquiry. The average response time, according to one study by Inside Real Estate, is about 15 hours and 30 minutes, though research has also shown that a staggering 48% of inquiries fall through the cracks. You also need to be cognizant of the time that elapses between follow-ups, which, surprisingly, is reported to be the most overlooked aspect of real estate lead generation. By closing these gaps, agents will easily start to see a growing number of qualified leads. Make the most of online “We still use magazine ads for brand awareness and reminding buyers and brokers about a listing, but the first line of contact is internet-based,” says Frank Bodenchak. “Over the past decade, we’ve moved away from relying on print for information dissemination to relying on email blasts, real estate search engines, and social media.” Google Analytics is a fundamental way to watch your web traffic. You can review how many people visit your site and track their browsing behavior. For instance, keeping an eye on your bounce rate will inform how quickly visitors leave your site after they arrive. You’ll also be able to assess which of your pages are the most popular. Adding these metrics to your marketing rubric gives you the bigger picture of how your efforts are succeeding. Frank and Dawn Bodenchak have seen firsthand the benefits that social media brings to their marketing. Facebook and Instagram provide feedback to help agents monitor their social channels, stay notified on engagement and responses, and maintain real-time marketing awareness. “By switching to a business account on Instagram, we are now receiving all kinds of key insights from posts,” says Frank Bodenchak. “Beyond likes and comments, Instagram tells us the gender, age, and location of our audience. With even a small budget for online marketing, we can make an impact.” The basics still apply.

“Know the landscape, know the pricing, and know the product — and most importantly, know how the product can be adapted to work for a buyer,” says Dawn Bodenchak. “The metrics we use to evaluate our marketing success may not have changed, but the means to achieve them have.” Now there are more tools in agents’ inventory to make sure that their strategies are successful — and, by extension, that their leads, prospects, and clients enjoy the best service possible.

Compass says in the letter that Bright MLS’s new ban on pocket and off-market listings is anti-competitive and may lead to legal action.

Amid a heated industrywide debate over off-market listings, Compass this week sent a “pre-litigation letter” to Bright MLS threatening legal action over the multiple listing service’s new pocket listing policy.

The letter was sent Tuesday and characterizes Compass as a “concerned” member of Bright MLS. It then goes on to argue that Bright MLS’s new off-market listing rules “directly contradict” their stated aims of increasing cooperation and improving the consumer experience.

“Specifically, the limitations it places on brokerage pre-MLS marketing programs — and, in turn, consumer choice — are highly problematic,” the letter states.

Significantly, the letter reveals that Compass is “prepared to take direct legal action to challenge this policy and recuperate any and all damages associated with its implementation.” In other words, Compass is willing to sue to fight the new rule.

The letter is referring to a policy that Bright MLS adopted two weeks ago. The policy requires Bright MLS’s roughly 95,000 members in the Mid-Atlantic region to post their properties to the multiple listing service within a day of marketing them. Beginning Dec. 1, agents who break the rule can face $5,000 fines.

hough the policy still allows for “office exclusives,” it effectively bans off-market and pocket listings, the latter of which are sometimes promoted for days or weeks before becoming available to the wider market.

Bright MLS’s new policy is a slightly tweaked version of a proposal the National Association of Realtors floated at the beginning of October. That proposal hasn’t become a rule yet, but has already sparked significant debate with both supporters and detractors in the industry.

Cory Perkins — Compass’ head of inventory, strategy and operations — penned the letter to Bright MLS. The letter is specifically addressed to Bright MLS CEO Brian Donnellan. As of Wednesday evening, Compass had not yet received a response from Donnellan or Bright MLS.

In the letter, Perkins is critical of Bright MLS’s policy, describing it as a move “toward unlawful, anti-consumer and anti-competitive practices.” He also argues that the policy represents a restraint on free trade that could open Bright MLS to legal risk, and may violate anti-trust laws.

“If it were not for Bright’s overwhelming market power and position, we would simply show our disagreement by taking our business elsewhere,” Perkins adds in the letter. “Unfortunately, that is not an option as there is no viable alternative in the market, underscoring this policy’s gravity and impact on both members and consumers.”

