Despite a barrage of headwinds agents are facing in the current market–notable reductions in sales volume, record-high home prices, elevated inflation and increased uncertainty they will even stay in the business over the next two years–inventory has been increasing over the summer and we’re seeing “an incredible trend in the direction of normality.”
That was industry icon Brian Buffini’s message of hope as he kicked off “Brian Buffini’s Bold Predictions Mid-Year Update,” an annual webinar, broadcast July 22 where the chairman and founder of real estate training and coaching firm, Buffini & Company, examined the state of the real estate market, the legal landscape with NAR Chief Legal Officer Katie Johnson and officially introduced a new industry designation designed to renew agent professionalism and support industry professionals through the historic changes that are coming to the industry following the NAR settlement.
The state of the real estate market
Taking a look back at his December 2023 Bold Predictions forecast, Buffini started off noting that due to a late-blooming spring market, his prediction that 40% of the homes sold for the year would happen early and slow from there, turned out to be incorrect, with the market producing just 25% of expected home sales through spring. To plan for the year ahead, he said agents should prepare for “the big push” (40% of the year’s home sales) to happen this coming fall.
“This (will be) the season you need to be most active and prolific in your market and most face to face with your clients,” he said. “The industry is a more deeply needed, relationship-driven business than ever before and it’s more in need of a trusted advisor and someone who’s actually cultivating and marketing their database that way.”
Sharing data coming out of the recently released 2024 NAR Member Profile, showing that 73% of all REALTORS® surveyed were certain they would even still be in the business over the next two years, Buffini emphasized that the time is now for a renewed level of professionalism in the industry. “That doesn’t speak to professionalism and making long-term commitments to the customer and the industry. If it were me, I’d use that as a selling point to tell your clients, ‘I’m in this for the long haul.’”
Buffini added that his December 2023 prediction of home sales reaching 4.6 million and 5.3 million in 2024 and 2025, respectively, is still on track, but admits, “how we’re getting there is different than what I thought.
“Interest rates went up to 8% and I thought we’d be below 6%. I thought we’d have three rate cuts this year, and what’s happened is the amount of spending has created an artificial market and that’s where the inflation is coming from…the average person is struggling. And giant corporations, whether it be the CHIPs Act, the infrastructure bills, all that money started flowing into those major corporations; they’re flush with cash…so inflation has been stubborn,” he said.
He does predict one more rate cut this year, however. “The good news is we were right on the transactions but we were wrong on the rates.” He forecast that rates will come down to 6.67% this year and down to 6.25% next year, with the above volumes holding.
“We’ll have a big fall and spring…It’s happening. Listings are staying on the market and inventory is creeping up,” he said, adding. “…You can not complain about a poor fall if you didn’t plant seeds now.”
Transitioning into a discussion about the NAR settlement with NAR Chief Legal Officer and Chief Member Experience Officer, Katie Johnson, Buffini commented that while the current events are historic, over the years he has seen other increases in lawsuits filed against the industry when markets are hot.
“What’s happened is, we’ve had an 11-year runup,” he said. “And that has led to some poor practices and has allowed more and more opportunity for these lawsuits to come and target the real estate industry.”
The new rules of real estate
With that, Buffini introduced Johnson, saying that combined with the legal changes that have engulfed the real estate industry this past year, and the overall frustrations REALTORS® have with the confusion in the industry right now, including with NAR, “I just can’t imagine a better guest to have on our program today…and I think you’ll feel a lot more encouraged about the National Association of REALTORS® after you meet her.”
Johnson dove right in addressing the confusion around the NAR settlement, outlining several achievements the settlement produced, as well as what they mean for real estate professionals and consumers alike in the new era of compensation.
“The settlement is an opportunity to continue raising your level of professionalism and continuing to be that trusted advisor,” Johnson said. “We went into this litigation over five years ago with two goals in mind. We wanted to secure a release of liability for as many members, association MLSs as possible in defending this decades-old practice, and we also wanted to preserve the choice for consumers regarding real estate services and compensation…we think it achieved both those goals. It has that path forward, but it also shut down a number of copycat lawsuits that were proliferating across the country.
Buffini agreed, adding, “You were also able to cover agents whose companies weren’t yet covered, companies over that $2 billion mark who hadn’t yet been able to negotiate their way through the process. I found that to be great negotiation on your part.”
Johnson noted that over 1.4 million members were covered and released under this settlement agreement, as well as all broker businesses with a 2022 sales volume of $2 billion or less. “That way the very high-end brokerages who we were not able to cover in our release didn’t have to worry about their agents moving or going elsewhere,” she said.
