NAR Settlement: Separating Fact From Fiction

In the wake of the recent NAR settlement, there is a lot of noise about the future of buyer’s agents. Understanding these changes is crucial for real estate professionals moving forward. In a recent webinar, Alvaro Erize, CEO of CINC, delved into the implications of the settlement, shedding light on key aspects that will impact the industry. He covers: 

1. His interpretation of the recent events (What did NAR actually commit to as changes in policy)
2. His opinion of what these changes (and other possible developments) will mean for the buyer agent/industry
3. A sneak peek of how CINC is committed to supporting buyer’s agents every step of the way in the current evolving landscape.

Transcript

Richard Kaiser: [00:00:00] All right. Welcome to the webinar here from Atlanta, Georgia. I'm Richard Kaiser, Director of Demand Generation. I've got my counterpart our CEO Alvaro Rize. How are you doing today, Alvaro?

Alvaro Erize: Very well, thank you, Richard. Excited to be here.

Richard Kaiser: Good. A lot of feedback and a lot of interest in the topic today.

We've been getting a lot of questions about the NAR settlement, right? And I think there's been a lot of noise in the market. And so really I think what we want to share with you all is Alvaro's views and separating fact from fiction out there. We got a lot of things to, there's been a lot of different parts of this.

I think we wanted to go through what our interpretation of the events are particularly right? What changed versus what didn't change, but also about what this is going to mean. For the buyer agents role, particularly buyer leads. And then also we want to give you guys a sneak peek of how CINC is committed to support buyers, agents, and all realtors [00:01:00] through this process.

And so we also want to make sure this isn't just Alvaro, and talking at a screen here. So we'd love for this to be interactive. So if there's any other prospects,

Alvaro Erize: Let's do this. First of all, everyone put where you're from on the chat. So I see who's there. And if you want us to promote you, so that at least we see your face so that I'm not speaking against a wall, just put like your hand up and Oh, Christina.

Hey, if you can, Christina, if you're on camera, can I promote you? And and a few others just just to see two or three faces for me, it's very difficult when I'm speaking not to see anyone while we have a lot of people. Okay. I'll let Richard back there on the team decide if there's a few that we can, if you come in.

Oh, Laura, good to see you. Where are you from Laura? Idaho. Idaho. Wow. Going right in. What do I do tomorrow? Nashville. Nashville. Nashville. Nice. That's close to me. So Holly and so good. We have a [00:02:00] quorum here and we have quite a bit of content, so I'm gonna go into it already. I want to do my legal disclaimer first which is this is really my opinions, right?

This is, I'm not even representing CINC here, certainly not Fidelity. I'll tell you who I am and then from that you can decide how much weight or not you put on my thoughts on the matter, especially as I was thinking of doing this. I know all of you are experts in this and have been in this industry more than I have.

So anyway, as a short intro to myself, my name is Alvaro Arisa, I am the CEO of CINC. I have been for the last seven years. And I'm originally from Argentina, if you didn't detect from my accent yet. And I'm a civil engineer from not proficient, but from having studied that, but the truth is I've been in business all my life.

I did an MBA here at Stanford. That's how I got to, to the U S. And then again, seven years ago, I came into the real estate industry for the first time with with CINC. And I have been. Really ecstatic about serving you all [00:03:00] in this role. And so for today, again, what you're about to see are my interpretations of what's going on.

So the main thing that, that I'm going to say is this, like as a preview of what yes, there will be a recording. We're going to [00:07:00] put it on YouTube after. Don't worry about it. Again, if I was to give 2 highlights of what I think I will say that some people will not agree with me right now in the industry term with a lot of people is, I think there's 2 big things that are not going to change.

And those are, I don't think that the commission for the buyer agent, or the general model for the buyer agent is fundamentally going to change. I really don't and I'll give you my arguments later of why is that the second that I really don't think is going to change is I don't think that the amount of money being paid out of pocket by buyers will change either.

That's obviously a bigger, even bigger thing than the commission itself. But I will give you my arguments later of why I think that this is a little got to part of the, where a lot of changes so that everything stays the same. But we'll get to that. So first let's go to what the NARS settlement actually was, right?

And okay, we all were subject to one of the biggest misinformation campaigns that I have seen in a very long time. And coming from a political family in Argentina, I'm used to [00:08:00] journalists talking crap. But what we've seen in this particular moment is I think takes the cake, like starting by the 6 % is gone, right?

1st of all, the 6 % doesn't exist. We know it's 5. 5% 2nd, it's not going anywhere. This settlement doesn't really affect that in any way. And the most not damaging, but the most outright wrong statement of all, which unfortunately was repeated by our president even was the now for the first time you can negotiate commissions, which is absolutely not true.