Perkins also argues that the policy could result in agents breaching their fiduciary duty, that it reduces transparency, and that brokerages may sue to collect damages for an array of things such as loss of listings and profits.

The letter concludes with a description of an “appropriate path forward” suggesting, among other things, that a revised policy will let brokerages “continue to offer pre-MLS marketing programs to their clients.”

Here is the full letter:

https://docs.google.com/viewerng/viewer?url=https://webassets.inman.com/wp-content/uploads/2019/10/Concerns-about-Bright%E2%80%99s-Off-MLS-Listing-Policy.pdf

The success of HGTV and the plethora of online information has shifted the ground rules of real estate sales.

Any seller who has not sold a home in the past five years is in for a shock: Everything they thought they knew about selling a home has changed.

Sellers who do not understand the new rules of engagement can easily make costly mistakes and jeopardize their chances of a sale.

3 fundamental changes
These three changes have altered the homebuying and selling landscape forever.

Change 1: The advent of HGTV
Buyers spend countless hours watching HGTV and have developed extremely refined tastes. They know what they want and when they look at homes for sale. They are looking for properties that look similar to what they have seen and liked on TV.

Change 2: The advent of mobile devices and HD internet connectivity
Buyers used to have to visit a home to add or remove it from their short list. No longer the case, today’s sellers have between seven and 10 seconds to sell their home, and those seconds are on a mobile device anywhere on the planet — not in any home for sale.

If a buyer does not like an online listing, they will move on to the next home in a heartbeat and will usually not come back to review.

If they do not like what they see on their device, they will never waste their time visiting in person.

Change 3: The advent of internet real estate sites
Realtor.com, Zillow, Trulia and a host of broker-owned sites have populated the internet with user-friendly websites that provide property data, historical facts, HD pictures, automated valuations, neighborhood and school info, and more.

They have completely removed the need for buyers to visit in person to determine if they like a home. Once a buyer has shortlisted available inventory, they only visit the select few they like.

These three changes have not only revolutionized the way buyers search for and view prospective homes, they have transformed what they buy as well. Historically, there were three groups of buyers:

Top-tier buyers: Willing to pay a premium, this group looked for move-in ready homes that had all the amenities they were looking for.

Middle-tier buyers: Looking for homes in “original” condition, this group hoped to get a decent price and then improve the home over time with sweat equity.

Bottom-tier buyers: This third group were contractors and flippers looking for distressed properties they could buy for 60 percent to 70 percent of retail value.

The middle tier, which historically represented a significant percentage of market sales, is disappearing. More comfortable with tech than construction, today’s buyers are forgoing the middle tier en masse and paying more to obtain move-in-ready homes that look like the finished properties they have seen on HGTV.

This is not simply the consequence of real estate-related technologies. The past few years have seen sweeping societal shifts as homebuyer wannabes, for many reasons, are less willing or even capable of fixing up a home they’ve purchased.

They know exactly what they like when they see it, but have almost no idea how to produce it themselves. The No. 1 question buyers ask about our listings is, “Can we buy the staging?”

With buyers moving away from “original condition” properties they perceive as needing upgrades, homes that appear in the middle tier are being forced down into the bottom tier and need to be priced accordingly. Sellers who do not understand this new reality stand to end up with far less than they imagined.

5 seller myths
With this in mind, here are the top five seller beliefs that are no longer true:

1. I do not need to have the listing agent visit until my home is ready.
Wrong. In reality, the sooner the agent can get in, the better. Sellers, assuming the old rules still apply, might spend money on things that could harm a home’s potential and, conversely, fail to spend money where it matters.

Agents can not only help sellers maximize their potential, but they can also connect them with the trades and other professionals required to do it right.

2. I do not need to upgrade the property for sale.
Since increasing numbers of buyers are looking for move-in ready homes, the more a seller does to get the home to that level, the higher the returns. In an up market, sellers can reap a $2-$3 dollar return for every dollar spent.