Shifting to the topic of misinformation in the (mainstream) media in the aftermath of the settlement, about commissions and whether or not they are still negotiable, Buffini asked how that notion could have emerged in some media reports.
“That’s an incredibly infuriating aspect of not just the litigation, the Department of Justice point of view, but also the media and the reaction and the reporting following the settlement,” Johnson noted. “The NAR policy has expressly stated that commissions are negotiable, and are the independent decisions of the brokers and their agents. So that misconception has led to consumer confusion, and the allegations are that consumers just didn’t understand that or perhaps that wasn’t their experience.
“(Commissions) were negotiable, and they continued to be negotiable, and as a result of the settlement, there will be more express communication around that. And that gets back to building trust through excellent communication,” said Johnson.
She also noted that the MLS will continue to play a critical role.
“While communication around compensation at the outset of listing and promoting a home is happening off the MLS, there is still a central role in cooperation in the MLS in the sense of how we define it in our Code of Ethics, and that is to share listings, to show listings, to share information with competitors who will help sell the inventory.
“We argued that the MLS was the most efficient and transparent way to convey that information, but the jury disagreed, so now there’s another touch point of high communication outside the MLS, and there’s a lot good reasons to communicate that–to first-time buyers, low-income, minorities, veterans and others –who want to have that offer of compensation to help them get into the home-buying market.”
Buffini supported that idea, noting that while discount models or “cafeteria-style” pricing where agents may charge a certain amount for individual parts of the transaction, like seeing a home or writing an offer, the vast majority of consumers want representation due to the complex nature of real estate transactions.
“What none of the lawsuits seem to be addressing, is that consumers–on a giant scale, an overwhelming majority–want to be represented. It’s an extremely complex, difficult purchase. It’s not, ‘Oh I’m booking a hotel room on Expedia.com and I can just do it myself. There is so much physical labor involved in getting the ball over the line in a real estate transaction.”
Buffini and Johnson also reviewed several questions and concerns that may be on the minds of agents and brokers, and their clients, including:
- Don’t try to avoid the compensation conversation; it’s an opportunity to show your value proposition, and sellers and buyers need to know their options and choices
- High communication with clients is key–being able to articulate your value and service in a way that differentiates your service and business to the consumer will ensure your continued success
- Consumers can adjust the amount of compensation agreed upon with their buyer broker even once the offer stage is reached
- Consumers don’t need a buyer broker agreement to tour an open house
- Check out the 100+ facts on these post-settlement topics on facts.realtor
- Check out the ABR, Accredited Buyer Representative course at become.abr.realtor; it’s available for free until the end of the year
Introducing CFSP, the Certified Full-Service Professional designation
Buffini concluded his Mid-Year Bold Predictions by revealing the launch of a new designation, CFSP, the Certified Full-Service Professional, created to address what Buffini says has deteriorated in terms of agent professionalism over the last 11 years of an upmarket, as well as how best to work with transparency- and clarity-seeking consumers confused by misinformation in a post-settlement environment.
“The last 11 years has created this false market,” he said. “Property values rose and market values shrunk. Interest rates went low, prices went up, many offers on listings selling in record times; almost no negotiations and people over-bidding one another. No physical inspections…and what it produced is the most unskilled, unprofessional market that I’ve witnessed in my 40 years.
“We have a generation of REALTORS® without the skills to deal with a normal market, and the pros who’ve been around a long time, haven’t practiced those skills.”
He predicts:
- There will be a significant reduction in the amount of agents in the marketplace
- Discount fees and “cafeteria models” will be commonplace
“There is a radical need for professionalism across the industry,” he said, which is why he’s bringing to market the CFSP designation training program. Used to help industry professionals provide full professional services, while charging appropriately and maintaining transparency, Buffini says the CFSP will help agents stand out in today’s marketplace. The five-module program also brings in professionals outside of real estate to support a broader professional offering to bring to clients, he says.
“The CFSP training separates the true professionals from the amateurs at a time when the industry is at a crossroads over agent compensation and agents’ perceived value,” Buffini said. “Working with a CFSP designee means buyers and sellers will understand how their agent earns their appropriate compensation while receiving unparalleled service throughout their transaction.”
Following the webinar, RISMedia Founder and CEO John Featherston said of the Mid-Year Bold Predictions, “It was very educational and uplifting to see an industry icon like Brian Buffini both pointing out that the economics of our industry are stabilizing and also providing a new educational path forward for agents and brokers to invest in their career so they can provide the professionalism, solutions and transparency that buyers and sellers are looking for now in their real estate services.”
To watch the full broadcast, click here. To learn more about the CFSP designation, click here.
