[00:00:00] Zach Hammer: Welcome back to The Real Estate Growth Hacker Show. On today’s episode, Charlie and I are going to have a little bit of a conversation where we’re diving into some of the impacts of the NAR settlement. And specifically, how it might, how it will affect recruiting for real estate teams. And what impacts it makes, what impacts it doesn’t make and those sorts of ideas, as a quick caveat to this, here’s the reality.

[00:00:24] What we have right now is we have the realities of what the changes are. And some potential attempts at trying to follow those threads through to the future and seeing what the impacts are in terms of how clearly anybody knows this, I think there’s still a lot to be figured out by the market, and a lot to be figured out by what happens in reality as opposed to having really clear definite answers to a lot of this. But the good news is that I think ultimately where we come down on this. Is that there is clarity of what matters from the real estate team [00:01:00] perspective, there’s clarity of what kinds of things to be looking for, even if not the specific answers to all of them, so we’ll dive into that.

[00:01:08] So Charlie, welcome back to the show. exciting, exciting topic. We are back to Hawaiian shirts today. So, you know, Today is going to be great. It is a bomb pop Hawaiian shirt kind of day.

[00:01:21] Charlie Madison: Exactly. Lightning bolts, stars, and bomb pops, apparently this is a 4th of July Hawaiian shirt, but every day is a Independence Day for me.

[00:01:30] Zach Hammer: Indeed. I love it. Just a real quick context. I’m sure everybody’s at least basically familiar, but just that we’re setting the groundwork. What are some of the key details of this NAR settlement? Just at a real high level, because again, most people probably already aware, so we don’t need to rehash it a ton.

[00:01:44] Charlie Madison: I heard someone point said the TLDR, too long, didn’t read is one, you have to have a buyer rep agreement to be able to work with a buyer. And two, the buyer, co-op commissions cannot be posted on the MLS. They can be on other [00:02:00] websites, or you gotta call the listing agent. That’s really the two big things.

[00:02:04] Zach Hammer: I think the other one is that sellers are not required anymore to offer a by side commission in order to list at the MLS, right? It makes sense if it can’t be listed in the MLS, makes sense that it’s not a requirement which means that it’s effectively not required at all.

[00:02:22] Charlie Madison: See, I don’t know that was a requirement everywhere. I guess it was some places. I don’t think that it was on mine. You had to put something in the field, but I don’t know that it was a requirement.

[00:02:32] Zach Hammer: Yeah. That’s kinda what I heard too literally, in some places you could put as low as 1% if you wanted to. That there was technically a requirement to offer something, but you had full ability to offer whatever you wanted.

[00:02:43] But that’s not even a requirement at all anymore. And then I think the other key thing that’s important to note is that the timeframe of this. A lot of people were thinking, we’re looking at potentially years before this gets figured out. And we’re looking at a July, 2024.

[00:02:58] It’s when this stuff goes into [00:03:00] effect. So we’re recording this right now, March of 2024. So we are April, May, June, about three months away from those rules going into effect. So that’s a lot quicker than I were expecting.

[00:03:12] Charlie Madison: You’re right. I’m fascinated to see how it’s going to work out. I’ve worked in unregulated industries. When I was in the tech world, web design, you had someone’s cousins, uncle’s brother, willing to build a website for $20. And then, one of my good friends, his website started at 35 grand.

[00:03:29] I got paid from hourly up to, I think, $60,000 for a website. And so that’s normal. I’ve got a lot of friends in the coaching industry, and one of my best friends, he charges, I don’t know how much that is in American dollars, but 60,000 pounds to be coached for a year.

[00:03:47] Another one of my good friends, he’s a hundred grand a year. And then you got coaches and therapists charging 25 bucks an hour. And so, ever since I’ve gotten into real estate, I’ve always been like, look if it happens that [00:04:00] way, it’s every other business in the world.

[00:04:02] You have to prove your value.

[00:04:04]

[00:04:04] Zach Hammer: Exactly. And so, that’s ultimately where we are. Is that there’s going to be a bit of a shake up of previously, there were things that were part of the normal operating process of doing business requirements that were handed from the top down really at a technical level.

[00:04:21] The other way that I’ve seen this shift is the requirements that are put in place through this settlement, they’re really easy to get around and have the same effect as what was before. So you can’t listen to the MLS, but you could still offer the same types of commissions if you want to, you could still negotiate them, all of that still exists. The requirement to have a written agreement, great, it’s another piece of paper to fill out. But that’s not really a big regulatory requirement to have something in writing saying, this is the service that I’m offering and what I’m providing. So that isn’t like an onerous. And then otherwise, on the other end of the spectrum, the things that were previously [00:05:00] required and maybe a little bit more heavy handed of a requirement, if that makes sense no longer are, right?

