The NAR Ruling will change the way Americans Buy & Sell Real estate

All right, welcome back to the Real estate Revolution. On this episode, we are talking about the commissions, the lawsuits, and the exciting things that I think may be changing. And it's a great conversation. And I have a guest that's probably going to be coming in on a regular basis, which is DJ Garrett here. We're getting him from behind the camera and on the microphone. So let's get into it. Well, by the time you hear this podcast or see this, the commission settlements are all over the place and according to some, realtors are out of business and there's a lot of Chicken Littles running out there. So I thought it'd be fun to start this out a little bit new as Garrett and I are trying some things. Garrett has been in the background running the cameras, and I think he'd bring a great perspective and banter conversation on this podcast and this show. Just kind of what he sees from the consumer side, what's kind of confusing from what he sees from behind the camera. So I thought we'd start with this particular topic.

So I love it. I love it. And I'm excited about this topic because, one, I'm not a real estate agent. I don't deal real estate or speak most realtor language. So trying to break down this topic is entertaining for me. So I'll probably ask a lot of basic questions. And I was thinking about your audience as well. Even though many of them probably speak realtor language, they have to communicate to consumer language, which is the always the tough part. So should be fun.

Should be fun. And I think the other thing too is actually the reasons I'm excited for this change and seeing what's happening, this evolution, you know, in the next spin in the real estate. So I'm actually, I've got some things I want to share, just some thoughts of what might be exciting about this, this new change. Like if we go back in time in history where things kind of began is that, you know, it was, it was co op and then it was a co broke and then with the co brokes, you know, there had to be management of the MLS systems and the different things. And so it grew into all this stuff. And so now what the consumer. And the whole premise of the lawsuit was that people were forced, which is what was said, to pay a certain amount of commission, and the brokerages colluded right to keep these prices high, which is never what happened. I've never been able to put a gun to anybody's head and force them to pay a 5 or 6% commission.

Okay. So that's obviously, that's the first part of what I read as well. And I was trying to figure out. Because there's a settlement.

Yes.

So was there an actual ruling on this or did they settle? And there's.

They settled. And now it's like everybody gets a piece of what for what. And that's still. I mean, they ruled against that. Yes, it was an antitrust, and yes, there was collusion, all these things. So the brokerages, the big brokerages that got sued and then, you know, the nar, national association of Realtors, they settle. So now you have these chunks of money of whoever is in this class action lawsuit that are getting a piece of it for these violations. All right.

And did I read that brokerages could pay into that and opt out of certain things?

There was a couple of different things. Because there was brokerages below a certain threshold of sales volume that would be excluded.

Yeah, it's like an intense amount, but. Okay. Okay. And I read to the lawsuit indicted that before the settlement agreement, the regulations discourage buyers agents from showing certain homes to their clients. This was done by incentivizing agents representing home buyers to avoid showing their clients listings where the seller's broker was offering a lower commission to the buyer's agent.

Here is where it all comes together. Ooh, I like.

Wrapping up already.

Wrapping up already? Yep. The point in all this and what is actually going to happen is, is what is called decoupling of the commission. And here's the best analogy that I've been able to kind of come up with is that let's take a courtroom and you have the plaintiff and the defendant, and they both have an attorney. Right. The plaintiff is offering out 1% of the settlement of his settlement for an attorney to represent this client. So this client can go through and pick whoever he wants and this person is offering that. Does that make sense?

Yeah. You know what's really interesting about that when you think about attorneys, though, is typically the. The case, whoever's gonna win is getting enough money to cover their legal fees.

Right?

Yeah, A weird right. It's a weird dynamic.

But so. So anyway, so what it is is like saying one party is gonna pay for the other party's representation, and that's what co broke. And the commissions are when you sit down with a seller, they agree to pay whatever the commission is that is negotiated based on the services you provide. Right. Which everybody has an array of services. You know, it could be 3% to 10%. Just depends. And you can look at my listings, and none of Them are the same. So now part of that commission based on the conversation is to be offered out as a co broke to incentivize a buyer's representative to bring a buyer to that. Well, the commissions are published inside the mls, which now shows, well, this seller is only paying two and a half and this one's paying three. So I'm not going to show the buyer the two and a half. So now there's this unfair play of, well, we didn't get across the board what they were offering. Here's why that's important. The buyer's agents were never having a conversation with who they were representing as to what they were being paid and how they were being paid. It's always like, don't worry about it. I represent you, but the seller's gonna pay me to represent you. So now it's like this. Who's really paying what? And it's convoluted as to how it's being paid.

Yeah.

And who's incentivizing what. And then you also had some agents where they would, you know, we're putting listing agreements. And it's like, I took a 6% commission and I kept four and I offered two. So now you're keeping four, but you're also not offering enough. The seller may not get as many buyers because you offered two. But do they really understand what's happening?

Yeah. All right. So since I've been working with you, you always give an excellent definition, in my opinion of what you. I don't want to say the word feel, but it kind of is Feel how you interpret your fiduciary responsibility. Right. So can you explain what. How you know, when you coach people or when you're explaining what that fiduciary responsibility is? Because my next question to follow up is, do you feel like for. For the agents who maybe participated in that mindset of going, I'm not going to show them this because it's a low commission. Do you feel like they lived up to their responsibility?

That's a choice, right? I mean, living up to their responsibility, choosing those things. I don't know if you can go into the fiduciary. Right. I think it's a moral type thing. Like, well, I'm not going to do this, but I think the reality is, is that we just weren't having enough conversations with the client ahead of time saying, this is my value. This is the investment of the services that I provide. And the bonus is, is that sometimes the sellers offer an incentive that's going to go towards this investment. Right. That's how I explain it to my clients, that there is a certain value in my services and this is the cost of the investment. And sometimes the sellers cover it, sometimes they don't.

Yeah.

So it's your choice if you want this service as to do you not or what. And that's the conversation that should have been happening all along. Rather than having to choose, the buyer's agent now will set whatever their representing price is. And it's basically the reverse in where we're. Rather than having 14 listings and you know, you're working with a handful of buyers, you have 14 listings and you have 14 buyer contracts, which are like people listings.

Yeah.