In a declining market, they may not get 100 percent back, but they will get a sale. I frequently hear sellers ask, “Why should I upgrade? Won’t the new buyers come in and rip out all the stuff I just put in?”

That is not the right question. A better question is, “What can I do to make my online pictures sizzle to get the highest number of buyers through the front door regardless of what a buyer does once they own the home?”

If a seller can invest $1,000 on carpets and in the process make $3,000, does it matter what the new owner does once they move in?

3. I need open houses to sell my home.
The myth here is that buyers need to visit your home in person to decide whether they like it or not. In the new reality, buyers are visiting because they have already seen the home online and decided it was worth seeing in person.

Open houses simply make it easier for buyers who are already going to visit to actually get in. They also make it easy for the neighbors to come through — which is good because they frequently know someone looking to move into the area.

4. I need many open house signs at multiple key intersections.
Wrong again. Savvy listing agents put out tons of signs because they are free advertising. Buyers who have seen the home online do not need directional signs to find the home. With open houses dates and times syndicating to all the major web portals, buyers simply use the GPS feature in their phones.

As for the neighbors, they will not come because you posted signs at far away intersections. To get them, you want signs close to the open house.

5. If buyers really want my house, they will pay more than market value.
Buyers are not running charities. Due to online AVMs (automated valuation models — think Zestimate), buyers know when a property is overpriced and generally stay away, assuming the seller is unrealistic.

While pricing strategies vary from region to region, most agents know to recommend that sellers price listings close to market realities. As more listings come onto the market, buyers have more choices and migrate toward those they believe represent good values.

Sellers who insist they must net a specific amount, which in turn pushes the price too high, are only kidding themselves.

For sellers who have not sold a home in recent years, the new rules can be a shock. Ironically, since most sellers are also looking to buy a replacement home, all I usually have to do to change their thinking is to ask them how they are personally searching for homes in their new location.

They walk me through their process, and suddenly, in most cases, they get it.

The question has prompted a debate — including in a recent Facebook post with hundreds of comments — over how to safely welcome strangers into a property

West Des Moines real estate agent Ashley Okland was alone at an open house for a new development in 2011 when someone walked in and shot her twice. Okland died from her wounds, but to this day the case remains unsolved and no one has been arrested.

The senseless killing reverberated through the industry at the time, but it was particularly hard on Jen Stanbrough, a fellow Des Moines agent and a friend of Okland. Stanbrough told Inman that after Okland’s murder, she began looking over her shoulder, suspicious of people in restaurants or who pulled up next to her in their cars. The incident shattered what Stanbrough described as her “false sense of security,” and it helped change the way she does business.

“Now I’m 100 percent referral based,” Stanbrough said. “I don’t do open houses.”

Agent safety has become an increasingly urgent topic of late thanks to a number of high profile, and in some cases deadly, incidents. Some incidents, including one in which a man used a stun gun on a female agent during an attempted sexual assault, have specifically happened at open houses. And that has prompted a debate — including in a recent Facebook post with hundreds of comments — over how to safely welcome strangers into a property and if agents ought to conduct open houses on their own.

Real estate experts said there isn’t one single answer when it comes to agent safety at open houses, but there are basic precautions that everyone should take. According to Carol Berberian — a safety trainer and consultant at Boston brokerage Lamacchia Realty — those precautions include meeting the neighbors before an open house, making sure that you can get cell phone reception inside the property and knowing local emergency phone numbers in advance.

Agents can also heighten their situational awareness and make sure that they’re physically located in a safe space. So, Berberian said, that includes for example agents ensuring that they are closer to a home’s exit during an open house than the people viewing the property. She also said agents should feel confident refusing requests that creep them out.

“It’s okay to say to somebody, ‘No, I won’t go to the basement with you, I’m going to stay here in the kitchen,’” Berberian said. “The thing you ever need to do if you’re caught in a house is create distance.”

Stanbrough, who since the killing of her friend has become a board member of safety group the Beverly Carter Foundation, also said that agents can deploy cameras during their open houses, then advertise to visitors “that the open house is being monitored.”

