Agents at Greater Risk of Being Sued in a Cooling Housing Market

Macro trend lines within the housing market continue to show warning signs that there will be a prolonged deceleration of home sales within the United States. While home prices have risen year-over-year, they are doing so at a declining rate, and with month-over-month drops persisting. The impact of inflation and rising interest rates, which have caused mortgage rates to surge towards 7%, has resulted in many consumers, particularly first time buyers, being forced to hold off from purchasing properties. Inventory levels, which plummeted during the pandemic housing boom, have begun to climb again rising year-over-year and all signs point towards an unwelcome slowdown.

Adding to these challenging times, real estate firms should expect to see an increase in the number of lawsuits that are filed against their agents in the coming months.  Historical precedent dictates that as the housing market cools, instances of buyer’s remorse will increase. As home values stagnate or even drop below their purchase price, the “last batch” of buyers can often become resentful and their frustration can frequently be directed at their agent or other professionals involved in the home buying process.  Issues that were once minor inconveniences or easily overlooked now turn into matters to be litigated before the courts. Agents who are sued face no greater likelihood of being found at fault in a down market, but the number of professionals who find themselves party to a lawsuit will escalate.

Recommend your clients purchase a home warranty
The likelihood of an already frustrated home buyer becoming increasingly exasperated is reduced when a home warranty is in place.  Should a hot water heater fail several months after closing, a home warranty offers an easy avenue for replacement.  The buyer no longer has a need to stew on the minor issues they believe were not disclosed to them in the buying process or the contingencies that they might have waived.

Make sure you are using current market comparables
In a rapidly fluctuating market, it’s vital that you provide your clients with an up to date comparative market analysis (CMA) to ensure any offers they submit are fair and competitive. Using data from a CMA carried out months prior could leave your clients at risk of feeling that they submitted an offer misaligned with market conditions.

Provide full and complete disclosure
With dissatisfied home buyers looking for reasons to potentially sue their real estate agent, it is critical that you disclose all known defects, hazards and other relevant facts to your clients. If it is relevant and you are aware of it, so should the buyer or seller that you represent.

Secure, strong and stable errors & omissions (E&O) insurance coverage
It is vital that you have quality E&O coverage in place with a strong and stable insurer who has experience dealing with different market cycles.  Partnering with a specialist provider with a long track record of serving the real estate industry matters as lawsuits increase.

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Opinion: A unified approach for reducing appraisal bias

The impact of data and diversity

There is no single silver bullet that will rectify the pernicious impact of bias in residential real estate valuations — it is a complex problem that requires a multifaceted solution. But there is the promise of a better future on the horizon. The housing industry and Biden administration have begun a full throttled effort to solve the issues contributing to inequity.

By combining the power of emerging technologies like artificial intelligence (AI) and machine learning (ML) with a true commitment to diversity at every stage of the valuation chain, we can build a consciously unbiased appraisal system that delivers more equitable and accurate conclusions.

Yet, this will be a time-consuming and challenging effort that will require all parties to be aligned in their goals and their approach. First, we must acknowledge the impact that appraisal bias continues to have on minority homeowners and the broader housing system.

Despite the protections enacted by the Fair Housing Act of 1968, inequality and discrimination in the housing finance system continue to shape the contemporary valuation of homes. Recent studies from Fannie Mae, Freddie Mac, and academic researchers have found appraisal disparities for communities and borrowers of color.

As a result, homes located in minority neighborhoods have been chronically undervalued, exacerbating the racial wealth gap. Fannie Mae’s “Appraising the Appraisal” study comparing appraisals to automated valuation model (AVM) data for refinance transactions found that Black borrowers received slightly lower appraisal values relative to AVMs, while white borrowers received slightly higher appraisals.

Likewise, a 2021 Freddie Mac study of more than 12 million appraisals dating back to 2015 found that appraisers’ opinions of value were more likely to fall below the contract price in Black and Latino census tracts. Some researchers point to appraisal methodology as a culprit.

According to a study published by Oxford Academic Journals in 2020, modern appraisal techniques using sales comparisons and neighborhood comparisons actually perpetuate racial inequality, and in some cases exacerbate it, citing that the sales comparison approach preserves historical racial bias in today’s home values.

Similarly, the study found that neighborhood comparisons used in appraisals may be influenced by racialized assumptions of a neighborhood. Thankfully, this topic has been getting the attention it deserves from industry leaders, regulators and the current administration.

In March, the Biden administration announced a multi-step plan to advance equity in the appraisal process. The administration’s interagency taskforce on Property Appraisal and Valuation Equity (PAVE) issued an action plan including regulatory reforms and oversight to make the appraisal industry more accountable, provide consumers with assistance and awareness, prevent algorithmic bias, drive more diversity in the appraisal industry, and leverage federal data to benefit research and policymaking.

If passed, the Fair Appraisal and Inequity Reform Act of 2022 would establish a Federal Valuation Agency responsible for promoting a fair, unbiased, transparent and repeatable valuation process. The industry is ready and willing to tackle this challenge.

We all share a goal of creating a system that produces more accurate valuations free of racial and historical bias to open a more equitable path to wealth creation for all Americans. The difficulty is agreeing on exactly what a consciously unbiased appraisal system looks like, and how to achieve it.

Ideally, the solution leverages more advanced technology, better data, and a more diverse workforce across every sector of the valuation spectrum. With advances in data engineering and modeling, we now have the technology and tools available to begin correcting some of the bias and issues in the modern valuation process.

By working from objective data rather than information processed and curated by humans, AI and machine learning technologies can reduce subjectivity and unconscious bias from appraisals. However, every valuation technology provider has their own secret sauce when it comes to their algorithm for AVMs and other computer-based valuation tools.

A slew of agencies including the CFPB, FDIC, NCUA, and FHFA have collaborated to address this with newly proposed quality control standards for AVMs. Their proposed amendment to FIRREA aims to increase confidence scores, prevent manipulation of data, avoid conflicts of interest, and enforce random sample testing and reviews.

More research is needed to determine which algorithms should be used to ensure AVMs do not introduce their own model bias. This would require extensive testing using historical and current data to determine if the estimates generated by the technology accurately reflects reality.

Additionally, the standardization of data is another crucial variable that must be addressed for this approach to succeed. Just as each valuation technology provider relies on different algorithmic models, they also rely on different data sources. It will be impossible to standardize models unless the data all models are running on comes from a single source of truth.

One proposed solution is for the GSEs to provide open access to their data sets, which constitute the most comprehensive collection of comparative real estate data nationwide. That way, all participants are comparing apples to apples without the possibility of oranges sneaking into the data set.

There has been broad support for this approach across the public and private sectors, from fair housing advocates to valuation industry leaders, but it remains to be seen whether the FHFA will authorize the release of GSE data.