And so now you're also. You have an obligation when that buyer's under contract to be servicing them, showing them houses, staying on top of them. Right. So it creates a whole nother layer of that. Your agency as well.

Yeah. All right, so we'll get into that. But there was one part that I didn't understand either about this ruling and I didn't know how to interpret it. So I, I tried to write down it so that maybe you could explain to me because I didn't grasp it, but it had to deal with the MLS and it eliminating fields indicating broker compensation. Right. So I just, I didn't know if agents, like, do they still have to belong to an mls? Do they still have. Like, how does.

Yeah. So what we were just talking about was exactly what they're getting rid of. So compensation will not be public knowledge.

Okay.

Okay. So there's no choosing. I don't know what I'm getting paid. So hopefully you had that conversation with your buyer and they know what they're going to pay because some of these houses may not come with compensation. It'll also be up to the agents to call. These are. These are some of the things, you know, our president, real broker did an amazing job of just explaining this, which we'll include that replay link in the show notes because it's very, it's just perfect. Spot on, very easy to understand. So when you get into it, the numbers are just going to move around. Right. It doesn't mean that a seller can't still offer a commission out there. It's just not going to be published. And it will move the numbers into more of a buyer concession that covers the cost that the buyer incurs with an agent and their closing costs and those types of things. Or you will see where the lender guidelines change, where a buyer can finance their buyer representation into the Price, which, by the way, they're doing that anyway. The numbers are just different.

Yeah.

So it's not going to cause the prices to come down by 3%. It's not going to change any of that. The numbers are just going to move and it's going to make a very, very clear line in who represents who.

Sure.

Okay.

And this really leaves it open now for the buyer. Who. Who drives that negotiation? The agent or the buyer.

Yeah. So this is actually where one of the fascinating things that I really love in this is that, well, a lot of consumers like this lawsuit thing, which I still think was just an ambulance chaser thing that got through. You get a lot of people, it's like, I was screwed. My real estate agent sucked. I can't believe I paid this much money for him and all these things. But nobody said, hey, how did you pick your real estate agent? Yeah, well, they were referred by my daughter's cousin. Awesome. Did you know that they had never done a real estate transaction before in their life? And you're mad about it. So this is where the consumer is going to go through and go, okay, well, maybe I should actually ask some questions and do some interview process and do some due diligence as to the person that is going to represent me in the largest finance and the largest purchase or sale of my entire life.

Yeah.

And I don't think the consumers take that as serious. And I don't think that some of our industry that goes and gets random real estate licenses take it as serious as it is. Right. I mean, it always frustrates me. I've spent 25 years in the business. Right. And I'll be having coffee with somebody and I'm listening to the conversation behind me. And, you know, it's a couple of moms and they're talking about all their great lives and all the things. And now their kids are going to school. Mom's like, yeah, I'm going to get a real estate license. And, you know, I'm just going to show a couple houses on the weekend and, you know, do it just for friends and family. And you're like, I'm thinking to myself, I'm like, all she thinks is it's a little bit of extra money and it's just a no big deal. And I'm thinking, man, if she doesn't have a clue as to what she's doing, can she financially crush somebody and not take her? So those are the things that I go through in this, and I hope that the consumer starts to look at you Know, how do I find the right representation? And I do think it opens it up the consumers to go, hey, you know, I'm pretty savvy with my negotiations. I need you to open some doors. I'll give you 1000 bucks for these services. And if I need your help over here. Right. So more of kind of some attorney type fees. I think you might see some of that. Yeah, I think you're going to see some of the things, say, straight across the board is what they are.

Yeah, actually we'll come back to that. I have a bunch of questions about that, but. All right. So it seemed to me like buyers will have a little bit more control over who they hire. I mean, they've always had that control. So I don't mean to say it like that, but it, I guess from the compensation side, whereas sellers will have more options on how to offer compensation and concessions. Right. As essential buyers. So I always got a bone to pick with commissions, I guess because of my journey in two different states at the same time. Sure. And also as a first time. Really? The first time selling. Selling, yeah. But also how we got in the house, actually I didn't have to do the negotiate good negotiations on buying our first house either.

Right.

So it was a cash buy of a for sale. So it's like straight foreclosure sale.

Right.

So yeah, it's a little different than dealing with agents and all that kind of stuff.

But.

But it's hard because sometimes I can't see it being a bad thing for the average consumer who's maybe bought or sold a few different houses, who's maybe house hacked, who's moved around. I feel like that type of consumer could, could find out how to navigate this to their benefit pretty strong. But I was thinking about the first time buyers are the people who are really going to get hung out to dry. I feel like by not knowing how to pick the proper agent.

Right.

And not knowing the questions to ask.

That is where you know, a referral source is great for those types of people. But then it's knowing the questions. Right. So if this person is referred to you, great. Have a conversation with them and then ask them for three references. I want to talk to three clients. Right. So ask them to go talk to somebody. Ask them for a resume, both personal and professional. Look at who's representing you. Right. We've had some of these offline conversations about like a real estate agent resume application for people because it's always fascinating, you meet somebody, you saw them on a bus bench and your Friend said they were great. So you meet with them, you sit down, do all these things and later on you find out like they've got a criminal record and all these, like. Well, you didn't ask any of those questions. Right. But we did give them a key to our house and all the other things.

Well then what. So what maybe would be some holdups or some encouragement to people that just think, well, if I hire my niece for her and I can be her first transaction, she'll get a great kickback with the commission. Like, what's the. I don't want to call it a danger, but what's the red flag in that going. Be aware. Here's what could happen when you're hiring inexperienced.

Well, I mean, on the buyer side, that's a whole podcast in itself, right. To, you know, be aware of things. Right. So it's always interesting and I think that that's the risk you take in this. So let's take it down to a different level. Let's take doctors, for instance, Right. You know, are you confident in a. And I always like to use a plastic surgery thing. Right. Are you going to have somebody do something to your body that's permanent, that just got out of school, or are you going to somebody that's done that surgery 20,000 times and what is the price difference in the investment between the two and what is the long, long term impact of it? Right. So now somebody, the general public has to dissect, hey, I'm buying my first home. I know nothing, what I do about what I'm doing. So I'm willing to pay for somebody to learn this. Right. So I'm going to go through it and I see it right. Next time they might find somebody that they have to invest a little bit less in that just understands the terminology, they know what they want, they're not as much time and they kind of go through that. So I think that that's what's going to come kind of transpire in all this. And I think that's great because the general public, you know, as I teach and talk about, should understand the real estate thing, should understand the advantages of it. And it doesn't ever make us obsolete, those of us that will pivot and evolve. It just makes our services different. Yeah, right.