[00:05:07] I think potentially, this is entering a period where there’s the net result is that there is less regulation than there was before. There’s less restrictions. There’s more freedom for people to transact and engage in the ways that they want to. And so, now we have the ramifications of that, of if it’s been being propped up in a specific way through regulation, now what happens when that regulation isn’t there and people are able to let the free market decide that.

[00:05:36] And what sort of impacts do you see? So let’s answer this question in two ways. What sort of impacts do you potentially see on that in general? And then how does that impact teams specifically when it comes to recruiting agents? And honestly, if we really want to talk about this, recruiting is the lifeblood of a real estate team.

[00:05:57] So the same way that if I have a real estate business, [00:06:00] conversations are the lifeblood of a real estate business. The equivalent to conversations in real estate team is recruiting. You got to have opportunities of people who are looking to buy or sell in order to have a real estate business.

[00:06:12] And you have to have opportunities for agents in order to have a real estate team. Because the team aspect requires that you’re working with people who are doing real estate. So anyway, on that front, what impact does it make maybe in real estate in general? And then how does that relate to teams specifically looking to recruit?

[00:06:28] Charlie Madison: One of the things I like to think is what’s going to stay the same. That’s Amazon, Jeff Bezos, and his famous letter, he wants to look at what’s the same. And when he thinks about growing Amazon and what is it, customers always want more choices, customers always want cheaper prices, and the customers always want faster delivery.

[00:06:48] And that’s part of it. So what is it, I’m answering this backwards. What do real estate agents want when they join a team? Probably, one of the things is they want more [00:07:00] financial security than going out on their own will give them. So, it is hard for most people to go from a stable W-2 even a stable 1099 to you eat what you kill, and you’re on an island. Luckily it’s all that I know. So I’m just dumb enough to not know any better. And I just find a way to get through it. But that’s is hard. A lot of people that’s what gets them. So they joined for financial stability. So people want to know, how are you going to help me get that. And that’s the reason, they say they want leads.

[00:07:38] Even though we know that what they really want is compliant clients. They want training and then what a clients want stability. They want to know that you’re going to help me get the best house at the best price within my timeframe. Or they want to know that you’re going to sell my house for the most with the least amount of work

[00:07:56] Zach Hammer: right.

[00:07:56] Charlie Madison: my timeframe. And so, I think it’s just going to require an [00:08:00] uplevel and leadership. Someone could be like, you know what? I don’t even have to mention money to my client. I don’t even have to get them to sign a buyer rep agreement. I can just get a lead and let them run me around ragged.

[00:08:11] And when we find a house, I’ll write whatever they say and I’ll get paid by the seller. Now you’ve got to be a conversation up front and literally, you’ve got to sign, I’m your buyer-agent. And then the question is, can I get out of it? You’ve got to have that answer. What are you going to do?

[00:08:29] And then, I don’t know why you wouldn’t sign that anyway. Coming from my background, I was like, I want people to know upfront how I get paid.

[00:08:38] Zach Hammer: Right.

[00:08:38] Charlie Madison: And, I get paid whether the listing agent offers it or not. So to me, it always made sense, but now you’ve got to have that conversation, so you got to have the rapport. You’ve got to have the leadership to be able to do that.

[00:08:53] And then, as you go through, you got to provide that leadership. So I think that’s what the client is [00:09:00] going to say, Am I signing up with you forever? They’re going to have those questions. And so the agents that you bring in, are they going to have the ability to be that leader? And the leads that you get them, are they going to be able to have that conversation more so than just run around looking at houses? And of course, some teams, they already the teams that are top notch, that are already training people to get the buyer rep, that are already teaching them, your goals to lead, guide, and protect, those people are set.

[00:09:31] And so, that’s what I think is the same. And I wonder, are brokers going to keep trying to recruit as many as people as possible? Are they going to try to top grade where they just bring in certain ones? I think that’s going to be fascinating to see.

[00:09:45] Zach Hammer: Yeah. So a couple of key takeaways to me for there. So in terms of, knock on wood, Alex Hermosi, what he talks about for a hundred billion dollar offers, do you remember what’s the equation that he talks about for the basic idea of creating value?

[00:09:59] You remember it’s like [00:10:00] a,

[00:10:00] Charlie Madison: It’s effort.,

[00:10:02] Zach Hammer: Yeah.

[00:10:02] Charlie Madison: Desired outcome times likelihood of achievement divided by effort and sacrifice and time.

[00:10:11] Zach Hammer: Yeah. Exactly.

[00:10:12] Charlie Madison: It’s ridiculous that we figured that out together from memory.