While technology and standardization are important tools to create a more equitable valuation process, a diverse workforce is another critical check on subjectivity and unconscious bias. There is a severe underrepresentation of diverse talent in the housing industry.

According to the Department of Labor’s Bureau of Labor Statistics, the appraiser profession is 97.7% white, and women comprise only 30.4% of the workforce. Looking at the broader scale, less than 13% of the housing industry workforce is Black and Hispanic. As an industry, we need a more diverse workforce and leadership that better reflects the population we serve. In response to this, the Appraisal Institute has launched an Appraiser Diversity Initiative with Fannie Mae, Freddie Mac, and the National Urban League.

Other initiatives like Fannie Mae’s Future Housing Leaders program are focused on sourcing a more diverse talent pipeline and matching them with employment opportunities in the housing industry. It is important to also focus inclusive recruiting efforts within the valuation technology and data science field, including those building and maintaining computer-based models.

These initiatives will take time, but with a consistent, united effort across the industry we can ensure there is an emphasis on promoting diversity when hiring new entrants and promoting to leadership positions. There may not be a single action or reform that can instantly solve the persistent issue of biased home appraisals, but there are ways to improve and, perhaps over time, remedy the problem using a combination of technology and diverse data.

Through a merger of expert knowledge, diversity of thought, standardized data, and advanced technology, we can develop more equitable valuation processes that are consistent, repeatable, and transparent. The scope of the challenge should not discourage us. Rather, the reward of achieving a more fair and equitable system that serves all Americans is well worth the effort.

This article was first featured in the May HousingWire Magazine issue. To read the full issue, go here.

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Fannie Mae Adopts Appraisal Standard for Square Footage

Starting April 1, mortgage-giant Fannie Mae has implemented new mandatory standards for appraisers specifically around the measuring of square footage, with the hope that they become more widely adopted and make the often complex and subjective process less confusing while combatting long-running issues with racial bias.

In a webinar hosted by industry trade magazine Valuation Review, two experienced appraisers were joined by Fannie Mae senior director of collateral policy Lyle Radke in laying out what the new standards are (know as “ANSI”)—what they aren’t, and how they are likely to affect the home buying and selling process going forward.

“The first six months is going to be a learning curve,” said Hamp Thomas, an appraiser for Carolina Appraisers, who helped pioneer the new standards.

After decades of having different appraisers in every jurisdiction and from every company essentially having their own ways of deciding what the livable square footage of a home is, the hope is that Fannie Mae’s one single method will smooth out the process of running comps for real estate agents, avoid some of the pitfalls with lenders and appraisals and better automate and digitize their model.

“We aim to jump into the fray here and provide some leadership,” Radke said. “We have spent a good amount of time researching the various potential standards available and as result of our research we felt that the ANSI square footage standard was the best available option.”

These specific standards have also been adopted by the National Association of Home Builders (NAHB), have existing continuing education courses available and are relatively simple at 16 total pages, according to Radke.

Though they only apply to single-family homes and only encompass the single data point of square footage, Radke said the goal is to remove subjectivity from the process at least in part as a response to racial inequity in appraisals—with both data and the experiences of homeowners and REALTORS® showing people of color receive lower appraisals.

“It has created a lot of noise and controversy,” Radke said. “To the degree that we can migrate our opinion into more of a standardized or factual approach that helps us defend ourselves from any accusations of exercising latitude in an unprofessional way.”

The Biden Administration recently announced a five-step plan to combat racial bias in appraisals. Additionally, the Appraiser Institute has more recently acknowledged the need to address unconscious bias after calling the idea “absurd” and denying the existence of racial biases in appraisals in early 2020.

The new universal standards are also meant to prevent unnecessary conflicts and disagreements with housing appraisals. Though likely many governments or appraisers will continue to use other opaque standards, having at least one measurement that is known and mostly quantitative can only help, Thomas said.

“The stuff has not matched for all this time,” he said. “Now that we have ANSI we’re starting to look at it a little closer…the comparables don’t match with ANSI? Well they didn’t match before.”

“If you have at least one as a known, then your whole math equation is better,” said Richard Hager, President and Chief of Appraiser for American Home Appraisals. “It’s not perfect, but it’s better.”

ANSI also leaves room for an appraiser to opt out in special circumstances where a home just can’t fit its square footage into the standards, according to Radke, and also allows appraisers to provide a “narrative” explanation for why they couldn’t, or areas where they had to deviate from the standards.

Thomas said having some kind of concrete standard for something as essential and universal as square footage has been a long time coming.

“Somebody had to have the chutzpah, if you will, to take that first step, and that’s what Fannie Mae did,” he said.

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Refusing to Present Offers to Sellers - Division Advisory

Refusing to Present Offers to Sellers

The Division continues to receive complaints by prospective buyers and their buyer’s brokers that some listing brokers are not presenting buyer’s offers to the seller. An additional complaint is that those listing brokers are refusing to present offers to their sellers unless a particular contract software is being used. Also, there are reported instances where a buyer is represented by a brokerage firm that uses a varying commission model and submits an offer, and that offer is not being presented by the listing broker to their client.

Potential license law violations

These actions can be viewed as reducing the buyer pool and those brokers placing their interests before those of their clients, which can be considered a violation of the license rules, and their Uniform and Fiduciary Duties.
 
Brokers should be aware that the real estate broker license law requires that a broker present all offers received to their seller client. A real estate brokers cannot refuse to present offers to their sellers just because a particular contract software is not being used by the buyer’s broker. These actions are not in the best interests of their clients, and are furthermore harming their clients by reducing their client’s property’s competitiveness in the marketplace. It can also discourage brokers who do not use this brand of contract software from showing properties.

These practices bring up many questions

• Are these actions intended for the benefit of the Seller or Broker?

• Doesn’t the choice of contract software primarily benefit the Broker?

• Shouldn’t an offer from a broker using a varying commission model be treated or presented the same by the listing broker?

• Would these practices create a smaller buyer pool thereby risking a lower price and possible extension of the days on market to the Seller?

• Are these practices promoting the interests of Seller with the utmost good faith, loyalty and fidelity?

• What are the pro’s and con’s for the Seller in these instances?

• Would any of these practices have likely been approved by Seller if all the pros and cons were fully discussed?

• Must these actions be fully discussed and disclosed to the Seller in the Listing Contract?

A broker cannot restrict a pool of buyers by limiting or refusing to provide their seller client offers received without discussing with their client the advantages, disadvantages, and ramifications of doing so, and any such limitation must always be memorialized in writing in the listing contract.
 
A complaint received by the Division in this regard would be investigated to see if a broker did not present an offer to a seller client, and if any full and proper discussion, explanation, and disclosure had been provided by the listing broker to their seller, with a failure to do so possibly resulting in grounds for discipline.