What's the form called before you start to work with someone? So like a seller, like a agent agreement.

Yeah. So on a listing contract, you know, when you put a house on the market, it's a listing agreement.

Yeah.

On a buyer, it would be an Agency and a buyer broker.

Okay.

It would be equivalent of listing a house. Yeah. Which, you know, in that agreement it's, you know, a date and time. Right. Beginning and end, a compensation model. And speaking of that, like on that agreement you have some retainers. So you, you might start seeing some people collect some retainers for services. This is where your percentage is going. This kind of where your negotiation of what your value and your fees are.

Yeah.

And how that's going to be distributed.

I feel like that typically is a rushed process. Like there's so much information, that agreement that typically just goes right over the head of the consumer that I feel like now for a lot of people is where the questions are going to have to come maybe or slow down. Like, I remember my, my agent, you know, the house that we sold.

Good.

Like his selling point to us was that we could walk away from the agreement at any time.

Yeah.

No, you know, no fear. Like, okay, well, I really just wait to sell the house. I mean.

Right.

Let's just do that instead. But. But yeah, I guess we'll see what happens.

I want to go back to your journey in a minute.

When.

When you're done with this.

Yeah. Deal. Do you think agents will start to advertise low cost in a bunch of different ways?

Yeah, but they've been doing that for years. I mean, there has been so many discount brokerages over the years. It's nothing that's been hidden. It's just going to be in the way it's presented. So if you look, I think this is the other thing too that we can talk about in a second is really the breakdown of what agents get paid and actually what they're keeping. Yes. There's always been discounted brokers. Dude, there used to be one cut back when we farmed Moon Valley. That was like a help. You sell brokerage. That was a 4% listing and we hated them.

Yeah.

Right. Because you're like, oh, discount, blah, blah, blah. You don't do anything. And the reality was it was just a different mousetrap. Right. Somebody saw that. Like, hey, I don't need all the bull crap that the Valentine's do on my house. I'll save the money. They can do whatever they do. And I'm going to hire this person. That's kind of where you look at where we're going is, well, I know what I need. Or I have an insanely like, you think about the luxury market. You start thinking about there, you're like, I'm willing to pay an insanely expert person for the sale of this $12 million house. Right. That is where you start seeing some of those separations in what they're willing to pay for. Because those people, they equate to things in attorneys like what. What am I getting in the value of paying this person this much money?

So you don't feel like it'll become more cutthroat about trying to undercut other. Not that, I guess you feel like it already is that way.

I think it already is that way. I mean, we're. Our industry is no different than, you know, the. The billboard attorneys.

Yeah, sure.

Right. We're all chasing something.

Yeah.

And we're all chasing attention and we're all trying to build a different mousetrap, and we're all presenting it differently. And the reality is most of it comes around in the same thing.

Yeah. All right. We'll see how quick you can think on your feet. Do you feel like it's important to. Or what would you say to maybe some of the listeners that are agents out there or running teams even? And you go, how important is it to have your messaging dialed in when all of a sudden you start getting callers kind of shopping around, trying to figure out what's it going to cost me? Oh, well, it's a half percent cheaper over here. You know, how would you.

You know, my opinion on it is turn it around on the consumer and help them make the decision, which is kind of like reverse interview. So if they're calling and they don't know what the decision is, help them with the interview process and lead them in the parts where you really specialize in, where somebody else may not be able to answer those. So it's being proactive in where you add value. So I'll give you a great example. When I'm having a conversation with buyers, one of the value propositions that I have, which doesn't sound like it makes a difference to them, but it does to their overall experience. So when I can tell them, one, my wife is a general contractor. Not that, you know, you may be using her. I have that knowledge in my background. We have flipped and renovated a lot of homes and we've bought a lot of rental properties, and we still do. So as we're going through these processes, when you have questions about construction costs or those types of things, I'm going to have a little bit more knowledge than the average person to walk you through this. And if you're thinking about the investment space, I'm going to have a little bit more knowledge. So if all these things are, you believe are a value to you, then I might be the right fit. If you. If you don't give a crap about investing in the other things and you just want somebody to open the door and you be a bull in a china shop, knock yourself out. But I think that that's where the conversations are, and I think that you have to be very clear on who your clients are with that conversation. Right.

Yeah.

Here's my boundaries, here's my value. If that doesn't fit, that's okay. Don't take it personally and move on to the next person.

Yeah.

And it. Yes, you're gonna have some cutthroat people, and that's okay. Yeah.

So I think that really, that mindset that you have, I think, also stems from your viewpoint. I know I brought up your. One of your interpretations of the fiduciary responsibility, but I think that's the difference in a lot of agents, which is, well, my responsibility is to buy them the cheapest deal or save them the most money or make them the most money by selling at the highest price. Let's make sure that the buyer, seller knows all of the options on the table and how to find them, what they are absolutely looking for, how does their whole situation win? And I just haven't met a lot of people that carry that mindset to go, what does the win for this person look like? Let me learn what that is and then figure out all the options and present them to them.

Right.

But that's really what you just described, because you view it as your responsibility.

That's my responsibility. And I think where it comes to this is people would come to you and say, I'm ready to sell my house. And, you know, like a dog with a bone in its mouth, you're like, okay, here's the agreement. There was no, well, where are you going? Why are you selling your house? Have you thought about this? What if you did this? What if we. Oh, okay, none of that appeals. Okay, great. Then let's go back to sell your house. But what if all of a sudden they're like, oh, we didn't think about, you know, Timmy going to college in four years and how that's going to impact this? Or we didn't think about buying this investment property. Now we were just going to put the money over here, and you're telling us we can do this. So it becomes about the people and what the bigger picture is and the longer picture is than just the immediate transaction. And I think that as agents, if we would Ask more questions. We would serve the clientele better. And there's more value in that. Which, guess what, with more value increases your earnings and increases your referrals and your reputation and those things.