Some agents, including several who weighed in on the recent Facebook post, have also suggested carrying weapons. And indeed two armed agents restrained an intruder at a vacant property in Ohio last month. The case reignited the debate over agents carrying firearms while on the job.

Asked if agents should bring weapons to open houses, Berberian pointed out that there are “certain people out there who are very well qualified to be armed.” But she also said many agents also lack sufficient training and could run into trouble even with more basic defensive tools like pepper spray.

“You can very easily further incapacitate yourself by having something you don’t know how to use,” she said. “Most real estate agents are really good at selling houses, we’re not security guards too.”

So, in the end, is the best solution to just bring along a partner?

Berberian said that in many places that may not be entirely necessary. Open houses, after all, are usually conducted on weekends when neighbors are home and there’s still plenty of daylight. She also said that agents can take advantage of various messaging apps to have a kind of digital partner.

“Make sure people know where you are and who you’re with,” she added.

Other newer safety technology includes an alarm that attaches directly to a phone. The device is meant to alert bystanders to someone in distress.

Still, some agents do prefer to bring along another human being to open houses. Though the drawback to that strategy can be having to share leads, Alisia Krastel — an agent in Maryland who posted the recent Facebook question — noted that in her case she typically brings a loan officer to her (now relatively rare) open houses.

“They’re happy to help you and if it’s slow you can have a working meeting,” she said.

Dan Hughes, an agent in North Carolina, said his preference is also to take a lender along, adding that the only reason he would specifically bring another agent is “if you expect huge traffic or for the security of the property.” He also cautioned against fear and said that “on the whole, people are nice and life is good.”

“My basic thoughts on the subject are simply that there are lots of risks in life,” he told Inman. “Nothing is danger free.”

Whatever strategy agents opt for, however, industry professionals who spoke with Inman for this story said that safety should at least be a consideration at open houses, especially given agents’ greater potential exposure to threats today.

“I don’t know that it’s a more dangerous job now, but I think people have more access to know where we are,” Krastel said, referring to the tendency to post on social media. “We’re giving them more information.”

Stanbrough added that many agents may not be fully considering the potential risks they face while doing their jobs, though that may be changing as more incidents make headlines.

“No lead is worth your life,” Stanbrough said. “You can get a bazillion leads, but if you don’t come home at the end of the day they’re not going to do you any good.”

Expireds are warm leads who want to sell — all you need to do is call them. So, why aren’t you?

Expired listings are critical to healthy real estate success. In fact, I focused exclusively on expired listings when I first started in the business, and they are how I got my career off the ground.

To this day, expired listings are what I train my team members to strive for from the day they walk through the door.

Why are expired listings so valuable? Because they are the holy grail of sales: the “warm lead.” Expired listings sellers have already made the hardest decision they have to make — the decision to sell their property. There is no time wasted trying to convince them that now is the time to sell or that a real estate broker can net 18 percent more than they can on their own.”

They’ve already decided to sell, and more importantly, they’ve already decided to give a broker a shot. All you need to do is show them why what you and your team does is better than what they’ve already experienced.

I find there are usually three reasons why a listing doesn’t sell in New York City: marketing, price and a lack of cooperation with co-brokers. So, if you can convince the sellers how you’ll do better on each of these points, you’re in a good position to take another shot at the expired listing.

In many cases, I would prefer to be the second agent on a listing rather than the first. If a property has been listed once, you’ve seen how it performs, what went well and what didn’t. I mean, would you rather fight Mike Tyson in his prime and fresh out of the locker room? Or would you rather watch him go a few rounds before you got in the ring?

Here are a few tips for making an expired listing your next closed sale:

1. Find those leads
Invest in your business by working with a reputable third-party service that provides you with expired listing owner information — specifically name, phone number, cell phone and email. Efficiency is key, so do your research to find the best firm.