Difficulties presenting offers

As a buyer’s agent, what if you are having a difficult time presenting your client’s offer to the listing broker? Then you can fall back on Commission Rule 6.13 - Offers must be Presented to Other Broker, whereby it states:

“A Broker must present all offers to the other Consumer’s Broker if such other Consumer has an unexpired Listing Contract. If the Broker has made reasonable, but unsuccessful, attempts to present an offer to the other Consumer’s Broker, the Broker must present the offer to the other Consumer’s Broker’s Employing Broker. If no Employing Broker exists, or if reasonable attempts to present the offer to the Employing Broker have failed, the Broker may present the offer directly to the other Consumer.”

Statutory Authority

Under § 12-10-404, C.R.S., a single agent engaged by seller or landlord has certain duties and responsibilities, including, it states in Part (c)(II) “Presenting all offers to and from the seller or landlord in a timely manner regardless of whether the property is subject to a contract for sale or a lease or letter of intent to lease.” Similar language found in § 12-10-405 and § 12-10-407, C.R.S., pertains to a Single agent engaged by buyer or tenant, and a transaction-broker.

EXCLUSIVE RIGHT-TO-SELL LISTING CONTRACT
 
Furthermore, in the EXCLUSIVE RIGHT-TO-SELL LISTING CONTRACT, section 5 states under: BROKERAGE DUTIES - “Brokerage Firm, acting through Broker, as either a Transaction-Broker or a Seller’s Agent, must perform the following “Uniform Duties” when working with Seller”: 

• “5.1.1 Presenting all offers to and from Seller in a timely manner regardless of whether the Property is subject to a contract for Sale.”

• In addition to any regulatory discipline, a listing broker not presenting offers to their client pursuant to the listing contract could be in breach of that contract and their fiduciary duties as outlined in that contract. This could result in civil liability for the broker if their client was harmed financially.

Related Tags:

• • Broker Advisory

How to Write an Appraisal Gap That Protects Your Clients

If you haven't yet seen it, please take 8 minutes + 34 seconds to watch this episode of Legal Bites from the Colorado Association of Realtors.

https://youtu.be/IrdJ35p9wQQ

Scott Peterson talks about how the Appraisal Gap language that can lead to problems is often one-sided: requiring the Buyer to bring extra cash if the appraisal comes in low, but not requiring the Seller to lower the purchase price in order to match the appraisal. (Great if you're the Seller, not so much if you have the Buyer, right?)Please take extra care when writing/using these clauses, make sure that your client thoroughly understands the Appraisal Gap, however it's written, and let us know if you have questions!

Court throws out pocket listing lawsuit against NAR and MLSs

Court throws out pocket listing lawsuit against NAR and MLSs

Judge says ThePLS.com failed to plausibly allege the National Association of Realtors' Clear Cooperation Policy harms competition and consumers. To the contrary, the policy has 'some plainly pro-competitive aspects’

A federal court has permanently tossed an antitrust lawsuit filed by a former pocket listing service against the National Association of Realtors and three of the largest multiple listing services in the country, finding that the plaintiff’s arguments are so flawed that the case cannot be saved.

In May 2020, The PLS, formerly a private listing network for real estate agents, filed a federal antitrust lawsuit against NAR and the California Regional MLS (CRMLS), Bright MLS and Midwest Real Estate Data (MRED) over a policy designed to curb pocket listings.

The suit alleged the defendants had violated the federal Sherman Antitrust Act and California’s Cartwright Act for adopting the Clear Cooperation Policy, also known as MLS Policy Statement 8.0, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public.

Office exclusives, or listings marketed entirely within a brokerage without submitting them to an MLS, are exempt from the policy. Some real estate brokers have threatened mutiny over the office exclusives exception to the Clear Cooperation Policy, which they argue inadvertently benefits large, national brokerages at the expense of smaller, independent brokerages.

The controversial rule is meant to effectively end the growing practice of publicizing listings for days or weeks without making them universally available to other agents, in part to address fair housing concerns. The Clear Cooperation Policy went into effect on January 1, 2020, and its implementation deadline was May 1, 2020. Some MLSs have instituted hefty fines to enforce it.

In August, NAR and the MLSs struck back with motions to dismiss The PLS’s lawsuit, arguing that antitrust laws do not exist to protect competitors, but rather consumers and competition, and PLS had not shown that the Clear Cooperation Policy harmed either.

In a Feb. 3 opinion, U.S. District Judge John W. Holcomb agreed with the defendants that, while The PLS had alleged facts showing harm to its own business, the company did not plausibly allege harm to competition and consumers.

“On its face, the Clear Cooperation Policy does not preclude real estate professionals from offering pocket listing services, nor does it preclude them from marketing their listings on PLS,” Holcomb wrote.

“Furthermore, there is no plausible inference from the alleged facts that the Clear Cooperation Policy has any such restrictive effect on the output of brokerage services to consumers. PLS does not allege any facts to show that real estate professionals have stopped (or will stop) offering pocket listings, or other types of listing services, when those services are demanded by consumers.

“To the contrary, sellers who desire to avoid listing their properties on an MLS may do so, for example, by working with an NAR-affiliated MLS member through the office exclusive exception or by engaging a real estate professional who does not belong to an NAR-affiliated MLS.”

Moreover, Holcomb pointed out that the Clear Cooperation Policy does not prevent agents from marketing pocket listings as they previously had: agent to agent — either in person, through phone calls or by email.

“Furthermore, the Clear Cooperation Policy does not proscribe real estate professionals from making a choice about the listing network platforms in which they choose to participate,” Holcomb said. “Of equal importance, consumers are not deprived of any choice in products or services.”

Rather, even accepting The PLS’s allegations as true, the policy has “some plainly pro-competitive aspects,” according to Holcomb.

“The Clear Cooperation Policy requires listings that are publicized by a member of an NAR-affiliated MLS to be reciprocally listed on an MLS for exposure to other MLS members,” he wrote.

“This means that all MLS members have access to information about listings that are publicly marketed by other MLS members, which ultimately promotes competition among real estate professionals and home sellers and buyers.

“Basic economics dictates that increased information about market conditions stimulates more competition among real estate professionals, whose goal is, at least in part, to match a buyer and a seller as quickly and efficiently as possible. This effect minimizes transaction costs. Consumers also have access to more information regarding market conditions, enabling them to make better informed choices about the bundle of real estate brokerage services that will best serve their needs.”

Importantly, given some pushback among brokers to the policy’s office exclusives exception, Holcomb said that particular exception “is significant.”

“PLS alleges that the presence of large brokerages operating across the nation increased demand for a nationwide listing network,” he wrote. “Surely, then, marketing a private listing within a large nationwide brokerage under the office exclusive exception provides significant exposure of the property in an off-MLS setting.

“This is important in evaluating whether the Clear Cooperation Policy has the plausible effect of reducing output of services to consumers. It does not.”