Yeah. I kind of wonder how much of that bone in the mouth, like, chase the deal, I gotta get the sale. You know, especially you're talking about when you started, commissions were what, 700 bucks, you know.

Yeah.

And how much of that mindset is attached to a scarcity mindset? I've got to close the deal. I've got to make this check. I've got to, you know, versus going slow down even. I've been on so many appointments with you and I've been behind the camera watching you give the best advice, which actually led to you not making a dollar. Because it's not really what they were wanting to do. They just didn't understand their options.

Right.

And the amount of people that you've kept in a house or kept ownership of a property as they moved on to something else.

Right.

But most people don't get to see that or understand that when it's going well. No, that's. That's what the win was for this person.

Right.

But it's also because if you didn't make the $2,000 commission on this house, that's okay. Because it's like your mindset always getting back in the car. It's like, well, hopefully that seed grows into a great harvest. Right. Hopefully a great referral comes from it. It's. It's just a whole different mindset that I think a lot of people, especially in this time frame with the way just the whole freaking country is.

Yes.

You know, so it's just different. But.

Well, I. When you go back to that, I think it's because, and this is why I'm hoping the evolution of the business changes from so much of the transactional goals, the commission, the GCI commission, gross commission, income goals. Like this is how everybody is judged and graded. Right. And it's taken me a couple of years to step back and go, you know what? I don't like all these industry goals. How do I shift some of these things and start living in a mindset of what is the income that I want to generate and manifest in my business for helping people solve their problems. And by the way, the bigger the problem that I can solve for somebody, the more income I'm going to generate. So when we go out and we really solve somebody's problem with some seller carryback or some weird thing that we do or if we buy their property, I'm making more money because I was able to solve that problem. If their problem is less and they just need to sell the house, put it on the market, then my value is in that 2 to 3% depending on what their scenario is.

Yeah.

And everybody's different. And that's why we always operated in the, you know what, not everybody is different. And this person, while they might pay here, there's other arrangements that we have that are beneficial. You know, some people that we have helped are, you know, which is so fascinating. We've sold their home. And I don't ever call it a discount. I've always said, well, I've invested back into that relationship. Right. So I didn't discount my commission. I said, you know what it might be worth to invest 1% of the sale of this back into this relationship because it might go somewhere. And by doing that, I've had some sellers that have taken all their proceeds and said, hey, you know, we will private lend for these things for you. Some of those people have had money invested with us for years. Yeah, right. And it all came because I'm going, hey, there's a purpose here that I want to do. And that's the way that ecosystem works. If you can figure out that mindset, rather than the scarcity of like, I need to get, I need to suck every droplet out of this right this minute. Rather than being able to have the long term gratification, rather than the instant gratification of the relationship.

Yeah, I think too, I'm, I'm really curious. I mean, I hope not, but it's kind of one of those things where I was like, man, I've been watching your, like, you have a pretty great inner circle of different agents, lenders, things like that. And they're in, there's one in every brokerage. I feel like we're running the own or whatever. It's not like it's just your, your team, but you guys all have this really mindset that's like shifted over the years in the industry. I feel like of going, hey, wait a minute, what happens if we stop being so competitive and we start to collaborate and you slide each other referrals based on the part of the valley you're in or deals over here and, and it's like grown its own community. And so I was trying to figure, I was like, man, I hope this doesn't set back, and I know it won't set back anything in your circle or anything like that, but just the average agent who is on a team that's maybe poorly managed and they're just grinding. So what would you say to someone just as a reminder of going, don't let this hinder how much you're willing to help other people in the same industry?

I'm going to repeat exactly what Sharon said when he got on that call the other day. He simply said, hey, we need to handle this with grace. There are a lot of moving parts here, so let's handle it professionally and with grace and realize that some of us have been through changing markets and some of us haven't been, and this is rocking some people's world, and let's lift them up and give them some confidence in what they're doing rather than tearing people down and taking advantage of the system. Right. And so I think there's two ways to approach it. Number one, if you're newer and unconfident in these things, do not fear telling the person on the other side of the phone like another agent. If you're on the phone with me, hey, you know what? I'm new to this. This is all changing for me. I'm unclear, you know, any guidance will be helpful. I'm going to absolutely hold their hand and do my absolute best to help them level up and understand what's going on. Because I believe that helps the industry, and I believe if you do that, they will help somebody else. Right. It's that. That karma and the golden rule thing. And then on the other side, for the listing agents to also humble themselves and go, hey, you're new at this, right? Like, let me walk you through this so that you don't feel like you're being taken advantage of or those types of things and go, okay, cool. I think it's also a lot of room for people to just collaborate. And, you know, again, I love. I just love what it stands for. Right. When. When real's motto is work hard, be kind. Right. So here we are in the midst of all these changes, and I'm watching all these comments and going, man, this isn't over. This is just change, and we all have to figure it out together. And the goal is that there's enough business to go around. There really is. And it's always been, you know, my goal and the things that I do to help make the industry better in any way that I can by the collaboration piece.

That's great. All right. Personally, I'm a fan of not paying both agents, mainly because I wrote that check times two. So I don't know what you Want to know about my story. But, like, in my end and when I was leaving the Midwest, I was the seller. I paid both agents. But I was moving to Phoenix. It was a hot market. So as part of the concessions, I paid both agents. So for me was like, oh, I added it all up. There's a large sum of money. So I'm like, sounds great. You know?

And you feel like there was little value.

A ton of value. I bought a house with a waterfall inside, bro.

Shut up, Garrett. You should fire your realtor and your family.

I haven't used them since.

Right. So, like. But I want to talk about your journey and when you started to bring up, like, how the agency is going to impact things. And I think here's one of the things that's really important. I want you to see the different times that you bought and sold in your journey. You bought when there was a foreclosure crisis, which none of us knew what the hell we were doing. It was the wild, wild west of the banks. If the bank told you to roll over in your grave three times and give them the middle finger, you had to do it by midnight that night. Right. So you bought a really weird time. You got a great deal, though, right?

Absolutely.

Okay, cool. Whoever guided you through it, I guarantee you, they barely knew what they were doing.

I didn't have an agent.

Oh, so you just bought off the sign, didn't you, bro?