[00:10:15] Zach Hammer: Well, we’ve probably talked about it the timer too. So the basic idea is at the top you have all of the good things, right? What do I want to achieve and minimizing, you want to maximize the power of the picture of the promised land that you’re taking people to.

[00:10:31] That’s the desired outcome. The likelihood of success, right? If I’m basically guaranteed that I’m going to succeed, that’s drastically better than it’s Russian roulette, you might succeed, but you might not, right? Anyway and then, the things that pull away from the strength of your offer are how much work does it take and how long does it take?

[00:10:50] So if you can get somebody a quick result with a little bit of work, that’s as close to what they want. And as guaranteed as possible, like people will eat that up. So that’s really what we’re optimizing [00:11:00] So, like you mentioned, the chaotic life of being a real estate agent, having answers paints clarity and makes likelihood of success drastically better.

[00:11:07] And having proven answers that have been tested that likelihood of success is powerful because it’s been done consistently having multiple answers to account for the reality of different outcomes is going to be powerful. So, if we’re trying to walk people through the process of saying, buyers are still going to need to buy houses.

[00:11:29] And let’s be honest, whether or not the buyers realize it, they need you. I’m in the middle of buying a house right now and oh my word, are buyers agents necessary? It is the most convoluted, crazy process of the world.

[00:11:46] And is it easy to find a house that somebody might want to buy? Is it easy to look up a home and be like, I want that one? That’s super easy. Zillow made that easy, the digital advent of the MLS coming to the internet made that [00:12:00] super easy, right? So, people have the easy option to find homes, they don’t need your help with that.

[00:12:04] What they do need your help with is here are the potential obstacles that we’re going to run into. Here’s the things that I see about this house that would cause problems, here’s why it causes problems with this loan, here’s why it causes problems with it being a good long term house or you potentially having to tear the whole thing down because it’s structurally unsound and all that.

[00:12:21] Knowing that stuff and being able to say, person who isn’t a professional home renovator, here’s the reality of this house and how well does it match your needs. And then navigating the crazy emotional world of dealing with a high cost asset between two parties that want the opposite things.

[00:12:37] The seller, they want to sell it, but I want to get as much and buyer wants it, but wants to get it for as little as possible typically. That whole crazy emotional rollercoaster needs to be navigated. And we might see some people deciding. Unfortunately, most likely for them that maybe I just go and start working direct with a seller.

[00:12:56] And I think we do see that likely to happen, [00:13:00] I think it’s going to be to the benefit of the sellers and to the detriment of the buyers.

[00:13:04] Charlie Madison: Yeah, because the listing agent has an agreement saying that I’m working with the seller, I’m representing the seller, it’s not the exact same thing, but it’s almost going into a lawsuit and only one person has an attorney. And the attorney is legally obligated to help the other person.

[00:13:20] Zach Hammer: Right.

[00:13:21] Charlie Madison: I can give you advice. But I’m not representing you.

[00:13:25] Zach Hammer: Yeah, exactly. So that’s what take away for me. If you are recruiting, having a clear and obvious strategy for how you help people get listings is going to be big, cause representing the seller on this stuff is going to be so much more powerful.

[00:13:39] From the buy side, I think the other thing that real estate teams need to be looking at having clear answers for is having a suite of options and strategies for how they make sure you get paid. Having a clear view of the land of saying if a buyer commission is offered, here’s what that does to our [00:14:00] fees, if it’s not offered, here are our strategies for how I can still get paid.

[00:14:05] And ultimately, you either need to have an answer for if there’s no commission offered, but that’s the house that they want, and do you have another way to get paid? Do you have solutions for that? And I know you’re more familiar with this than I am, I don’t think this has been fully settled out yet where people have the definite, this is the best ways, but what are some of the things that are on the horizon that you’ve seen as people talking about as potential solutions for that question?

[00:14:30] And specifically let’s go with if the commission isn’t offered, what are some of the potential solutions that people are envisioning?

[00:14:36] Charlie Madison: Yeah. I’m really lucky too. I had a coach in Atlanta. Probably seven years ago, that he said, this is coming, and so you need to get a buyer rep agreement, and you need to be able to sell your value, and you should get paid, you shouldn’t just get paid what everyone else does or whatever the listing agent, you should get paid your value.

[00:14:55] And so for a number of years, I often get paid three and a half percent. [00:15:00] I get paid, even if it’s a VA loan and the listing agents, not offered it. That’s one of my favorite stories. Have I ever told you that?

[00:15:08] Zach Hammer: I don’t think so. Tell it.

[00:15:09] Charlie Madison: This is a really great example.

[00:15:10] So I had a client moving into town and the Nashville market was crazy hot, this is where I’m humble bragging on myself. I did really good for him, he came into town for the weekend and he had to have a sell home contingency, VA loan, and he was moving from out of state, and I used my diamond in the rough strategy.