You've been able to negotiate commissions all along. In fact, commissions have been negotiated and we all know that. But this actual campaign of misinformation is going to do, at least on the short term, actual damage to us, right? It will misinform buyers and sellers, and that will make it that that some transactions get a little more difficult than we have to work through them.

Now, I'll give you my arguments today of why I think that long term. It doesn't really change, but I do acknowledge that right now you have setters saying, Oh, I want to sell for the same that I thought that I was selling, but I don't want to [00:09:00] pay the buyer. And that creates an extra level of friction. So let's go to what the NAR settlement actually was.

So the NAR settlement has three, three main components going for outside of, again, I'm not going to really talk about the money. That doesn't make a difference in, in what I'm discussing today, but it has three main points, right? The sellers are not required to make an offer of compensation to the buyer's agent.

The agents can no longer put the offer to compensation on the MLS and the agents Are required to enter into a written representation agreement in order to see a home. And so let's tear those apart. The 1st, 1 and the most funny thing of this is 1st, 1 thing that you all know, but I have to remind a lot of people in our industry is not the law is a private organization.

And this lawsuit is between private parts. And this is something that is committing as an organization. Everything that they say. Although they say it as if it was a law. It's not right. It's an internal rule to it's not agents. But the 1st 1 is okay. Sellers are [00:10:00] not required to make an offer of compensation.

Now, we all know that was true before. We know that no 1 was forced to give a buyer compensation agreement. Now. Some, and this was something that I believe probably was a mistake on our part that exposed it to this is some didn't require you to put a 1 cent or a 1 dollar in offered compensation.

That. I do believe with my apologies in advance to my NAR friends. I do believe that there was hubris, hubris there, right? There was a little bit of NAR wanting to say, Oh, we are defending the commission of the buyer agent when they were not. The truth is the commission of the buyer agent, as we'll see today, they were not.

Comes purely from a market situation from the fact that the buyer agents provide value and therefore have been able to extract good commissions from it because of the value that they provide. But by having that little rule that did open them up. And again, I'm not a lawyer. So again, everything that is legally specific, take it with even more grain of salt than the rest of my of what I'm [00:11:00] saying.

But I do believe that was a mistake and that mistake is reversed now. But they've gone to the other side and we'll go in the second point, which is the MLS cannot show it at all. But right now for this, the only thing that it's saying is you don't, you're not forced to pay commission to the buyer agent.

And it has another another point that I find a little laughable, but these things is either laughable or to cry, but it's true when they say and now it needs to be very clear that the commission is not set by law and that it is negotiable. What else is negotiable?

Buying a coffee at Starbucks is negotiable. No one, there's no law that says that the coffee at Starbucks needs to be 7. I don't know how much it is. You could go to the to the window of Starbucks and say, I want that coffee, but I want to pay for it. You could now they won't sell it to you because they don't, they're not forced to negotiate.

But their commission or their price is not set by law in the same way that now they're asking us to be more conspicuous about showing this, [00:12:00] which we will, because the last thing we want is lack of transparency. The truth is they should be asking from every store in the U. S. to say, Oh, by the way, all the prices in this ticket are negotiable, which they are right.

But that's just how crazy this has become in the end, what we want is transparency. And as we'll see today, one of the good things coming out of this will be an increased transparency, which I think will play in favor of the agent. But number one. Okay. Now we need to say, Okay. That that buyers don't need to that sellers don't need to pay the buyer agent anything.

Great. That's a statement. It was true before. The only real change is number two, which is now the MLSs. Are not going to be able to share it, right? The MLSs are not going to be able to say, Hey, this particular seller is willing to give a 3 % in commission share. Right now, a very important thing about this is that because NAR does this 1 more thing, which says [00:13:00] we're not going to do it with the MLS and no 1 else can do it.

No 1 else can aggregate this. Now, that's not first. It's not true because now I cannot do that. Anyone can do whatever they want. But the more important thing is what is the underlying thing that here, especially when the DOJ comes, what's the underlying thing that people are trying that they're trying to protect.

They're trying to protect the consumer. And as we know, if the buyer is going to have to pay out of pocket, which is something we will address later, the commission, then. Okay, then they need to know they need to know when they're looking at a house, whether that the end of that deal, if they said to their buyer, Hey, I do, because we can still share the commission.

