It's the stuff they are pushing. People are talking about violent rhetoric against USh, but if we dare to fight back, we are the violent one. Fifty five krs the talk station.
Ato six. It's Friday, and a very happy Friday to you, made extra special. I'm happy to welcome to the fifty five Carsy Morning to explain the what seems to me to be confusing reality the current real estate market and how the buyers and sellers agents get paid. Welcome to the fifty five Carracy Morning. Sure the only real estate agent I would even ever consider if I was considering selling my house. Peter Shabria Keller Williams seven Hills, seven
zero eight three thousand dot com. Peter, Welcome to the program, my friend. It's always great talking with you.
Thanks Brent, thanks for having me on.
You know everything there is no about the real estate market, and I'm pleased to be able to speak on your behalf because I know what a wonderful job you and your agents do, and you've got such a great team. But I saw when this legal challenge came out, and I didn't really read a whole lot about it. I just knew that the way real estate agents were going
to be paid. Was going to change because there was a legal decision from late last year that discussed the situation and said, no, it was unfair that the seller had to pay the commissions for both the buyers and sellers agent. So explain the way it was, and then help me and my listening audience understand how it is now, because I think it's gotten more complicated.
Peter, Well, first of all, thank you for the compliments, Brian, I really appreciate that, and we love working with you. We love working with your listeners, so thank you as always for the support. Happy too, and you're absolutely well, thank you very much. You're absolutely right. A little bit of a history, lesson a brief one, is valuable here. We all have to remember that prior to the early nineteen nineties, there was no concept of buyer agency. Sellers
hired a listing agent. The listing agent would charge a commission, and when a buyer called and took a look at that home, the listing agent would be the person that
would show the property and facilitate the sale. There was a giant misunderstanding by the buyers, thinking that that agent was representing them expensive transaction, and so what happened was a lot of buyers were being taken advantage of because they had no one to represent their best interests, and that's when the concept of buyer agency was introduced in
the nineteen nineties. And the way that buyer agency was compensated was that the listing agents were happy to share some of their commission because they had to do less work per transaction and the consumer benefited by having representations. So that was a great advancement in the advocacy on behalf of consumers in our industry. Well.
It was also to observe that was pre Internet and also the access to the MLS, the multiple Listing service was limited to people who actually had the license in real estate, wasn't It wasn't a real closed system where you couldn't just pull up a MLS listing and go through them yourself.
Brian, that's an excellent point. It was a very closed systemation was hard to access, pricing information was almost impossible if you weren't in the know, and so the consumer, the buying consumer, was at a serious disadvantage prior to the nineteen nineties when buyer agency was introduced, So that was a huge step forward in protecting consumers and the acquisition of real estate, and the most recent this NAR settlement that we're all starting to experience is another step
forward in transparency for consumers. What this is really about is that consumers didn't understand that. Generally speaking, consumers didn't understand that their buyer's agent was being compensated by the seller.
And so, you know, as a species, we humans have short memories, short term memories, and we all forget that buyer agents was formulated in that agency was formulated in the nineties to protect consumers, but those agents that are represented buyers still to get compensated, and they were compensated by the listing agents sharing their commission. Well, there was a perception that prices were inflated to pay for this buyer agency representation and that and this is where you're
absolutely right. Before there was no there was no technology that was systemizing all this. Now that the multiple listing service exists in all these municipalities municipalities around the country, that commission sharing uh business practice kind of became systemized and institutionalized through technology, so that all of a sudden, it very much can appear as though there's this system or this racket that can appear as though agents are colluding and fixing commissions. Does that make sense?
Yeah, I can see that, but there would be it becomes why I guess my reaction is, well, it becomes widely known you know what an appropriate commission is, whether it's you know, three percent, four percent, five percent. That
information gets out in the market adjusts accordingly. Because if there's an agency over there that's charging six or seven percent and the world finds out that no, you can only you only really have to pay three or four percent, clearly people are going to move over to the lower commission realm and go there.
That's exactly right. And that's what this is all about, is that, you know, the plaintiffs that ultimately filed suit against the National Association of Realtors and all the other large brokerages and ultimately Department of Justice feel as though there should be more transparency around how real estate agents are compensated and who's paying for it. And that's what this is all about, is creating additional transparency. And so the rules, there's really kind of like two core rules
that are changing. The first one is that buyer compensation buyer agent compensation can no longer be something that is shared just between real estate agents and the agent community. That's no longer we don't let each other know how much we're compensating. In fact, we don't really do that anymore. And the second thing is they can no longer look at a piece of real estate with the real estate agent unless they sign a buyer representation agreement. And in
that agreement, it's got to disclose a couple of things. One, how long they're going to work with that agent, Two, how much that agent charges, in three the scenarios of how that agent could be paid, and actually force to make sure it's clearly disclosed that the concept that real estate commissions are negotiable. And so that again brings an additional level of transparency to the consumer. And I think
you're absolutely right. I think different agents are going to offer different value to consumers, and ultimately the consumer is going to decide how much an agent is worth. And again I think that that is healthy for our industry and for the consumer.
It sounds to me like you are going to be earning less commission.