[00:15:31] And there’s this one home, I think it’s going to be really great, let’s go look at it. Great home it slipped through the crack. And I got him to sell a home strategy, I got him to sell a home contingency and I got him, I don’t know, it was eight grand in closing costs.

[00:15:44] And the listing agent was offering two and a half percent and at that time on that one, I was getting 3% and a 795 broker commission. So we get closer to the closing and it’s a VA loan, and the listing agent was only offering two and a half percent. And so, with the [00:16:00] VA loan, and so this is where it will be interesting to see how this works.

[00:16:04] Not in a VA loan, none of the closing costs are allowed to be on the settlement and go to the buyer’s agent. So even if the listing agent only offered a dollar, nothing else could come to me, which is mind blowing to me. So, we’d already gotten the closing costs covered and the client knew about it.

[00:16:24] We talked about it, I was like, he’s the closing costs cover me. So I just went to the client and said, this isn’t allowed to be on here. You are going to be bringing 12 grand to closing. Instead, we’re going to take what was going to go to me, put it to you.

[00:16:38] So now you’re going to bring eight grand to closing and you’re going to cut my company a check for four grand. Those aren’t the right numbers, but let’s just say that’s what it is. And my client said, awesome.

[00:16:48] Zach Hammer: Right.

[00:16:49] Charlie Madison: Because there was no difference in it, that was my leadership and I showed him. And so, that’s one thing, being able to get closing costs to cover it, [00:17:00] that’s simple. That’s really the best thing or work on, the down payment, there’s so many options. One of the things that my coach said was the special stipulations, he said that their loans used to not cost money that they just got paid on the servicing, but then they got brokers and now there’s a payment.

[00:17:20] And so they add the special stipulations, and he said, there’s no reason that the closing costs has to go to them. Why can’t the closing costs go to you? Why are you fighting so hard for them and getting walked all over? That’s what I heard seven years ago and that just made sense.

[00:17:35] And one of the questions that’s going to be, with a FHA loan, the maximum closing cost is 6%, with conventional, it’s 3%, different loans have different requirements. So it’ll be interesting how that affects, because if the closing costs, if your commission is 3%, then there’s no other room for closing costs because up until now, the closing costs did not include your commission [00:18:00] is the buyer commission and then the closing cost.

[00:18:02] So it’ll be interesting to see how that works, be interesting to see what happens with the VA. If the VA does not allow you to be paid from closing cost at all, how does that work now?

[00:18:13] Because the only way you know what the commission is you call which maybe you get an agreement that down to have communication with your clients. Let them, actually earn your value, communicate it, have it in writing, and then this is real estate.

[00:18:30] Figure out a way to make it work, can you roll it into closing costs? Can you roll it into price? It’ll be interesting to see all the solutions, real estate’s a pretty good industry at coming up with solutions.

[00:18:43] Zach Hammer: I think that’s the key. I think the reality is if I’m a team leader or part of the recruiting process, and either in charge of helping with making sure we’re equipping our teams and providing a training or good information, good strategies, if I’m leading the direction or to find that, here’s part of what I’d be [00:19:00] doing.

[00:19:00] One, I’d be going through and making notes of those types of stories and saying, what were the strategies that I have previously deployed in areas where the commissions were not clear or great?

[00:19:15] What did I do that was outside of just the normal accepted way of doing business? And if I don’t have examples of that, then I need to start seeking out who has those answers. I need to get involved in networking groups of other agents who are talking about these things that have these solutions. I need to be listening for stories, learning those things.

[00:19:36] But to me, the clear thing, it’s one thing to be ready to adapt. Charlie, you are in leadership in your business. But just like we just said, if you’re recruiting people to your team, effectively, part of what you likely need to provide is that leadership for them of giving them clarity through the path.

[00:19:55] And they still need some level of resourcefulness for themselves sure. But if you could [00:20:00] give them the shortcuts, these are the strategies that have worked, we can adapt them depending on your specific circumstances and whatnot, as you’re going through navigating these deals.

[00:20:10] But having strategies in mind that have in your back pocket and ready to deploy, even if not intending to cover everything where you try to be as prepared as possible with what you’ve seen work.

[00:20:22] One of the things, honestly, to me this goes back, I think you’ve mentioned this through some of your training, I’ve seen this most in just the idea of instructional design of it becomes incredibly powerful to name things. Both for sake of being able to wrap your mind around it, but secondarily being able to sell something.

[00:20:40] So like you mentioned, your diamond in the rough strategy, right? That you gave a set of things that you do a name, and now you can package a lot of ideas with one phrase and communicate a lot with a little, you almost want to be able to do the same thing with how you present. What are our strategies for how we deal with this [00:21:00] new problem, or new ish problem, of making sure you get paid in a less consistent environment? Name those strategies so that the concept, the strategy is documented. And this to me is most people are probably missing this.