It's just a question of which seller is willing to do it with me or not, right? Which seller? It's basically a salary concession. It's just a seller concession that has been the norm through time, but it's just a seller position to say anything else. It's the seller saying this particular thing. I'm going to take it so that we can put it as part of the [00:14:00] price and you can get it as part of the loan, right?

And it's going to be very important for clients to know which one's yes or not. So when we say Zillow cannot do it now, or it depends. I think clients will need to know, consumers will need to know which seller is willing to pay broker and of course they are saying you can put it on your listing page, but there's no reason that cannot be aggregated.

The problem with the MLSs was that it was considered that it was a service for agents. Therefore came the argument of agents are going to steer clients according to that. But the clients should be able to steer themselves, right? They, this is important information for them and they will have to have. So anyway, the real, the only real change here is they cannot be put in the MLS.

And then the third one, I do think that this is a brilliant NAR move. I think this is good for the industry and good for professional good agents, which is NAR is now saying, Oh, you will have to. [00:15:00] Got being written representation in order to show a whole, again, this is not long. This is an hour, right?

But still, if we all agree and that's where Nara is good, right? If we all agree that we're going to do this, then it is actually very healthy for the industry. So now you will have to force yourself and your client to enter into that discussion up front and to say, Hey, look, we are if we're more going to work together, this is how I get paid.

Right now, again, this is not new either. It is new that you're required to do this in order to in order to come into the property in a showing, but it is not new that that we. It is not new that you can enter a buyer compensation agreement that NAR has been recommending that you do it and that every coach that I know has always recommended that you do it.

And now what this does is it does give you a very good argument, a very good entry point into that conversation, which is to say, look, I'd love to show you this [00:16:00] home. Before that I'm required, we need to sign this, right? Or even better. Look, I'd love to work with you. I'd love to show you homes.

I still, I do propose that we meet ahead of time in my office so that I can explain to you my services and we do have to sign this contract before going, but I'd rather do it in person so that I can explain it fully. Those two things are extremely valuable and they will have consequences that I will address now as to how the industry evolves a little bit, because it will make that.

Leads as we call them people that are looking for houses will have to commit to an agent early on. Now, it's not an unbreakable commitment. We all know it right. But in general, when people make commitments, especially in the US, they keep them or you have to give them a good reason to break them. If there's no commitment, they feel free to just shop around and continue shopping agents through the whole life of their search. But now if you're going to be committing to an agent, the first time you want to see a house, which usually happens four or five months before, [00:17:00] before actually buying, it's rare that one will after break that contract and move to another agent.

So again, this is not a rule. This is not a law. It's a NAR rule. It is a good NAR rule. And the only other aspect is it does say now, if I agree with my buyer that I am only going to take 2%, I cannot take more than 2 % even if the seller is giving 3 % at the end. That's great. All of that I think is valuable and a good outcome from this.

And so again, if I go and I've tried to keep this section a little bit short, just because I assume that you all know quite a bit from this. But if I go at really what's out of this settlement, if I forget the 2nd and 3rd degree, what ifs and what will happen if I go to the facts of what's changed. I think little has changed.

You can still of course, co broker, the seller can still put and pay for the buyer agent. The only real. change is how that gets [00:18:00] shown again, where the industry, in my opinion is being mistaken is everyone is thinking, Oh, the co brokering offering is going to have to be more hidden. No, it's going to have to be more evident.

The main aspect that will happen in the future is that every house will have to somehow tell the buyer that Whether they're going to have to pay for their agent or not, right? Whether the seller is willing to have that seller concession of paying for the broker agent or not, right? So that, that item B here for me is the biggest change.

It's the only real change. But then hopefully it will end up in more transparency at the end of this, rather than less. For now, it is less transparency because we took the main way in which that was communicated and we pulled the blinds over it, right? Now you can still do it. You can still put it on your listing.

We're going to help you. We'll see how we talk that at the end but bottom line is, and that's why you'll hear me say today, we do are facing a short time of turmoil and misinformation that will come from the [00:19:00] negative consequences of this. And this first one is that today there's no good way to show the buyer whether they are going to have to pay out of pocket or not the buyer commission.

And then finally, again, I do think that. This is the perfect opportunity for buyer agents to now make their value known. Yes, this will result in amateur agents going out of the market. I do think that this might result in a 20 % of agents leaving the industry. I don't think that's a bad thing.

I think good pro agents will have to defend their value just as they do whenever they want to get a listing. When you're going to get that listing, you set up a listing table and you earn your business, right? And now you're going to earn your business as a buyer agent. Now the mistake a lot of people.

have is in thinking that those buyer agents cannot do it, don't know how to do it. And they absolutely do not all of them, but it will make the good ones win and the bad ones just get out of the industry. So that's, I know I went fast because I wanted to get to the second part. I see a question there about [00:20:00] dual agency and I'll go that in the second part.