I. I wish. I found the sign after I bought the house. It was behind the house. It was on golf course. It was literally. The sign was laid down, covered in weeds, like. I kid you not, typical REO agent. I did find it. I found the listing on Zillow, and then. But I couldn't find pictures. I found. I went through three different, like, agencies, websites to find pictures. And when I finally found pictures, I looked at Rachel, my wife, and I was like, if it looks like this, I think I'm really interested. Fun fact is, Rachel's like, oh, no. Her and her mom actually drove. They were driving around. They actually drove in the driveway and backed out. And they were like, no, it was. It hadn't been lived in for 11 months. It was. Everything was so overgrown. You know, it's in the woods. And so it just looked like, oh, talk about a project house. And it was. But. But it wasn't. I. I finally got a hold of the right agency, and I was like, hey, I'd like to look through this house. She's like, some. Literally, she was like 817 years old, and she Got us into the house and didn't. Obviously she had never been inside. And she was like, it's just an as is purchase. All original appliances from 1981. The fridge didn't have a seal on it. You know, it was all like, all the appliances and the washer and dryer in the laundry room were all the same color, which was like lima bean green.

Yep.

Yeah. So it's like. But awesome. Wood floors, like oak. Like, it just. You know, sometimes you go into a place and you're like. But then every now and then you walk into a place and you start, you go, I can dream for this house. And that's what happened. So I was like, I want this house. And even just to go on the story, because I can. The house at that time was actually listed for 124. And we were like, oh, man, this is great. Thanks for showing us. We got back to our apartment and I got a phone call, like, literally like 15 minutes after we left the house. And it was that agent. And she said, hi, just wanted to let you know. And me and Rachel were talking on the way home. And Rachel's like, I feel like maybe we should offer like 115 and see what happens. And the lady calls and says, just so you know, this house actually is dropping and tomorrow it publishes at 114. And so I was like, let's do it. So we put an offer in at 1:15. And it literally, after we put our offer in, three more offers from out of state came in at 114. So they. They took our offer and we found that house and we were moved in within like 14 days. Bank was like, get it out of our possession. Yeah, but it's crazy. The only thing I wasn't prepared for that no one told me about was that the city would be like, cool, you bought it for 115, but we valued at 215. So we want you to pay taxes on that. That was a whole other journey.

But yeah, well, you also lived in Illinois.

The worst.

So. So there's that piece. So here's what I want to get to. There was that time, right? There was a. There was a handful of us that like, were in it, kind of knew what was going on. And then there were some people that just were not really up to date with that. Okay, so then you sell when in 20.

September 2021.

We closed September 2021. Guess what market is a total shit show. We're in the middle of COVID The agents, like in Illinois are probably non essential essential. Nobody Knows what's going on. The market's going through the roof. Nobody knows why all the things. Right. The cashier at the local convenience store can sell a house and make a gazillion dollars. And that's exactly what happened. Again.

Yeah. Oh, I told you a million times. I was like, all I have to do is take pictures, put it on Zillow. This house is going to sell itself.

Yep.

And I mean, over the.

Yes, it will.

Well, that was my mindset.

Who is going to. So this is where I was getting at. Is it? Who is going to start guiding you through? Like, yes, I can find a buyer by doing this. Who guides you the rest of the way.

I didn't know there was a rest of the way.

I know, I know. That's. That's my point. Is the consumers, like, this is so easy. You're like, all right, what happens when the appraisal comes in low? What happens when there's a structural crack that you can drop a quarter in and everybody wants to cancel because the freaking house is falling apart? And it's really not. Who helps you through all those things? And what I try to tell people is that I get paid when shit hits the fan. And sometimes I'm really fortunate, and it doesn't. But I'll tell you what, you do not want me when it does. Right. And so there's no way, until you get somebody to prove your point, that this is why you hired me.

Yeah. And I think I told before, for the most part, I felt like. I felt like our agent wasn't doing anything. Stressed me out. But I would also, like, I'd send a text or an email, and I'd hear back 36, 48 hours later. And you're like, you're killing me. Especially because I was in the process of purchasing a house here, and it was like four to six minutes on response from your team, from Kelly Zitlow's team. I mean, getting pre qualified for all that. I mean, it was like, zing, zing, zing, zing, zing, zing. Everything here moved a mile, like a mile a minute. And there it was like, mile every couple of days.

So it's fascinating you bring that up because it seems to be that way as you go across the country and the further east you go, the slower things happen. Because the thing you're talking about is like, dude, we can close a house in seven days here, like, without a problem.

Yeah.

And we can rush everything. We can close them quicker. We bought a house in New York two years ago. It was like watching paint dry.

It's still title clothes.

Right. It took four months to get title and we paid cash for it. It's stupid.

It is. So the one thing, the one thing that lawyer did or lawyer the agent helped me with that I never would have thought about, I didn't even know is I had a great offer come in from someone who lived in Chicago, which was close to where we were, but it was a different county.

Right.

And he was like, hey, we had several offers on the table. He said, what I will tell you is an offer from Cook county means there's a lawyer involved, which hadn't thought anything of. And you just cautioned me of what that was gonna mean and what that, what that could mean. And here's where this could go good, here's where it could go bad. And so I was very appreciative of that, of that counsel because I wouldn't have thought through that. And it was a, it was a decent offer, which we ended up getting a better one later.

But.

Yeah, it's not to those clutch moments that you don't know what you don't know that comes in Handy.

Yep, yep. 100%.

What else we got here?

So let, let's go back and backtrack this. What are you, where are you at as the consumer? Like even though you live a little bit in this world, how do you feel it impacts you where you know, you live in an above mid range home here in Phoenix.

Right.

All the things if you're going to go like, if you and race are like, hey, I'm thinking about buying a house. What does that process look like for you with all this stuff going on right now?

I'm going to answer this. Knowing what I know or like what.

I would shoot for, what you would shoot for. Try not to take on the knowledge that you have more from like what you're reading right now and what your past experience.

Well, here's what it would mean to me. Really, here's what it does mean to me is I mean as just a basic consumer not knowing what I know, I would care less. The only thing I feel like I.

Look at as a consumer is the interest rate.

Can I, can I even qualify? Can I? You're looking at a monthly payment.

Right.