The PLS also failed to allege a plausible injury to participants on both sides of the real estate market — not just to sellers, but also to buyers, according to Holcomb.

“It is, perhaps, telling that PLS’s allegations focus almost entirely on home sellers,” he wrote. “PLS makes no allegations regarding any demand for pocket listings by home buyers, no allegations explaining how pocket listings are beneficial to home buyers, and no allegations regarding how the Clear Cooperation Policy harms home buyers.

“PLS’s failure to address the buyer’s side of the market is not surprising given that the alleged inherent advantages of a pocket listing — e.g., increased privacy and security for a seller to market his home without the wide exposure of the MLS and the avoidance of the stigma from listing and then delisting a property from the MLS — appear to benefit the seller, almost exclusively.

“In contrast, home buyers stand to benefit from an increase in available information about the market (which increases price competition), not from a reduction in the provision of such information.”

Holcomb dismissed the case with prejudice, or permanently, and without leave to amend. “In view of the fundamental problems with PLS’s theory of antitrust injury discussed above, the Court finds that the complaint cannot be saved by amendment,” he wrote.

Last month, NAR and the MLSs filed a motion stay discovery in the case until the court decided whether or not to dismiss the suit. With this week’s order, Holcomb denied that motion as moot due to the dismissal.

In an emailed statement, NAR’s vice president of communications, Mantill Williams, said the 1.4 million-member trade group was “very pleased” with the court’s ruling.

“This outcome further emphasizes that the MLS system creates competitive, efficient markets that benefit home buyers and sellers alike,” Williams said. “In November 2019, NAR determined that the Clear Cooperation Policy (CCP) was needed as a crucial protection for consumers and it was overwhelmingly adopted.”

NAR is still fighting another antitrust lawsuit against the Clear Cooperation Policy brought by another pocket listing service, Top Agent Network, though in July a court denied TAN’s motion for a preliminary injunction against the policy.

“We look forward to reaching the same outcome in the other, similar lawsuit against the CCP,” Williams said.

Keep reading on Inman News.

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If you're a Realtor who is exploring new career opportunities, or if you think that West + Main Homes might be a good fit for you, Contact Us or Email Us.

NAR Tackles Housing Discrimination and Racial Disparities in Regulatory Issues Forum

Click here for more information.

The National Association of REALTORS® (NAR) 2020 REALTORS® Conference & Expo began on Nov. 2 and is running through the 18th. On Nov. 10, NAR held its Regulatory Issues Forum, hosting a session, “The Role of Homeownership in Advancing Racial Equality and Ending Racial Disparities,” which looked at the history of housing discrimination in the U.S., as well as the racial wealth gap, to determine how REALTORS® can combat discriminatory behavior and systemic racism in order to provide equal housing opportunities for all.

Vince Malta, president of NAR, kicked off the session with the following statement:

“REALTORS® must be active participants in promoting equality, inclusion and acceptance. Housing discrimination and segregation have devastating impacts on families in terms of the racial homeownership gap, the racial wealth gap, and disparities in education, healthcare and so much more. We must educate our members and the public about the past. We must be clear-eyed about the problems that exist in the present. We must have honest and frank discussions about the disparities that exist because we can’t solve problems that we don’t see and don’t measure.

“Change starts with us. Fair Housing is the law, and to REALTORS® is the fundamentally right thing to do. It is an absolute necessity if we are to live up to our Code of Ethics and safeguard real property rights for every American. We recognize that it’s not enough to stop discriminatory behavior. We must take action to remedy years’ worth of inequality.”

Malta led the discussion—with panelists Mehrsa Baradaran, professor of Law at UC Irvine and author of “How the Other Half Banks” and “The Color of Money: Black Banks and the Racial Wealth Gap,” as well as Ryan Gorman, president and CEO of Coldwell Banker—on how to close the racial wealth gap to advance racial equality.

To start, Baradaran said one must fully understand what the racial wealth gap really means—it impacts more than just affordability.

“The wealth gap foretells your exposure to violence, whether you have clean water and parks, whether your schools are underfunded,” she said. “It’s about housing and where you live, and the policies and outcomes that relate to housing, which can segregate. It’s about systemic racism.”

Baradaran discussed the past, referencing a time when people of several religions, ethnicities and races were discriminated against in the housing and lending space.

“We’ve all heard about the Jewish-Americans, the Irish-Americans, etc. It’s important to understand what happened and how things became structural. Those practices were, for the most part, temporary,” she said, emphasizing that looking at these populations, and the solutions implemented, is key to breaking down obstacles for the Black community as well.

“Look at the areas that were left out the first time and provide solutions within those areas: down payment assistance, housing grants, etc. It’s about the resources.”

Gorman agreed, stating that policies in recent years to combat discrimination in housing have been much too broad.

“The challenges are very narrow, and so what we do about it has to be similarly narrow in order to deal with it,” said Gorman. “Imprecision isn’t helping us get anywhere.”

Both Gorman and Baradaran explained the clear challenge that lies ahead: it can be uncomfortable to admit these issues still exist, especially in the political space.

“It’s a difficult political move, but when looking at practicality, it’s not difficult,” said Baradaran.

“There’s a political challenge and discomfort with being more precise,” added Gorman.

The best way to look at the obstacles standing in the way of housing equality? Baradaran said one must conceive it as a “damages” scenario.

“We’ve promised equal opportunity and we’ve breached that promise,” said Baradaran. “It’s not about someone losing something so someone else can gain. It’s about equality.”

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Revising the Term “Master” in Real Estate Listings and Doing More Important Things Too

Update from ReColorado:

Master Bed/Bath Label Change Effective 3/9

On March 9, several options in the Room Type field will be renamed. The label “Master” will be updated to “Primary” for the following options:

• Master Bedroom --> Primary Bedroom

• Master Bathroom (1/2) --> Primary Bathroom (1/2)

• Master Bathroom (1/4) --> Primary Bathroom (1/4)

• Master Bathroom (3/4) --> Primary Bathroom (3/4)

• Master Bathroom (Full) --> Primary Bathroom (Full)

Additionally, the option Master Suite within the InteriorFeatures field will be updated to Primary Suite.

If you display the detailed room information on your IDX or VOW websites, you must update how these room types display to reflect the new names.

If you have any questions about this change or how it will impact your data feed, IDX website, or product, please contact datasupport@REcolorado.com.

Thank you,

REcolorado Data Support

Original Post:

Throughout the country over the last few years, Real Estate organizations have considered removing the terms “master bedroom, master bathroom and master suite” from their lexicon.

REcolorado, the prevailing local MLS organization of over 25,000 agents in the Denver Metro area, was recently faced with a decision, based on a participant request, to amend the term in databases in Colorado. Following brief discussions, the voting committee said by majority - no.