Remember that time is money. I won’t bore you with a “back in my day” story, but when I started in 2006, I had to scour and research all types of websites to find numbers. Today, you pay for a subscription, and they do all of that work for you! Invest in your business and save your time for more productive work. It’s worth it!

2. Make contact
When should we be making these phone calls? To me, the obvious answer is: When the majority of people are home or available to speak. Assuming most people work a 9-to-5 job, calling after 5 p.m. and on the weekends is likely most efficient. That doesn’t mean you can’t call at other times — just understand you might get a lot of voicemails.

Do not be afraid to knock on doors either. If you do, partner up with someone. Create a bunch of listing presentations and have them with you ready to go. If there is a listing in your farm or in the area you want to become well-known in, then go to the house and introduce yourself to the owner! If you don’t, someone else will.

3. Add value
You must have a system for demonstrating what you would do differently. Print the expired listing, grab a highlighter and highlight everything that you would do better. Does it need more photos or better photos? Is the price too high? Is the co-broke too low? Is the information accurate and compelling? Did the previous broker abbreviate the entire description like it’s 1995?

If you’re prepared with this kind of information, you’ll have a solid grasp of at least some of the things that went wrong the first time. Then, when you do get the appointment, you can compare it to what you would do better, putting yourself in a great position for securing the listing.

4. Practice, practice, practice
You need to understand that the key to success is practice. Make the calls, and even if you fail, keep making the calls. All you need is a 10 percent success rate to make six figures with expired listings.

This is real estate 101 — it’s a numbers game. Every “no” leads to a “yes.” Look at your marketplace, figure out the average “success fee” earned on a listing side transaction. Now, figure out how many expired listings you would need to secure and sell to reach your monetary goal.

If someone came up to you and asked you to make 1,000 phone calls a year, and they’d pay you $250,000, would you do it? That’s a clear response: Yes, of course you would! Well, that’s what expired listings are, they are warm leads who want to sell and all you need to do is call them. So, why aren’t you?

The suit alleges NAR, Realogy, HomeServices of America, RE/MAX and Keller Williams violate the Sherman Antitrust Act by requiring ‘buyer broker compensation’

A homeseller has filed a class action lawsuit challenging a principal tenet of how the real estate industry works in the U.S. as well as one of the main reasons behind the existence of multiple listing services: the sharing of sales commissions between listing brokers and buyer’s brokers.

The complaint, filed March 6, takes aim at some of the industry’s top players, alleging the National Association of Realtors and real estate franchisors Realogy Holdings Corp., HomeServices of America, RE/MAX Holdings, and Keller Williams Realty are violating the Sherman Antitrust Act by requiring listing brokers to make a “blanket, non-negotiable offer of buyer broker compensation” when listing a property on the MLS, which the suit refers to as the “Buyer Broker Commission Rule.”

The suit alleges this rule has inflated costs for sellers by requiring sellers to pay a higher commission than they otherwise would if, instead, buyers paid buyer’s agents directly.

“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market. Moreover, because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission,” the complaint said.

“Absent this rule, buyer brokers would be paid by their clients and would compete to be retained by offering a lower commission. The Buyer Broker Commission Rule ensures that price competition among buyer brokers is restrained because the person retaining the buyer broker, the buyer, does not negotiate or pay his or her broker’s commission.”

The complaint alleges that the defendants use their control of MLSs and defendant franchisors use their agreements with their local franchisees and their influence among Realtor leadership at both the national and local level to require brokers to adhere to NAR’s rules, including the Buyer Broker Commission Rule, thereby increasing “their profits substantially by receiving inflated buyer broker commissions and inflated total commissions.”

NAR, the industry’s largest trade group at 1.3 million members, hit back, denouncing the suit’s accuracy and declaring that prior legal rulings were on its side.

“The complaint is baseless and contains an abundance of false claims,” said Mantill Williams, NAR’s vice president of public relations and communications strategy, in an emailed statement.

“The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the homebuying and selling process. NAR looks forward to obtaining a similar precedent regarding this filing.”

Keller Williams and RE/MAX declined to comment for this story. Realogy and HomeServices of America did not respond to a request for comment.