So unless, you know, I do have friends that make it a same amount of money monthly and that's great for them. I. That most people I know have to make decisions based on monthly income.

Right.

So it's just about the interest rate.

Yeah, but that's on the buy side, I'm talking about more like when you're. You're going out and you're like, we're thinking about, you know, are you calling for that representation?

Yeah. So here. Here's where I would. What I would. If I was gonna go. The only reason this would affect me in any way is because I would try to utilize it to go, hey, I want to find someone worth 6%. Right? But here's what I want from them. Like, for me, I would. Yeah, I would really try to figure it out. Whereas I never knew what to ask before. Whereas now it's going, I, you know, hey, what connections do you have as an agent to help me find something below, you know, 100% worth? And not that I expect to find a house for 50 cents on the dollar from the. Every. Every agent, but what. Where can I start to utilize that agent's knowledge to find a deal?

Yes.

That. That's where I would. I would really try to tap into.

Yeah, no, I. I love that approach from that standpoint is more of, yeah, here's a list of standards that I'm looking for in somebody, and this is what I need right now. Because if you're saying, hey, I'm looking for a luxury primary residence, then I want to go searching for somebody that's in that space to find me that piece, because they're going to be very well connected. If I'm wanting to go find an investment property, well, that same agent is not going to be the same person that I want to find me the investment property, because I want somebody down in the dirt, somebody that understands it, Somebody like me that's like, oh, yeah, you know, you get it, right? You talk investor. I may not talk luxury, but I do think that the industry can go back and forth and go, hey, you know what? And I have really found this in my own practice that I have done a disservice for some of my clients where I've taken something on that was a little bit outside my wheelhouse. I'm like, man, you know, I shouldn't have done that. So now I'm very big on, like, hey, if I have a client or a friend or referral, looks like I've got some great luxury for you. I'm going, hey, you know what? I know Blake Clark or Brian north or somebody in that space that I can go, hey, here's the person I'm going to connect you with. I'm going to do a group chat. This is what I want. I might even refer to both of them say, these guys are both killer. They're best friends of mine, take your pick. It's not my space. Right. And then they're going to pay me a referral fee. And guess what? The client is taken care of. They got some business out of it. We share a relationship now and I don't give two shits. Yeah, right. But that is a whole different ball game. That's a whole different level to live on and go, I just, I don't want to cross that line. And there's times that Brian north and Blake have both crossed the other side and said, hey, you know, Brian north referred me like great family friends of his years ago that are still family friends of his. And now they're great family friends of mine. Yeah. And that was a very humbling experience to get that referral from Brian, you know, for who he is. So I think that those are the things that need to happen more often in this industry.

Yeah, I think too as the consumer, if anything it does, it does some weird things from what I could see online as far as like some people say it's going to cost the consumer more on the back end, which I don't, I wouldn't grasp. I don't see how that would work. If anything, I feel like you would save money in which the consumer wouldn't.

I think. Let me address that though real quick. The costing more on the buyer side is not costing them more as much as it is. It's going to be more out of pocket for them if they can't finance a real estate commission or there's not a way to move those numbers around for lenders. Right. So that's more of where the cost is. Not so much. The numbers are all going to remain the same. They're just moving.

Yeah. And so it's the buyer side of going, oh, well, I could only qualify for X, now I have to qualify for less. It's like some people's mindset. Yeah. But for me it's going well, shift your mindset. You have the same amount of dollars to spend. Find the agent that's worth that and find a property that costs the same. But maybe it's a better deal.

Yeah.

And I think people just miss that. There's a lot of young flippers and people there that know how to find that stuff, which is cool and great. I just, as the basic consumer, a first time buyer like you just, you have no idea how to look for that or projects scare you, you know, or if you don't, the capital in case Something happens. And the first house we bought was a project house.

Sure.

And I remember looking at my dad being like, gold, right? And, dude, I kid you not, you know, the. The three months after we moved into her house, you know, my furnace didn't fire up, and I called my dad, and I was like, hey, this happened. I'm not sure what to do. And he goes, oh, first thing, call your landlord. And he hung up. And I was like, have a freaking landlord, dad, you know, and realize like, oh, welcome to homeownership. Right? Like, well played, sir.

Right.

And you just. You start to figure those things out. But two years later, my AC unit went out. So you're like, these are all, like, weird things that you're like, yeah, I don't have the capital for these projects to just flip a house or whatever, because I didn't know how to find any of that stuff or have that mindset, you know?

So goes back to knowledge, you know? And one of the things that always fascinates me about you is, right, you're a very curious person. So you'll take something and then you'll dig. You're like a puppy. You're like, I'm gonna dig a little bit more. Like, no, there's some more. Right? Your nose is dirty. You're like. You got it all over your face.

There's a reason every metal detector is named Garrett.

So. But what I love about that is there's a curiosity factor. Is, like, if I go down this road, what do I get out of this? And I think that that's where more consumers need to be with this whole process. Yeah.

Yeah, that's good. I actually saw a tweet today that I was like, oh, interesting. And it was from an investor here in Arizona, in Phoenix. I don't know who they are because their username is really weird, but I also don't want to throw them under the bus.

But they.

They listed out.

It's just.

It was a graphic, basically, but it was this table that I'll show you. And he's, like, starting to see a lot of agents do this in the Phoenix area. What are your thoughts? Hit me up in the DMs kind of thing. But it was. He itemized out all of the. The realtors to do's and talked about and talked about pricing. So it was like, I'll just read through them really fast. But he called it a new home purchase fee structure client onboarding 199 draft and submit offer $500 or $100 for each additional offer limit 9. Open escrow and title and begin escrow process $99 schedule and coordinate home inspection $99 process all amendments and addendums $25 per review home inspection and draft buyer $250 with the buyer review closing cost statement 250 buyer final walkthrough 200 transaction brokerage 400 total purchase cost 1,900 2,300 bucks. And then all commissions paid by seller to be credited by, you know, buyer escrow. If transaction doesn't close, buyer to receive 500 credit towards future transaction. When it comes time to showing houses, they're billing at 2% or $75 an hour. Structured, kind of like an on dude, like a lawyer.

Do they get diarrhea, dizziness? Any of that come with this or.