The writing on the bedroom wall

The 40,000 member Houston Association of Realtors officially revised the term in June. Visitors can see the use of “primary” on any listing on HAR.com in the rooms detail section.

Changing the official term from “master” bedroom and bath to another term is a clerical errand. The work required to edit a word in a computer application is as trivial as it sounds.

Realtors have mixed views on the topic and John Legend tweeted to the coverage in Houston, “Real problem: realtors don't show black people all the properties they qualify for. Fake problem: calling the master bedroom the master bedroom. Fix the real problem, realtors.”

REcolorado subscribers from around Colorado make up the MLS Rules and Regulation Committee, an experienced group that influence our industry on a local level and include brokerage owners (including West + Main Homes), appraisers, and other interested parties as a collective voice to evaluate suggested MLS changes and the boundaries created around MLS-defined responses to mandates.

Just so it’s clear, none of the representatives on the voting committee were to be tasked with the implementation of the revised term. Just a vote to send a support ticket to the MLS or not.

To view the term how it appears in the MLS and on the REcolorado public website: click here.

But the majority of the committee voted against this minor change, a back-end upgrade that would not dictate advertising or govern the speech of individual brokers still using the label.

It’s an academic question for leaders.

Is there a sound argument for continuing to mandate the term “master” when referring to a bedroom, bathroom or suite - when it can be so easily amended?

Denver area Realtors are working on more transformative issues. That’s why they should expect approval of nominal administrative fixes reflecting those issues, even when subtle.

But our region has seen it’s share of problems too, well documented - here, here, and here.

Denver Realtors are doing bigger things

Our community deserves to see how Realtors are fighting systemic discrimination in the real estate market, not scrutinizing their organizations’ refusal to do obvious and simple updates.

We are calling on REcolorado’s leadership, including its staff or Board of Directors, to override the decision made by Committee and remove/replace the term “master” from its product suite.

It’s literally the easiest thing we can do. Small steps are the only way to complete long journeys and Fair Housing in Real Estate has a long way to go. While this issue is a bare-minimum endeavor, let’s not use our energy to specifically oppose it either, as it could be done by now.

To view what West + Main listing marketing looks like with a change in terminology: click here

Have an opinion? Please reach out to support@recolorado.com or your MLS Leadership and let them know what you think. They want to hear from you.

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Further Reading & Background

• Why and how Houston decided to remove the term from the MLS - link
  06/24/20 | Houston Chronicle

• Tweets from John Legend criticizing PR generated from changing the term - link
  06/27/20 | Twitter

• Leading real estate brokerage in Chicago pledges to stop using the term - link
  06/30/20 | @properties blog

• A list of Diversity Resources by DMAR to showcase advocacy and links - link
  07/17/20 | Denver Metro Association of Realtors

• National real estate data organization recommends switching the term - link
  07/20/20 | Real Estate Standards Organization (RESO) blog

• New York agencies pledge to have deep conversations or change the term - link
  08/05/20 | The New York Times

• See the treatment of “primary” room on any Houston area website listing - link
  10/29/20 | Houston Association of Realtors (HAR) Website

• Three-year investigation reveals widespread discrimination by Realtors - link
  11/17/19 | Newsday Special Report: Long Island Divided

• New coverage of New York senatorial investigation to agent discrimination - link
  10/23/20 | The Notorious ROB

• National Association of Realtors is not focused on the issue at this time - link
  06/25/20 | Realtor Magazine

• Nationwide Realtor survey reveals some don’t see a need to change the term - link
  07/02/20 | Chicago Agent Magazine

• A tenured Denver Realtor stole and destroyed Black Lives Matter yard signs - link
  08/20/20 | Westword

• A Denver neighborhood named after a klan ally finally changed it’s name - link
  06/17/20 | Westword

• Realtors made obtuse Fresh Prince parody in Denver’s most gentrified area - link
  07/23/19 | Westword

Safer at Home Guidance for Real Estate - Colorado

Safer at Home Guidance for Real Estate

(October 12, 2020 Update)

The Division of Real Estate continues to receive complaints concerning real estate brokers not following state and county-issued guidance regarding COVID-19 restrictions when performing real estate activities. Please be aware that many Orders are still in effect and you should be vigilant to stay in compliance of those Orders for the safety of yourself and others.

On October 6, 2020, Governor Jared Polis, by Executive Order D 2020-213, extended many previously issued Orders that are referenced below.

On June 30, 2020, Governor Jared Polis by Executive Order D 2020 123, amended Executive Order D 2020 091, the “Safer at Home and in the Vast, Great Outdoors”, which is incorporated into the Colorado Department of Public Health and Environment’s (CDPHE)   Tenth Amended Health Order 20-28, dated August 21, 2020,  under the Safer at Home phase of the COVID-19 pandemic. 

These Orders implemented a number of measures that allowed many Coloradans to return to work and recreation in the great outdoors while maintaining social distancing, it also allowed all Field Services, including real estate, to resume operations in accordance with the requirements of this Order including Appendix B. Real estate includes in-person real estate showings and marketing services which must adhere to Social Distancing Requirements with cleaning and disinfection between each showing. Open houses must follow the Indoor Event requirements in Section I.H.4 of this Order.

The goal remains to have most people stay at home as much as possible while allowing businesses to  reopen under restrictions and guidance to ensure as much safety as possible for both employees and consumers. CDPHE is making the information contained in the Amended Public Health Order available via the Safer at Home webpage where you can access information by industry (see “Field Services & Real Estate”).

DORA recognizes that these orders, while detailed, do not necessarily reach the level of specificity many of our regulated professions desire. Additionally, we know that businesses and professionals are being asked to absorb information from a wide variety of sources, and many amended versions of public health orders. In an effort to provide not only additional clarity on industry and business-specific safety measures, but also to synthesize information from many State of Colorado sources, we ask you to once again review the additional guidance for real estate brokers and services. 

Also, please be aware that The Colorado Department of Public Health & Environment has also implemented the "Protect Our Neighbors" phase. "Protect Our Neighbors" means that communities that meet certain criteria have less stringent restrictions than under "Stay at Home” and “Safer at Home" phases.

Different communities will be in different phases, based on local conditions and capabilities. What this means is that rules may be different if a county has moved into the "Protect Your Neighbors" phase. You should therefore inquire to your county seat or health department regarding any variances that may allow more lenient restrictions than those implemented throughout the rest of the state. If you are unsure what applies, follow the stricter set of requirements.

Short-Term Rental Guidance

The “Safer at Home and in the Vast, Great Outdoors” orders allow for the opening of the short-term rental market. Therefore, real estate brokers that work with customers in the short-term rental market need to be aware of the recent Colorado Department of Public Health & Environment (CDPHE) Guidance for Short-Term Rentals that was updated under the Colorado Safer at Home Orders on the Safer at Home website. This short-term rental guidance provides information concerning the rental space, owner and manager responsibilities, and the responsibility of guests. Please review it in full before you proceed with resuming services in the short-term rental market.