[00:21:15] That’s one aspect that they’re probably missing, they probably aren’t naming the strategies, they probably aren’t actually trying to document them and collect them. But doing that will make it a lot easier to communicate your value to a potential agent of saying, we’ve got our six strategies for how you get paid, even if there’s no commission. We’ve got our two, our three, our 37, who knows, how many strategies can you put together?

[00:21:39] And having that in your back pocket will help to communicate. We know how to help you navigate this chaotic environment, we know how to help you succeed and we have the shortcut process that makes sure that you stay successful in this chaotic environment. Does that make sense?

[00:21:53] Charlie Madison: Yeah. That’s good business 101, create a unique process and name it uniquely. So people can’t [00:22:00] compare apples to oranges. One of the other things that I love that my coach said is people would often ask, “What’s normal in real estate?” I don’t know what’s normal in real estate.

[00:22:08] This is how we do it.

[00:22:10] Zach Hammer: Yeah.

[00:22:11] Charlie Madison: I don’t want to be compared. And that goes into, that’s just brilliant marketing. Which is what, my coach that my friend, that’s a coach that gets paid a hundred grand to meet with you four times a year and you get a cell phone, that’s what he’s done. He’s built expertise niche and people are like, it’s worth it.

[00:22:28] Zach Hammer: Yeah. I love that. One of the other kind of branch of this subject is, I think there’s three likely business model buckets that come out of this that I’ve seen. I’ve been researching from a lot of different people, getting a lot of people’s different takes, and what stood out to me, I forget who I heard this from, but the basic concept I heard from somebody.

[00:22:46] I might have even shared the post with you, so you might remember who I’m talking about. I don’t remember off the top of my head who voiced this idea, but I see three major business models coming out of this. I think people offering like a suite of flat fee [00:23:00] services or a la carte services saying, if you want my help with this, here’s what it costs.

[00:23:04] And so, that’s a way of structuring it where people are like, I would like your help with negotiation. But I’ll find the home that I want, and then maybe I pay you per review of a property or something. I don’t know, I’m literally just pulling ideas out of my butt there, but a suite of services and just having the costs for them, that’s one potential model.

[00:23:23] Another model is specialized services. So there’s two examples that come to mind for me. One of which is one that I think consumers would be very familiar with. So it could be actually leveraged as a marketing opportunity for how you say, here’s what I do, or here’s how to think about this. I don’t know. But have you ever seen the show Property Brothers?

[00:23:43] Charlie Madison: I’ve seen it I, I haven’t watched it a lot.

[00:23:45] Zach Hammer: So, I think that show is actually a pretty good example of what I would call a highly specialized business model. I’m sure it’s the Property Brothers Show specifically, it’s definitely those brothers, I forget, maybe it’s not that show that [00:24:00] they do this, but the basic model of the show is, you want a house, you want it in this area, our basic premise is that we’re going to help you find a home that needs repairs and needs remodeling. But once it’s remodeled, you’re going to get exactly the home that you want in the area that you want it at a price that feels good. And that’s going to be better than just buying something that’s already at that higher price range, that’s their basic premise.

[00:24:26] And so, they bring a combination of services that aren’t all typically the standard real estate transaction. They’re helping you find the home, but that’s not where they stop, they’re also helping repair, remodel design. So they’re bringing a whole suite of, you have a bigger problem that we’re helping you solve, we help you solve it in this more complete way. So it’s a specialized thing, that’s the one that I think most people would be potentially familiar with.

[00:24:50] The other one that comes to mind is you and you have a very specific way of helping people where you strategically go after people who [00:25:00] are looking to move within the same area. So they’ve got a home that they need to sell, and they’re looking to buy again in the same area.

[00:25:06] And so, you’ve developed strategies around that specific type of person that brings together the things that they need in order to achieve that. You want to just at a high level walk through the specialization aspects of that.

[00:25:18] Charlie Madison: They may say, there’s nothing new there and that’s the power of marketing and packaging. The fact that I’ve called it my moved up, my move up plan, or my move up down, or move down plan and it’s really simple, I find out whether they want to move first, and the truth is most people that I’m working with, they move because they want to.

[00:25:41] And so, often they say, I don’t want to just settle on a home, I want to find a great home for me. So I set them up and usually what we’ll do is we’ll get like a line of credit, or a bridge loan, or we’ll do something, and get everything set up there, and we’ll come up with a listing plan that does not go into [00:26:00] effect. We get everything set up and then, Alright, now we’re going to look for your home.