I don't know. But. So they're what they were, what they worded it as is retaining. Like, like a retaining for a lawyer. So it's 75 bucks an hour or time you want me to show a house and drive somewhere?

Yeah.

And so he was like just fishing. But it's Basically, it's like 2% buyer agent on a $700,000 home for, for the buyer is 14K. Right. So that's, that's a nice home. But also that's your standard four bedroom home where I live is that.

Yeah.

So that's, that's like, that could be a big deal for some people. So it's just, just, it was interesting seeing how like they're already. I think this person views themselves as like an investor coach the way that they had their, their profile position.

Sure.

So it's just interesting to see like that's so yeah, you will see those.

Things to pivot where you also have the ability, you know, depending on how it aligns. Right. As we start. I think this is a great way to kind of pivot about some of the exciting things to really think about. Like, oh, how does that change? How does that shift? Right. Yeah. So you start seeing fee based stuff. Well, just like an attorney, guess what, your credit card's on file. You call and you're on the phone with me for 30 minutes. You're getting swiped. Right. You may see some of that when it comes down to maybe investing or some of the other things. Like yeah, dude, I, I'll show you as many homes you want. Like I'm, I'm just gonna, you're gonna pay me for the service. Right. Rather than, you know, this is where it's beneficial and not beneficial. Right. It used to be great. I Get a buyer's agent for 3% and it's a year long. And this investor is dragging me around by my freaking ears. And I hate this guy. Right. Versus you want to drag me around my ears? You're going to pay me to drag me around my ears. And if I don't do it, maybe somebody else will, and that's okay. And that's where the choice and the services is going to apply. Right. So that is kind of the exciting thing of what does that look like? Now you get some of the exciting things where I started thinking about, okay, how does it impact, like here in Phoenix, we, a couple of years ago, this big thing, right? When the market started heating up. Oh, God. If you put a sign in the yard and it wasn't an mls, it was a violation. Right. Clear cooperation violation. Because you weren't offering it in mls. I'm like, well, shit, right? I can't even try to. Which it was always trying to attract buyers before it went on the market.

Yeah. Do you have a list of these things? Because I'm really curious as well. So granted, this is like instituting something new, but I feel like it also is undoing a list of things that people know people aren't talking about it. Right.

Just. Just so everybody's clear on this, these are not things that are happening. These are things that I'm thinking that I'm also saying, hey, do your own research. Yeah, yeah, go dig like a puppy. I'm just saying these are some things that I'm excited to see what could potentially change across the board, which is some of the things that have happened over the years. When we talk about sandbox in Arizona, especially the sandbox is the MLS and the board system. Right. So if you go to Tucson, you go to Phoenix, you go to Payson, you have all these different sandboxes. And it used to be it's like, oh, if I went to Sedona to show a house and I wasn't in that sandbox, they're like, we don't cooperate with you peasants from the Valley.

The Valley.

We're Sedona dwellers. Right. And we would do the same thing to be like, we're not cooperating with you tree huggers from Flagstaff. Yeah.

Do you ever tell people in Sedona that they're just the valley of Flagstaff?

Right.

We're all the water.

Right. I mean, so. So with all of that, you just are seeing where. How do we shift in the sandbox and where does it change the rules? Right? So if a Seller says, I'm willing to offer somebody this commission and it's not published. Is it okay for me to cross the sandbox and everybody's okay with it because now I'm representing my buyer. Clearly, even though I'm not part of your board, I can still represent my buyer because they're paying me to represent. And if he's offering something, you can still pay it to me. Does it change those rules across those sandboxes? Right. That's something that's fascinating to me. Do the lender guidelines start to change? Right. So is there a way to finance commissions into a deal? How are they going to show up on the closing disclosure statements? How are the fees going to be charged? If you can do a fee based service and it's on a credit card, how is that going to work with the Department of Real Estate? Because technically the Department of Real Estate, all fees have to go through the brokerage and be dispersed to the agent. So, you know, I can't take a credit card from you, the consumer directly in my business. But do people start re labeling things and is there a separate consult? Like people start getting weird and creative. Right. We watched it during the short sale days and all the different entities and things. So you start looking at all those pieces and going, okay, well there could be some good and some exciting changes about it. I think the bigger thing is when you really look at it, it's like, man, as complicated as it might be, it may not be, but it's like for every state, if there was one MLS system and one board and one government in that, it would make things so much easier. Right. With having access to all the data. So we still have access to the data. And it used to be the MLS was the proprietary, like this is where you had to get the information. It was secret. Now it's wide open.

Yeah.

But there's still no crossing borders. Right. I still have to pay to be in Tucson, to be here, to be in Flagstaff. So my dues every year, like three grand a year to be parts of all these MLS's to serve all of our different clients.

Yeah. You know, it's interesting. So the, the lending rules changed from when we got our first house to when we got our second house.

Yes.

Bought our first house in 2012 right at the bottom of the market is great.

Right?

Pretty sure it was just a.

You.

Know, Fannie Freddie loan, just like running the mill, which turned into a sweet family. It just worked easy.

Right.

But it was interesting when we did our loan here is like Learning that the amount disclosed have to be disclosed as a lump sum in the lending side. Whereas every agent now. Well, from this tweet is what meant what it jogged my memory in thinking about when I tried to look into that before, I was like, oh, it's just a giant lump sum trying to figure out like item, like an itemized breakdown, you know. But will it change in the real estate side if everyone's going to try to itemize things down like that, Would they ever make that same rule, like.

You have to disclose what you did for these fees?

Yeah, well, it's interesting because they made, it's like they made the rule that it's not disclosed. Instead it's just a lump sum.

No, that was, that was a much different thing. The lending versus what was happening in the real estate business. Right. There's really, there's no way for us to hide any fees. Right. There's only way to disclose, like, here's all the things we did for what we were paid.

Yeah.

On the lending side, but you don't.

Do unless you're asked. Right. But like, are those things that. Does the agent disclose those things unless they're asked?