Additional Guidance for Real Estate Brokers & Services

Guidance for Short-term Rentals

How COVID-19 has disproportionately impacted communities of color

What it means for the future of the housing industry

At the beginning of COVID-19, people were calling the virus the “great equalizer” because the virus was expected to equally affect people regardless of race. However, the opposite quickly became apparent as communities of color have been disproportionately and overwhelmingly affected. 

by Kristin Messerli for Housing Wire

Recent data shows that death rates among Black and African Americans are two to three times higher than white Americans, and they are hospitalized at twice the rate. In diverse areas like Chicago and Louisiana, for instance, Black Americans represent 70% of the COVID-related deaths, while making up only about 30% of the population. 

In a market that is flourishing, it can sometimes be difficult to see the impending impact this disparity may have on the housing industry. Lenders are experiencing record-high volume with purchases on par with last year’s numbers. And Millennials seem to be setting their sights on homeownership, as I reported in a recent article.

Yet, unlike previous economic recessions, the demographics that are hit the hardest are also a much bigger portion of the purchase market. Millennials, who now make up the largest cohort of homebuyers, are also nearly half from communities of color. 

The pandemic’s resulting economic recession is likely to impact more than homeownership rates and place added pressure on affordable housing. For a generation that has raised the bar for “ethical consumption” with major corporations across the world, they will choose to work with companies who have supported communities hit the hardest in this crisis.

Millennials entered adulthood during or immediately after the Financial Crisis of 2008, and they remember vividly the disproportionate impact that had on communities of color. Black Americans and Latinx lost 25% of their wealth from 2004-2010, while whites lost only 1%. 

This crisis is not entirely on the shoulders of the housing industry, but it is so deeply intertwined that a response is crucial to future success in this market. When the dust settles and the economic damage is clear, how will this generation think of our industry? 

The intersection between health and housing

Health disparities, such as that of COVID-19, are influenced by many factors, but research shows a strong correlation with housing opportunities, particularly quality and location. 

Pew Research states the median wealth for Black Americans is ten times lower than white Americans, and their homeownership rate remains at a steady 30% below their white counterparts. This wealth gap places many communities of color in low- to moderate-income neighborhoods that often consist of older housing stock and an absence of necessary amenities. 

According to the World Health Organization, the physical condition of homes has major implications for people’s health. People living in older manufactured homes suffer more frequently from respiratory conditions such as asthma and cardiovascular disease due to heating and cooling issues, lead and mold exposure, and allergens to name a few. 

Black and African Americans are three times more likely to die of asthma-related deaths, and are 75% more likely to live near a polluting facility, such as a factory. In addition, many of the lower-income neighborhoods are located far from healthy grocery stores, transportation, and healthcare resources, making COVID-19 testing also less accessible if at all.  

All of these health determinants are a direct result of socioeconomic status, which is inextricably linked to the housing and wealth divide that began with our industry’s history of housing segregation and redlining. 

As a review, in 1934, the Federal Housing Administration began subsidizing subdivisions built for white families, while implementing the “redlining” policy to prevent Black Americans from living in or near those neighborhoods. From 1934-1968, 98% of home loans were given to white families, which resulted in decades of home equity appreciation and generational transfer of wealth. The neighborhoods were divided with the strategic placement of highways, rivers, and train tracks to prevent Black Americans from entering white neighborhoods. 

With the rising cost of housing and other layers of discrimination, many families of color haven’t been able to catch up, remaining in neglected neighborhoods, far from access to food and healthcare. 

As difficult as it is to think about, COVID-19 shines a huge spotlight on the racial divide in housing and its devastating consequences. So while we celebrate the record commissions and unphased purchase volume, the communities that were withheld access to quality housing and affordable credit are quite literally dying around us. 

So, what now? 

Examining our inequities doesn’t mean that white people today must feel shame or guilt for what others have done before us, nor does it mean we must abandon an abundant pipeline of leads.

But if we claim to be one community, in which white and black are equal in value, those of us who have benefited from the inequities should also look for opportunities to rebuild together. 

There are many housing policies that can benefit this effort, which often remain only discussed in nonprofit meetings and policy centers. The Surgeon General recommends that a portion of the Community Reinvestment Act (CRA) funding get redirected to support the development of safe and healthy homes. And there are many nonprofits that also support this effort, such as Rebuilding Together and Habitat for Humanity. 

Community Land Trusts (CLTs) have also been proven to significantly improve wealth creation in families of color with shared equity homeownership, as well as reduce displacement and retain rental units in neighborhoods undergoing gentrification.

As a more immediate measure, we can consider donating to nonprofits and supporting businesses in areas with food deserts and who may be more vulnerable to the recession. 

If we want equality in America, we need to recognize the historic inequities, support housing policies that promote equality and do our part on an individual and company-level to close the housing divide. 

Financial Relief Update. We Still Don’t Know Enough

Note: This is a memo we shared with our agents this morning specifically addressing the financial relief packages aimed at replacing income for workers affected by COVID-19.

We decided to publish in order to share knowledge and learn what we don’t know in service of protecting the public and our real estate agent workforce as we process this global pandemic.

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Good morning,

I wanted to remind you all that information about financial relief tied to income and work in the Coronavirus Aid, Relief, and Economic Security (CARES) Act is still being clarified (especially for how it applies to real estate agents) and among individual banks and individual states Department of Labor and Employment.

I am putting this out today just to help get you prepared for working through any of this that applies and to make sure you have current accurate info.

Much of whats covered in the act is clear. NAR put out a useful publication Provisions for REALTORS® and Their Consumers highlighting how most of the act applies to you.

What's not clear yet is how financial relief packages will extend to self-employed real estate agents. Hang tight. There are many premature congratulatory messages circling around the real estate community when we still have so much to understand how it works.

One of the two income replacement programs you might be eligible for are 1. Pandemic Unemployment Assistance or 2. Payroll Protection Loan. We do not know for sure how eligibility tests applies to agents yet (especially for #1) and both will require good faith certifications on a number of levels and intervals.

It is entirely possible that agents dont qualify for either program. Or that its dependent on state or local conditions. Or that its easy and applicable to all.

We believe that much of the criteria will rely on individual assessments of the need to protect oneself balanced against everyone's ethical points of view.

While we wait for specifics about which programs you as individuals may qualify for and how (as well as wait for banks and DOL to implement their own unique versions of making that aid available) I can definitely recommend one action in the next few days that you're going to have to do anyway. Organize your finances and make a folder with everything you can that might be required when applying for aid. I would recommend your last 2 or 3 tax returns and all of the information you typically need to file tax returns for the previous/current year not yet filed. Payroll tax filings, 1099's, income and expenses ledgers, etc. See full CARES Act here.