[00:26:03] And we could find it in three weeks, we could find it in nine months. We leave it open ended. Part of what I do too, is if there’s a bunch of them, I’ll preview the homes during the day, because pictures lie and out of ten, there’s three good ones. And then I’ll say, look, here’s three that we’re going to go look at.

[00:26:21] And then, they buy that home with the line of credit or the bridge loan. As they move out, then we enact the listing plan. In fact, I’m doing it in two weeks, the couple are moving down to Huntsville. The painters are in there this week, and then we’re going to enact our plan, and we get it staged, and we do everything because that’s what they love, it’s so much easier.

[00:26:45] And so, no one has heard that and then I actually label the bridge loan. I laid it, I’ve labeled it, I’ve created my own name. It’s called the Double Down Loan because they put 5% down up front. And then when [00:27:00] they sell their house, they put the rest of their loan on it and it recalculates.

[00:27:04] And I do that for one reason, no one can compare me apples to apples. Also, if someone Googles any term, there’s going to be people on Reddit that are just crapping on it. There’s going to be the pros and cons are going to get all wonky.

[00:27:20] And so, it depends like the Double Down Loan’s not right for everybody, I’ve got some clients that it won’t work for. So, I’ve got lots of strategies cause I’ve just thought about this now for close to seven years and

[00:27:35] Zach Hammer: And, the key thing that stands out to me is that you are able to specialize, because you know who you are serving. You’ve picked kind of a specific segment that not everybody’s situation is exactly the same, but when you’re dealing with very similar people, their situations are very similar.

[00:27:53] And so, that specialization allows you to have more of a suite of [00:28:00] services and plans that are specifically tailored to help that person do what they need to. And so, you gain a fuller understanding of the overall picture of what’s possible and whatnot. So I think, that to me is one of those areas where very clearly specializing.

[00:28:13] Looking at who do you know how to help that you can help consistently and getting good marketing going out that talks about how you help people with that. By the way, if you want good marketing, that goes out, that talks about what you specialize in Referrals While You Sleep is a great option to check out, because it does that for you on autopilot.

[00:28:29] It makes it really easy, ReferralsWhileYouSleep.com or check them out at RealisticGrowthHackers.com/RWYS

[00:28:34] Charlie Madison: w

[00:28:37] w

[00:28:38] Zach Hammer: s

[00:28:39] Charlie Madison: s

[00:28:40] Zach Hammer: I had to think through the first letters in my head. But that’s Charlie’s company that helps real estate agents with marketing. If you’re a lender looking for help similarly than realtor waiting list is what you want to check RealtorWaitingList.com. But Anyway, where was I? Sorry. I got too busy pitching your awesome service.

[00:28:56] Charlie Madison: You that was very nice. We’re talking about having knit services, and [00:29:00] naming them, and being able to stand out from the crowd

[00:29:04] Zach Hammer: So we’ve talked about like flat fee, a la carte services, we’ve talked about niche down narrow services. Honestly, I don’t even know if I’d call the third one. So look at it this way.

[00:29:14] The third one to me is just this idea of there’s always a market for people who are willing to pay a ton to get everything, to get all the help in the world. You’re arranging their cars, and you’re arranging the remodeling for them, and you’re making sure that there’s champagne at the showing, and essentially what I would call

[00:29:34] Charlie Madison: pay for convenience

[00:29:35] Zach Hammer: They are the same people who will consistently pay for first class, and will pay to be able to go to the airport lounge because it’s more convenient. It’s one of those things that end of the market, the luxury end of the market is willing to pay comparatively more for things that they aren’t zero work, but they’re outside of maybe the realm of traditional real estate. And that would be the other model that I would say is just that [00:30:00] luxury, you care about the really small details that are just about convenience.

[00:30:05] And I think there’s the reason why I’m a little bit hesitant about even calling it a third model is there’s elements of that in what you do when you specialize. But the specialization is more about being very clear about what actually matters or not. I think what I would say potentially goes to that luxury end is that end of what you’re willing to include in what matters is fairly wide.

[00:30:26] And they pay for it, but you’ve got to be ready to provide for it, you’ve got to be resourceful enough provide for those needs, and it’s not necessarily a massive segment of the market, but it’s a comparatively profitable segment for those that I think are ready to narrow in on it.

[00:30:44] I don’t know, does that make sense? Do you think that’s a fair take of where some of those different zones go?

[00:30:48] Charlie Madison: Yeah, and I think, it reminds me, value and money is so, it’s elastic. That’s what Dan Kennedy always talks about, and, I’ve got clients that we’ve [00:31:00] sold houses to open door and offer pad. And sometimes just for that convenience, I had a client, house was with was worth 340. And they decided to sell their house for 280, and pay I think, eight percent, service fee, and then repair costs that they were okay, doing all that because of where they were. And I’ve got friends, I’ve got one friend, he said, I sold some wholesaler. I’m like, oh my gosh, I could have sold your house and got you 20 percent more. But for him, it was the easiest thing, he didn’t even care that he gave up 40 grand.