No. Yeah. No, but on the lending side, what was happening was I would get you at a 6% rate and you'd be like all happy, go lucky. Plus you were paying a point. Right. So you're paying a 1% origination. You got a 6% rate. But I could have gotten you 5.8. But I got a spiff because I got you an extra up here that wasn't being disclosed. So now everything's, you know, and, and that's my perception of what was happening is there was buried fees that were not being disclosed. And, you know, it kind of stems from the Dodd Frank stuff when all the appraisals and all the fraud was going on. And then they created this like closing disclosure that is a very calculated, very detailed disclosure of every fee that is charged. And they made some. There was a lot of reform in the business during that. And that was on the lending side because the lending side created. Yeah, the last downfall.

Yeah.

Right. So there was a lot of reforms. So not that this is a downfall. And to be honest, the last, you know, point is that, look, the only people that are really going to be talking about this is anybody that's had any thought process of buying or selling a house in the last year.

Yeah.

Other than that, it's going to be another lawsuit that flies through the media. Somebody's going to go back to buy or sell a house. And keeping in mind this is like for the industry, the average consumer does this every five to seven years. So in seven years, when you just sold somebody a house, there could be a whole nother change and I wouldn't worry too much about it. Yeah.

So this isn't like a class action lawsuit where I get a check in the mail because I used a realtor?

No, lame.

Every four years I get a random check from some Apple class action lawsuit. So I was hoping it'd be like that.

No, no, that's not how that works. Here's what it's really about, you know, as we kind of go through this, is that it really has to do with decoupling a commission, which is the buyer is going to be responsible for paying their agent. The seller may still be able to offer compensation, but it won't be publicized. Right. So there may be more conversations between agents on what compensation is. You know, some random person will figure out some sort of like hidden code in the MLS that's supposed to show commissions.

So I guess I was thinking, can a seller still look for the buyer to pay closing costs for the seller? Is that an option?

I mean, everything's negotiable. It is.

Okay, so that's what I was wondering. If the market is hot and houses.

Are flying like they did, you're bringing in some of the things where, you know, back in the days where the market was different, we were doing multiple offers or like in the cash part of the market where we deal, you know, in off market where we're paying everything, there's typically not commissions and fees involved in that. So there's a little bit of misconception on that, but it still kind of works out the same in that. Yeah.

So but you can negotiate either way is.

I was wondering.

Okay. I didn't know if it was just.

For the buyer side, but yeah, no. So, you know, we're just decoupling and drawing a clear line as to who's representing who and who's paying who. And there's still a lot left to be determined as to how all this is going to be played out. But in July, they're just saying they're not going to publicize commissions. It doesn't mean that the sellers can't offer because here's the deal, you know, and again, the replay of Sharon, he puts it so great in there is there's two paths to get from his house to L. A and the Delta is three minutes. There's just two different ways to get here. And guess what? There's a new path. The old path of 35, 40 years isn't going to be the same. And now we have to reroute and change how we think about it and educate the consumer and educate ourselves and just make it a common playing ground. Because the real estate community still holds value. It'll never fully be replaced by AI because there's too many variables in what we do. Right. So many variables in you as a human. And there's too many variables in the freaking houses that we have. Yeah, right. Yeah.

Especially because it's not just giving advice, it's problem solving.

Yes.

And that's, that's different.

Yeah.

I will say too, it seems like anybody, agent wise, any agent that seems to have a decent amount of experience in, in not just working in an easy market, but they've, they've been around, they've experienced multiple markets.

Right.

Doesn't seem to be shaken by this one bit. It only seems to be people that maybe haven't experienced a tough market, that this is like another, you know, needle or the last. The last straw, I guess. Not the needle that's hidden.

Yeah.

The last straw on the camel's back.

That's right. Yeah. Yeah. I mean, when you look, I mean, we're, we're getting ready to do an event. Right. With. With Carl Freud who owns Kenneth James Real Estate, Brian North North & Co. And Blake Clark of Limitless Real Estate and myself put on by Kim Ryan. And real brokerage is about grit in this market. Right. And all of us have had paths through the grit. Right. Brian and I went through the reos and the foreclosures. Blake picked up his careers mid foreclosures and Carl came in a little bit later. But there's this path that we've all navigated through, and I think that if you're always willing to be. The best example is, you know, get a Gumby doll and put it on your desk. Right. Is to always be flexible and nimble with this market. And it comes back to how are we leading and guiding people? And there's always going to be a investment for that service and that's where we have to go in what we're doing.

I've been more pokey, but all right, too. And then I don't know if you've mentioned, I haven't heard you mention. Might as well mention on this podcast router, because actually, right now, every month you are doing a call for agents in every brokerage. It's educational.

It's been awesome.

I'm I get to sit behind the camera and listen to it, but maybe talk about that and invite the listener.

Yeah.

So if.

If you're in the real estate industry, it is a real estate agent specific call, but once a month, going through things in March, you know, we're doing. Which is coming up real quick. So who knows if this is aired? You know, just going through the things that we've learned after flipping a thousand homes and where to add it into your business. And not so much the process of flipping a home, but really the things that can kind of help speed up your process and help you avoid some dangers that we did. And then, you know, there's a. There's a schedule. So every month, you know, if you want to get on our email list, just dm, we'll get you on the email list, make sure that you have that information. And it's really just about giving back to the agent community and helping them get through this time. Because at one point in time, you know, when I went through this in 2008, there wasn't a lot of this information and there wasn't a lot of people willing to share. So it's kind of my turn to give back.

Yeah, I love it. It actually is kind of a private link, so we don't post it.

Yeah.

So they got a dm. You, whether it's on Instagram or Facebook, at Steve D. Valentine, and that information goes out.

Yeah, yeah. And if you're having, you know, any thoughts or questions about your brokerage, your team, I'd love to get on a call with you. Not for the reason you're thinking, though. Actually, I love doing this exercise with the agents about figuring out and helping them figure out where their next move is. Because real may not be the brokerage for you. Maybe something else is. And it's really questioning on where you're at now and where you want to be. And so if you want to help kind of making that decision and tearing that apart and also hearing what Real has to offer pretty much anywhere in the country. Let's jump on a Cali link here and let's talk about it, and let's just break it down for a few minutes and let me help you at least give some questions to ask yourself so that you can make an educated decision going forward.

That calendar link should be in the.

Show notes somewhere around there. Guys, thanks for joining us. Hope this clears up the air, makes the waters a little bit muddy. And welcome DJ Garrett.

We did it. We did it.

Peace out.