1. Pandemic Unemployment Assistance (PUA)

"Self-employed individuals, independent contractors, and other individuals who are unable to work as a direct result of COVID-19 public health emergency, and would not qualify for regular unemployment benefits under state law may be eligible to receive PUA."

It is not clear how real estate agents specifically qualify. We need information on how and when the benefit expires (ex: when you start showings, when you go under contract, or when you earn/paid a commission?) Perhaps this benefit is only deemed applicable to agents in states where real estate services were deemed non-essential? It even says,"This excludes individuals who have an ability to telework with pay" Is that agents? We don't know yet.

Colorado is not ready to accept applications at all, and we don't understand if agents are eligible or what actions end the aid period for those who are.

Again, to be clear. We do not know if agents qualify, if you will qualify if they do, or what triggers termination of aid. We will let you know as soon as we do.

2. Payroll Protection Loan

“The Paycheck Protection Program administered through the SBA – provides up to $349 billion in loans to eligible entities, with such loans being subject to forgiveness under certain circumstances for...self-employed individuals, independent contractors, and sole proprietorships to help small businesses keep workers employed amid the pandemic and economic downturn."

It is not clear how real estate agents specifically qualify. Applicants will certify "1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations 2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments." Banks will reportedly be ready to start accepting applications as early as mid-week which is when we'll know more about eligibility scenarios that might apply to you.

Loans can be up to 2x the borrower’s average monthly payroll costs, not to exceed $10 million. For the self-employed that means "The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period."

Basic requirements can be found in the U.S. Chamber of Commerce Coronavirus Emergency Loans Small Business Guide and Checklist.

For the self-employed much of this loan is forgivable up to the amount spent in an 8 week period on "payroll, rent, utilities, and mortgage interest." If those major expenses are more than what's forgivable, Interest Rate not to exceed 4% or 10-year term. Payment deferrals available if loan exceeds amount forgiven.

Max benefit if self-employed at $100,000/year at 2.5 the monthly rate could result in a $20,833.33 forgivable loan. YMMV.

"Borrowers do not need to demonstrate actual economic harm in order to qualify. Instead, they simply need to make a series of good faith certifications, principally that current economic conditions necessitate the loan to support ongoing business operations, and that the funds will be used to maintain payroll and address other covered expenses." Read more in this analysis.

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Again, to be clear. We do not know if agents qualify, if you will qualify if they do, or when applications will start. We will continue updating the Agent Resource Guide as info comes out.

Overall our message is to prepare your finances so that you can take advantage of relief that is intended to help you. If not one of these, there may be others. I can't stress enough how this will come down to how the real estate trade is defined, how states interpret essential services, how fast states enact the application process, which banks are approved to originate loans what the criteria will be, and your individual circumstances and needs. Still a ways to go.

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Greg Fischer

Tech | Managing Broker

(720) 605-3325

✉ EMAIL

Agents Register for Fair Housing Classes Now

A thorough investigation by reporters in New York revealed that real estate agents were blatantly discriminating against the public using many illegal and unethical methods in 2019.

Newsday Special Report: Long Island Divided

The Fair Housing Act passed over 50 years ago in 1968 to explicitly protect people from discrimination when renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. National and Colorado laws further extend housing protection regardless of disability, sexual orientation, or gender identity.

The law alone is not enough to prevent discriminatory practices, reverse the harm imposed on affected communities, nor fix the systemic issues that disadvantage protected groups still today.

West + Main Homes is committed to creating a Fair Housing Policy that exceeds national and state guidelines. We are opening courses to agents from other firms in Colorado and will share best practices with other brokers currently developing or refining training about this topic.

TRAINING FOR DENVER REAL ESTATE PROFESSIONALS

We are kicking off the year with a series of three in-person training courses taught by Dindi Wade, the Outreach Specialist/Operations Manager at Denver Metro Fair Housing Center.

1. Wed Feb 19 | Fair Housing 101

2. Wed Mar 11 | Disability and Fair Housing

3. Wed Apr 08 | Sexual Harassment in Housing

Denver agents are routinely screened for fair housing competency and will learn how to operate in compliance by attending sessions and documenting their attendance and comprehension.

Classes hosted at our location in RiNo at Blake St. and 26th, just west of Broadway at 10am.

We are excited to engage DMFHC on these courses and look forward to sharing Dindi’s insights and expertise with the real estate community. Our goal is to design a series of career-specific training that our agents can easily attend across the Denver Metro on an annual recurring basis and opening our classes to brokers and agents from other firms as well.

Because the Denver Metro Fair Housing Center is a non-profit, West + Main Homes will proudly donate regularly to help fund education, advocacy, and enforcement of fair housing.

Being an ethical real estate agent means doing more than attending a Code of Ethics class with the local association. It requires curiosity, education, training, and accountability.

Team Diva: What Does It Take To Be An Ethical Real Estate Agent in Today’s Market?

EDUCATION AND COMMUNITY

In addition to events in our offices, we are designing downloadable resources with help from fair housing agencies, REALTOR® associations, and other groups. Agents will be tested on its contents, and everyone will sign an affirmative commitment to equal opportunity.

West + Main Homes will continue curating community outreach activities for agents by renewing a partnership with Giveback Homes to help build affordable housing and new causes like Home Builders Foundation, creating home modifications for people with disabilities.

We will start, participate, and listen in difficult conversations about the impact of the real estate industry in Denver including a review of the Mitigating Involuntary Displacement study initiated by the Mayor’s office, visiting the Undesign the Redline exhibit, and sharing valuable local commentary like How can we see redlining’s lasting impacts on Denver? with our team.

LEADERSHIP FIRST

Our executive staff is committed to seeking qualified guidance, providing regular updates, donating resources/money/time, and auditing company procedures to ensure that we are fit.

We will develop/monitor advertising to indicate everyone is welcome and no one is excluded.

We are taking a positive approach to fair housing practices and will follow the spirit as well as the letter of the law. We refuse to tolerate noncompliance and will act swiftly if concerns arise.

We are sharing our progress in the hopes it will inspire brokers to ask questions, document their efforts, and engage with communities more equitably while learning from us as we go.

We are not doing enough to protect the public or educate workers and that must change now.

Appraisal requirements axed on sales of $400K and under

Approved by the Federal Reserve on Friday, the adjustment, from $250K to $400K, marks the first time in 25 years such an appraisal threshold has changed.

Following nearly a year of deliberation, federal regulators on Friday approved a long-awaited proposal to waive appraisal requirements on certain home sales of $400,000 and under.

Approved by the Federal Reserve on Friday, the adjustment, from $250,000 to $400,000, marks the first time in 25 years such an appraisal threshold has changed. The decision comes a month after the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation signed off on the rule.