The plaintiff is Shorewood, Minnesota resident Christopher Moehrl who sold a home in the Minneapolis area on Nov. 15, 2017 that was listed in NorthstarMLS. In that sale, Moehrl paid a total broker commission of 6 percent: 3.3 percent to his own listing broker, a RE/MAX franchisee, and 2.7 percent to the buyer’s broker, a Keller Williams franchisee.

Moehrl is represented by six law firms in the suit: Cohen Milstein Sellers & Toll PLCC, Hagens Berman Sobol Shapiro LLC, Handley Farah & Anderson PLLC, Justice Catalyst Law, Wright Marsh & Levy, and Teske Katz Ktizer & Rochel PLLP.

The lawsuit seeks class-action status on behalf of homesellers who paid a broker commission in the last four years, since March 6, 2015, in connection with the sale and listing of their home in one of 20 Realtor association-owned MLSs, many of which are among the largest in the country, including Bright MLS in the Mid-Atlantic region and My Florida Regional MLS. The other 18 MLSs cover these metro areas:

Cleveland, Ohio
Columbus, Ohio
Detroit, Michigan
Milwaukee, Wisconsin
Minneapolis, Minnesota
Austin, Texas
Dallas, Texas
Houston, Texas
Las Vegas, Nevada
Phoenix, Arizona
San Antonio, Texas
Colorado Springs, Colorado
Denver, Colorado
Salt Lake City, Utah
Fort Myers, Florida
Miami, Florida
Charlotte, North Carolina
Raleigh, North Carolina

Although Moehrl’s attorneys do not name these MLSs or the Realtor associations that own them as defendants, they do allege that the MLSs and associations were co-conspirators because they adopted, complied with and implemented the Buyer Broker Commission Rule. They also allege the defendant franchisors were co-conspirators because they complied with and implemented the rule in the geographic areas in which the 20 MLSs operate.

“Defendants and their co-conspirators collectively have market power in each relevant market through their control of the local MLS and their dominant share of the local market,” the attorneys wrote.

“Defendants are jointly and severally liable for the acts of their co-conspirators whether named or not named as defendants in this Complaint,” they added.

They expect the class to be “many thousands” of people and say the amount at issue is more than $5 million. They allege that Moehrl and other class members have each incurred thousands of dollars in damages.

“For example, a class member who sold a house for $500,000 paid in the range of $12,500 to $15,000 in additional commissions due to the conspiracy,” they wrote.

“In a competitive market, the seller would pay nothing to the buyer broker, who would be paid instead by the buyer, and the commission paid by the seller would be set at a level to compensate the seller broker only.”

The complaint does not address a possible consequence of having buyers pay their own brokers: limiting the pool of buyers for a home. In part because buying a home is a relatively large purchase, the sales commission is rolled into a home’s listing price and paid from the proceeds of the sale, which is often financed by a mortgage. If buyers were required to pay their own brokers directly, they could potentially not afford to pay as much for a home, leading them to either not make an offer on a home or to offer less — neither of which would presumably benefit the seller.

On the other hand, making buyers pay for their own brokers directly may lead fewer buyers to hire brokers, giving sellers an upper hand in negotiations. Or, as Moehrl’s attorneys contend, changing the rule could force buyer’s brokers and agents to compete with each other on price.

Currently, NAR’s Code of Ethics prohibits buyer’s brokers from making home purchase offers contingent on reducing the buyer broker commission, the complaint noted.

According to NAR’s Code of Ethics, Standard of Practice 16-16, “REALTORS, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation.”

Questioning the status quo
The vast majority of the 650 or so MLSs in the U.S. are owned by Realtor associations, which in turn are governed by NAR rules. If Realtor associations don’t follow NAR rules, they risk losing their charter. If Realtor-affiliated MLSs don’t follow NAR rules, they risk losing their NAR-provided professional liability insurance.

NAR’s Handbook on Multiple Listing Policy requires that when a property is entered into the MLS, “participants make blanket unilateral offers of compensation to the other MLS participants and shall therefore specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.”