[00:31:39] Zach Hammer: Exactly. So I think, that’s the big change that’s happening to me. There was previously a standard floor of what was expected to some degree of what you could expect. If you’ve got any given listing, it’s floor of what you could expect that commission is going to look like on the other end. Now that floor is essentially been potentially pulled away.

[00:31:59] And [00:32:00] so, if it’s been pulled away, what are the options look like that there’s more variety? And because of that, I think, the key idea is that, everyone could be everything to all people. That was never a great strategy, but I think a lot of people were able to potentially skate by on this floor of commissions available that I don’t know how many people will be able to succeed doing that. I think a lot, we can do anything, it’s potentially going to go to the two extremes of we could do anything, but you pay per piece, or we could do anything and you pay a lot for the convenience.

[00:32:34] And then in the middle, we specialize in a very clear, specific, either set of use cases or in a specific use case. And I don’t see that generalist model, I think it gets even harder to be successful with that, does that make sense?

[00:32:48] Charlie Madison: Yeah. We’re moving to specialization, the do everything. People, they don’t get paid a lot, and it’s cause they’re a generalist and they’re a commodity. And so, you’re going to have to, [00:33:00] it’s your responsibility to uncommoditize yourself. And the cool thing is there’s plenty of resources on how to do that.

[00:33:08] Whether our favorite Mike Michalowicz, get different pumpkin plan, that’s what he talked about. He was in IT, and IT is commoditized, but he nixed in the hedge fund. So I think it’s got the ability to open up a ton of value.

[00:33:22] Zach Hammer: And for sake of real estate teams looking to recruit, I think there’s a few different models that you can play at here, I think you can try and recruit to fill specific use cases maybe in your business where you have your go to person for a specific use case.

[00:33:36] So maybe you build out a well rounded team that goes after different use cases, it could be that you get really good at helping people zero in and find their strategic place to emphasize, it could be that you build out a model where you get lots of opportunities and you process them through a combination of flat fee services versus specialized, maybe even luxury.

[00:33:59] Maybe you have that [00:34:00] full suite of things that you offer and you have different people on your team that are geared, more one way or another. I think to me, if I had to say what will be the most consistently successful, it’s probably going to be getting really good at helping people to find their unique area to serve.

[00:34:21] Being able to teach them how to productize, and decommoditize themselves to have a consistent specialized opportunity. So learning how to do that, learning what that looks like and how to spin the same work of real estate in these specialized ways.

[00:34:37] And I think yours is a great example. It’s not that everything comes completely different. It’s not like you were doing real estate, but now you need to learn how to resole shoes. It’s not that. It’s, you’re still doing the same work, but the specific angles problems that people run into that, you’re specializing in that way and you’re figuring out who is the person that consistently runs into these problems that you can speak to them effectively and show [00:35:00] how you are a clear path to success for them.

[00:35:02] So I think, getting really good at being able to voice that, being able to say, here’s one of the challenges that you’re going to run into in the real estate industry. Here’s how we help you through it or being able to recognize when people have that done really well and being able to say, here’s how we help support and make that easier.

[00:35:16] Those sorts of things, and those are guesses. We’re still figuring out what all that looks like, but those are some of the things that come top of mind to me in terms of what’s coming. First off, do you agree, disagree with that assessment?

[00:35:27] Do you think I’m off anywhere on that?

[00:35:29] Charlie Madison: Oh, I think you’re right. It’s basic business knowing your customer, and what does the agent usually want? The agent usually wants financial stability or a high top end, maybe both.

[00:35:41] Zach Hammer: Right.

[00:35:42] Charlie Madison: And so, how can you provide one or both of those to people? And if you can do that and make a profit, you’re going to have a lot of people want to work with you.

[00:35:51] Zach Hammer: Yeah, I agree. That makes sense. If you had to give a guess, so we’ve got these regulations coming out, or being, I don’t know [00:36:00] the technical terms for July 2024 is when at least the first aspects of this, if not all the aspects, I forget the specifics are coming out.

[00:36:07] Given that’s the start of when the official transition happens. Given we’re in a transition now, cause we know what’s coming. So people are going to start adapting in the ways that they can now to whatever degree, and then it’s officially acceptable come July.

[00:36:22] And then what do you think the next few months, next few years, what do you imagine in terms of timelines around these things being impactful and when people need to be prepared for them? If you had a guess.

[00:36:32] Charlie Madison: I think

[00:36:32] Zach Hammer: We don’t have a crystal ball.