I think it's possible, and I'm the consumers are going to be able to have a choice in how much they want to pay for representation, and representation takes different forms. Remember, on the listing side of things, commissions, well, commissions have always been negotiable both the buy side and the list side,
but consumers had more experienced negotiating listing commissions. When an agent shows up in your kitchen and talks about putting your home on the market, you have an express conversation about what that agent charges, and that is a negotiable moment. So that's now going to happen on the buy side. And there are all different kinds of models on the listing side. You know, you have agents that are charging premiums and agents that charge so called standard amounts, and
you have discount agents. When I first got into business back in two thousand and two, there were discount brokerages where a homeowner could pay five hundred dollars to put their home in the MLS and there was no advocacy on behalf of the listing agent. That was called a discount brokerage model. Well, here we are twenty two years later, and those discount brokerages represent less than one percent of the transactions and the multiple listening service. So consumers want
to be protected. They want experts, and they want to and they're happy to pay for proper representation where someone is advocating for their family and their finances, that's not going to go away. I think different levels of advocacy expertise will show up now on the buy side of
the transaction with different corresponding compensation amounts. But at the end of the day, we all have to remember, for the majority of us listening to your radio program right now, buying and selling real estate are some of the most expensive I don't want to say high risk, but sort of like high value purchases of our lives, and making sure that we have someone that can advocate and protect us is critical. When you have a major health issue,
you don't try and find the cheapest doctor. You try and find the most experienced doctors that can help you navigate back to health. And so yes, it's very possible that commissions will be compressed, but ultimately I think that's going to be determined by how good agents are at communicating their value, at educating their clients and what they do, and how good of a job, what their track record looks like, and advocating for their clients. So we may
see a commission compression. I think what we will definitely see is less real estate agents in the industry. I think it's now going to become a little bit of a higher skill industry. And I think I think the agents that are doing this like part time, they may
de select themselves from the industry. And again, I think that's probably ultimately a benefit for the consumer as agents that more of the agents that are in our industry are working full time, have deeper levels of experience and are able to best advocate on behalf of their clients.
Well, and you've been emphasizing. I even wrote the word value down. There is such a tremendous value to get a truly getting a truly experienced real estate agent, because there is. I mean, you could just just give it a couple of moments time and think of the unbelievable pitfalls that might be waiting for an inexperienced home buyer, like, for example, a first time home buyer. Do they know about, you know, home warranties, Do they know about buying as is?
They know about you know, looking at an HVAC system and how much life it's got left with it. Sure you have a home inspection, but we all know how reliable those guys can be, but there's just your experience really in yours to the benefit of most notably people
who are not experienced at all. It's worth paying for that because you could I mean you can ultimately save your your your clients, but I mean you could save them tremendous amounts of money but also keep them out of some potentially horrific situations.
That's exactly right. It's a lot of times the best real estate agents make it feel like a smooth process and you kind of scratch your head and go, well, what did I pay them for? Well, you just paid them for nothing, dramatic happening and making sure you should you wind up with the right house in the right neighborhood, with the right entities that's going to be the right fit for your family and its needs over the course
over the next five to ten years. A lot of what a great real estate agent does is block and tackle on your behalf without you even knowing it, and also being a great consultant to make sure you are buying the right real estate because real estate is not a liquid asset, right, and so you really need to make sure that you're doing all the right do due diligence, but also vetting what real estate best compliments where I am living my lifestyle today, and also where am I
heading in my life, and how does that real estate reflect my personal journey that I'm going to have over the next five to ten years. It can be a real mistake to work with an agent that doesn't necessarily go as deep with you these questions and you wind up in a house two to three years later that no longer meet your needs.
It's I can at a great financial planner, you know, one.
Hundred percent, Yes, sir, that is exactly right, and that is exactly real estate. Good ahead, No, no, no, no. Good. Real estate is for the majority of homeowners, the single
biggest driver of wealth. It's actually interesting. There's a great article in the Wall Street Journal two days ago about how millennials, who for the longest time were lagging previous generations in their acquisition of wealth, just in the last few years, are now further ahead than previous generations in the amount of wealth that they have acquired, and the single greatest driver of their wealth acquisition has been the equity that they've seen grow in their homes. So just
like a financial advisor. Real estate advisors are great in great real estate. It's great for advocating and protecting your best interests, but also setting you up on the right path to home ownership, which is, by the way, the fast track to building wealth.
Indeed, in Peter Ford Park Company, I just lowed you one more minute here. Can you give my listeners just a general understanding of the current Greater CINCINNTI real estate market? Are we still short on housing stock? Are there still bidding wars going on? Thumbnail sketch if you don't mind for a.
Moment, Yeah, great question, Brian. Absolutely, we are in an acute seller's market. It's softened a little bit, but we are still in a seller's market. Some pockets of Cincinnati are starting to move towards a balanced market. But if a property is priced well and presents well, and it is in a market where there is a significant level of demand, that property will probably go into multiple offers.
Multiple offers, and that's where a bidding work can show up. And that's where Peter and his team can help you out as well. Also as a seller's agent, they knew exactly what to do without you as little as money as possible to have, what to polish up, what to change the where the value shows up for an improvement like painting a room or doing this or changing something in order to maximize the sell price of your home. That's one of the things you get in terms of
value from great real estate agents. Peter scherbrie A Kellowiams seven Hills. You can find them online at seven zero eight three thousand dot com or call them up at five one three seven zero eight three thousand. Peter, thank you so much again for your support of the morning show and helping out my little but most fundamentally helping out my listeners. I know you are definitely worth the val value and the commission.
My friend, well, thank you, Brian. I really appreciate that when we offer tell our clients is prices what you pay, the value is what you get.
Amen, brother, we'll talk soon. My friends, stay well. Best to you and your team. It's eight twenty right now. If you have caresee the talk station Color Electric Family interoperated since nineteen ninety nine. Speaking of home ownership, yes, you will have electric needs. You will need some great electricians. What you need is a team that prides themselves on their honest reputation, the quality of their work, their customer service.
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