MLSs cannot “include general invitations by listing brokers to other participants to discuss terms and conditions of possible cooperative relationships,” though listing brokers can change what they offer any other MLS participant provided they do so in writing before the participant has submitted a purchase offer.

The complaint contends that foreign real estate markets do not work this way. Rather, homebuyers in countries such as the United Kingdom, Germany, Israel, Australia, and New Zealand pay their own broker directly if they choose to use one and pay less than half the rate paid to buyer brokers in the U.S.

“Defendants’ conspiracy has kept buyer broker commissions in the 2.5 to 3.0 percent range for many years despite the diminishing role of buyer brokers,” the complaint said.

“A majority of home buyers no longer locate prospective homes with the assistance of a broker, but rather independently through online services. Buyer brokers increasingly have been retained after their client has already found the home the client wishes to buy.”

MLSs pro-competitive or anti-competitive?
The complaint does not mention that most other countries do not have MLSs, precisely because, as NAR defines it, “An MLS is a private offer of cooperation and compensation by listing brokers to other real estate brokers.”

“Without the collaborative incentive of the existing MLS, brokers would create their own separate systems of cooperation, fragmenting rather than consolidating property information,” NAR says on its website.

“MLSs are a powerful force for competition. They level the playing field so that the smallest brokerage in town can compete with the biggest multi-state firm. Buyers and sellers can work with the professional of their choice, confident that they have access to the largest pool of properties for sale in the marketplace.”

For their part, Moehrl’s attorneys maintain that “Plaintiffs are not aware of any pro-competitive effects of Defendants’ conspiracy. But if there are any, they are substantially outweighed by the conspiracy’s anticompetitive effects.”

Moreover, the complaint asserts that brokers wishing to not have the Buyer Broker Commission Rule would be at a competitive disadvantage because they would either have to try to compete without using a listing service or establish an alternative listing service to compete with the aforementioned 20 MLSs who still had the rule.

“A broker who represented a seller without using a listing service would lose access to the large majority of potential buyers, and a broker who represented a buyer without using a listing service would lose access to the large majority of sellers. Brokers cannot compete effectively without access to a listing service,” the complaint said.

“For an alternative listing service to compete effectively with one of the Covered MLSs, the alternative would need to have listings as comprehensive (or at least nearly so) as the Covered MLS. Brokers and their agents who currently profit from inflated buyer broker commissions and total commissions have minimal incentive to participate on an alternative listing service that would generate lower buyer broker commissions and lower total commissions.

“Further, many buyers would be very reluctant to retain a buyer broker operating on an alternative listing service that required them to pay the buyer broker commission, when other buyer brokers operating on the Covered MLSs are entirely compensated by home sellers. Accordingly, seller brokers on an alternative listing service would struggle to attract buyer brokers and their buyer clients.”

“Accordingly, a listing service attempting to compete with any of the Covered MLSs would likely fail to attract enough property listings to operate profitably and be a competitive constraint on the incumbent MLS. The absence of listing services that compete with the Covered MLSs (or other MLSs) reflects the very substantial barriers to entry,” the complaint added.

The complaint also alleges that NAR, to further the conspiracy, has advised MLSs to take steps to prevent third-party websites from becoming competitors.

“NAR advises MLSs to enter into non-compete agreements with third-party websites, such as Zillow, so that those websites do not become competitive rivals to MLSs,” Moerhl’s attorneys wrote.

“NAR’s checklist of ‘critical components’ states that the consumer-facing website ‘must agree they will not compete with the brokerage firms or MLS by either becoming a licensed brokerage firm or by providing offers of cooperation and compensation.’ The non-compete agreement requires the consumer-facing website to agree not to ‘use the data in a manner that is similar to a Multiple Listing Service.’”

The complaint asks for a jury trial and requests damages and/or restitution, costs of the suit, and a permanent injunction preventing the defendants “from continuing to require sellers to pay the buyer broker and from continuing to restrict competition among buyer brokers.”

Credit: Inman.com