[00:36:33] Charlie Madison: Practically, I think some things are going to happen quick. One of the first questions is how are listing agents going to handle the commission question? Because, if you’ve got a hot listing, you don’t want to answer 500 calls of, are you offering a commission?

[00:36:51] So are they going to put it on a document and upload it to the MLS? Is that allowed? Are they going to put it on another public portal [00:37:00] like Zillow? So that’s going to be fascinating. How are they going to solve things to make things smoother for them? And, real estate, like I said we adapt really quick.

[00:37:12] I remember, when the market was hot, there’s not a whole lot of new things and there’s lots of other industries that talk about that are similar. One of the things I love about the real estate industry, we do have some of the most brilliant minds in the world in this industry.

[00:37:25] And the top 10% in anything. And so, I remember when the market was hot, we got escalation clauses, we got dropping in contingencies. We found all, we had businesses offering to buy the house cash and then you pay them back. All of these things popped up.

[00:37:48] So I think we’re going to have some solutions pretty quick. And I think a lot of it’s going to be, how’s the listing agent going to handle. I’ve got to call or text you to find the commission. And then how are the MLS is [00:38:00] going to respond? Cause that’s really fascinating. We’ve got, I think there are thousands, I know hundreds of MLS is, and some are big, some of them are small, it’ll be interesting to see that.

[00:38:11] So I think, that there is this path of least resistance, and the terrain just changed, and we’re going to find, humans find the path of least resistance and we got a lot of us. So I think a lot of stuff will happen quickly, we got a lot of good big companies around, we got some small companies that have smart people. And I do think it creates the opportunity for great value but you’re going to have to up your game.

[00:38:38]

[00:38:38] Zach Hammer: Yeah, I think, to me, it’s one of those things of definitely start having a plan of how you’re helping make sure that you’re agents can still get paid no matter what happens. It’s one of those areas we don’t necessarily want to spend infinite time on this, but you do want to have plans and strategies for here are starting paths and how I would go down tracking down [00:39:00] solutions.

[00:39:00] And know that you really, I think that’s a skill set, that’s the skill set of being ready to build the parachute on the way down and figure it out as you’re going because that’s going to be necessary, I think. Because we don’t know exactly what it’s going to look like until we get there but having some ideas for that is going to matter.

[00:39:15] And then on the other end, having potential solutions of maybe you’re checking in with legal counsel and saying, if I put this note in the MLS that says, check this website for information on listing and potential things, it’s not going to get me in trouble.

[00:39:27] But have some sort of solution, where you are, you’re trying to optimize to make sure that you can convey answers to questions quickly, that you can do it easily, that you can do it with the least hassles for yourself, cause it’d be really easy to set up a Google Spreadsheet that has the name of the listing and basic details and the commission.

[00:39:42] Zach Hammer: If you’ve got a bunch of listings and you’re doing that, then you share it out to people that are asking and there you go. But checking in on the legalities and of all of that is going to be the thing that you could potentially do in advance.

[00:39:53] But I think just like you mentioned, going through the typical process and asking, I like that example of, when people [00:40:00] ask this question, again, you can’t assume that people are not aware of this, that the information for this was just announced on the New York Times and it was the front page news for everything.

[00:40:12] My mom sent me a link to an article about it. That

[00:40:15] Charlie Madison: People have thoughts and opinions about it.

[00:40:18] Zach Hammer: Exactly. So you have to imagine that the consumers are going to be asking about this, so you have to be prepared for the questions, for the objections. And as teams recruiting, you need to be able to equip your agents for that to have clear guided, here’s how we solve this, here’s how we’re dealing with this, etc.

[00:40:35] And honestly, the more proactive you could be about having those answers, now is the time to say, here’s what we’re doing to prepare. Here’s what we’re doing. I would be doing virtual trainings, in person trainings.

[00:40:44] I’d be doing stuff to say, we are leading, we have answers, we’re putting together answers and start showing that you have that so that you can attract the people who need that help, cause that’s really what’s going to be setting you apart.

[00:40:55] But yeah, any other final thoughts, closing thoughts around how [00:41:00] this NAR settlement impacts real estate teams and recruiting?

[00:41:03] Charlie Madison: Go make money, now’s the time.

[00:41:06] Zach Hammer: There we go. Just like always there’s never a dull day in the world of real estate. I think the reality is as soon as real estate professionals get used to something, it all changes anyway. If you’re not used to it yet, here’s your lesson again, right?

[00:41:18] So there we go. All right, cool. Thanks so much. This has been, I’m Zach Hammer with Charlie Madison. It’s been another great episode of the Real Estate Growth Hackers Show. Until next time, we’ll catch you on the next one.