“The appraisal threshold was last changed in 1994,” according to a press release issued by the Board of Governors of the Federal Reserve System. “Given price appreciation in residential real estate transactions since that time, the change will provide burden relief without posing a threat to the safety and soundness of financial institutions.”

The increased appraisal threshold, however, does not apply to loans insured by the U.S. Department of Housing and Urban Development, Fannie Mae, Freddie Mac, the Department of Veterans Affairs or the Federal Housing Administration, according to rules issued by the Fed.

“The data are limited to first-lien, single-family mortgage originations on residential properties by FDIC-insured institutions and affiliated institutions that are not sold to [government-sponsored entities] or otherwise insured or guaranteed by a U.S. government agency,” the rules state.

The change, which will go into effect once recorded in the Federal Register, was first proposed in November by the FDIC, OCC and the Board of Governors of the Federal Reserve.

Read the official press release.

Let us know if you have questions about this information, or how it might impact your clients.

Related Links:

West + Main Agent Toolbox

Upcoming Classes + Events

Schedule a meeting with Stacie Staub

The Big Brokerage Bounce

As someone who has only worked at 3 brokerages throughout my entire Real Estate career, I never really understood the motivation to keep switching brokerages, often to just end up switching back, or switching again.

As soon as I got my Real Estate license, I also had my second kiddo…so I have to admit, I wasn’t “all-in” nor did I think I would be - like many Realtors, I had applied for a license so that we could save money on our own purchases and investments, and because it seemed like a pretty easy side-hustle. (Ha!) Anyway, I joined a really small firm that I think only had 4-5 agents on its roster, and as far as I can remember, they were all of the same motivation/mindset.

There wasn’t a lot of training provided, but I did a lot of hands-on learning while hustling foreclosures in the Dark Times (otherwise known as the Recession). After a couple of years, my business had unexpectedly grown, and I found myself in the position of actually needing a team - so I talked my mom (a natural salesperson) into getting her license and helping me while I had a couple more babies and our business continued to grow.

I also decided that instead of becoming an Employing Broker once I hit that 2-year mark as I had planned, I needed the support and people of a little-bit bigger brokerage, and long story short, I literally stumbled into the perfect place and ended up transferring my license shortly thereafter.

Flash forward 10 years, 100s of transactions, a move into brokerage management…and here I am, almost 3 years into owning an indie agency, West + Main Homes.

One of the most fascinating things that I have had the opportunity to experience first-hand is the ever-tempting Brokerage Bounce…agents who move brokerages quickly + regularly. It’s tough not to take those moves personally, but I’ve learned that Realtors really only have a small handful of reasons why they choose to jump from ship to ship, and not a lot to anchor them onboard, no matter the business model or the offering.

1. Promises, promises. Brokerages that are dependent on a constant flow of agents to keep their pipelines flowing are apt to make a lot of promises - whether it be company-provided client introductions (leads), pain-free transactions, various assortments of marketing campaigns and collateral, or the biggest one - TECHNOLOGY. Technology that promises to sell houses for you, because that’s the dream, right? To sell houses without having to actually sell houses? That would make me want to jump ship, too.

2. Greener grass. When you’re not selling as many properties as you thought you would, or when it seems like your friends at XYZ and 123 Real Estate are growing their production more quickly than you are, it’s easy to assume that there’s something magical in the water across town, across the street, or even across the hallway - and that if you drink from that same fountain your business will magically grow, too.

3. Discounted fees. There’s something to be said about keeping more of your own money, and if you’re a lone-wolf type of Realtor who only comes into the office to turn in closing checks, doesn’t show up for classes or social opportunities, never even bothered to figure out how to login to the Company-provided tools, doesn’t really need much supervision or guidance, and frankly doesn’t even like other Realtors that much (you know who I’m talking about!) then a Flat Rate or Discount Model might be a better fit for your Real Estate business.

4. Resistance to inertia. According to Steve Murray at Real Trends, inertia sets in for agents after 4-7 years with a brokerage. Agents who are afraid of becoming complacent, who are bored with what their brokerage has to offer, who have hit a plateau in their growth and can’t seem to get past it often think that moving to a different brokerage is the answer - and sometimes it is. Agents sometimes experience a nice bump-up in business if they have been languishing in the same space for a while and move to something new and different, probably not because the tools or office are a better fit, but because motion creates forward motion.

It’s a bit of a weird time to be in the business of selling Real Estate, isn’t it? In one of the best economies that most of us can remember, with super low interest rates and what has been a cycle of incredibly low inventory, it’s difficult to feel completely solid on this footing, when everyone keeps talking about when it’s all going to drop out from under us. There are also new elements that we are all trying to get a grasp on: ibuying programs entering markets and scooping up market share, and industry “disruptors” like “the billion-dollar-backed newbies” and “the MLMs of RE virtual brokerages” recruiting with an almost starved frenzy - if they are targeting you as an agent, it can be almost impossible to avoid the distractions.

If you are thinking about making a brokerage switch, I would encourage you to take a deep breath and ask yourself the following questions:

1. Why did I decide to join my current brokerage in the first place, and are they delivering on their promises?
   

2. What is this agency offering me that I am not already currently getting at my current brokerage?
   

3. Is this a switch that will make me happy and help me maintain/grow my business for the next 4-7 years?
   

4. Do I have the time + money to make the switch right now in my career with my current pipeline?
   

5. If I switch because it’s cheaper/a lower split will I still have everything that I need to run my Real Estate business the way I have been? If I switch to a more expensive brokerage because they are offering so much more, what will the ROI be on that difference in investment?

Still think it’s the right time to make a move? I would encourage you to evaluate several brokerages that you have admired from afar. Here are a few things to consider:

+ Does the branding + marketing resonate with you? Are you excited about it?

+ Do they offer the variety/frequency of education/training/coaching/supervision that you need right now in your sales career?

+ Does the business model (splits, monthly fees, etc) make sense for YOUR business model?

+ Does their tech stack line up with the way you like to work?

+ Do you like the way the office feels? Would you feel comfortable walking in and working, and also bringing clients there?

+ Will you actually use the things that you will be paying for?

+ Are there extra costs to consider (i.e. franchise fees, annual charges, hard costs for products + services like signs/business/cards/marketing collateral, mentor or coaching splits, etc.)

Before you start making the rounds, create a spreadsheet so that you can side-by-side compare the different offerings - and don’t be afraid to go to the meeting prepared with a list of questions + concerns, as well as take notes during the interview. There will be a lot of information, and it’s important to make an informed and well thought-out decision so that you can avoid bouncing again anytime soon!

If you would like to talk it out before making a decision, I’m here for you. Let’s talk.

Wondering if West + Main might be a good fit for your Real Estate business? Join us at one of these upcoming classes or events…you don’t even have to tell us you’re coming, we look forward to meeting you.