I do think That in the short term, there's going to be some, I don't even want to be negative, but some in a scrupulous agents that will push towards a dual agency that is not in the best interest of the buyer or the seller. And sometimes it will be organic. Yes, dual agency sometimes makes sense in certain cases, but agents that are either pushing that or in a scrupulous agent that will say we don't pay the buyer.

I'm still charging my 6%. I'm just making more percentage. Again, in times of turmoil, where unfortunately you had something that has reduced transparency instead of increased it in the short term, you will have some mistakes, some people that will be taken advantage of. But again, the the general approach for me is.

You will still have to be very upfront and I see, and I will address when we're talking about menu of offering, that's where I disagree a little with the industry. I know that the whole industry is saying now you'll have my flat fee and [00:21:00] I just do this for you. And then I have your more involved fee.

You may have them just to humor things. The reality is I think everyone will end up where we are today, but I'll go there in a second.

Richard Kaiser: Alvaro, two others before you get through. One Kimberly was asking about for veterans. And I think you had some stuff about VA loans. I think we'll get to that later on.

So Kimberly, I'd stick around for that. Jeanette is asking, this is something more, in the logistics. Now, if the buyer agent signs paperwork for 1 % commission, but the seller has agreed to pay 3%; who does the 2% go to?

Alvaro Erize: And so again, this is where. My webinar today is more about the trends of the industry.

Those technical things are going to have to be again. What I think will happen is, of course, it's like a seller concession that the buyer doesn't want to take the seller is keeping it right? Like the seller will just not pay that commission. I don't think it's going to go to the seller agent. But again, that will probably be defined not by NART, but by [00:22:00] state and the state laws will define that in, in practice.

What I think will happen is most buyer agreements will be signed at 3 % because always you can always say look, we can agree on three, but then I can reduce if they're not giving three. So don't sign me less than three because you're you're hurting me. But if it ends up at one or two, I can always come down.

You can do that. You cannot do the opposite, right? So you cannot say you're going to pay me three. You're gonna, I'm agreeing one with you, but if they agree, if they say three, I'm going to keep the three that you can't. So it's in the interest of everyone to start high and then come low. But again, without going into the technicality of it and remembering that I am not a realtor there, right?

So that's going to be between realtors. I'm interested. In thinking what this means for the industry as a whole, and how is this going to evolve? Because the main conclusion, in my opinion, erroneous that is being given in the industry is that this means that either the buyer agent will go [00:23:00] away, or they will turn into a clerk into someone that does for a flat fee, a flat service, or things like that.

I don't think that's the case. And so that's where I want to go into what I think are the Results of this. Now I will separate what I said with a mistake, more or a mistake, less due to my ignorance. It's pretty much fact, right? We're talking about what happened, what NAR said in its settlement.

You may say that I did interpret it wrong, but it's pretty much set in, if you read the settlement. Where I'm going to now is absolutely my opinion, right? So it's here. That's what I think. I'll give my arguments and you can decide whether those arguments are valid or not. I think that because of these because of these changes, the first thing that will happen is that buyers will have to get exclusive representation earlier in the fund.

Buyers start really looking at houses many times, five, four months before before actually buying a house. And because now they will need to sign that contract early, they will start that relationship officially early. They were already starting those relationships early. [00:24:00] But now they will have to put it in paper.

That doesn't mean it's unbreakable. So if you think that now you cannot lose that client, you know that you're delusional there. But it does mean that in 90 % of the cases that will not change after the fact, it's very rare for people to go and break a contract and say, no, I want to change the agent.

Just it is as it is in a seller agent, right? So that's number one. And I'll explain all these five points in detail in a second. Number two is the buyer agents will need to defend their compensation when they do come five months before, Hey, here's my buyer contract. You will have to say, this is why I'm valuable.

This is how much my service is worth. And that's where we can discuss whether there will be different offerings and the flat fee and all of that. But more importantly than that, it's you'll have to decide to tell them you need to choose me instead of someone else. Which is different from saying can I send you homes?

And if you see one you like I show it and then you'll worry you don't need to choose. Now you're gonna have to say you need to choose me and this is why I'm worth it, right? So we'll go into that number two. I think it's one of the most important. Three. [00:25:00] This one is one that I think the industry is missing a lot.

It's more important to educate sellers than buyers right now. And I've seen a lot of people talk about sellers now, they don't know that if they don't know offer co broke, they're in trouble because there's a lot of people that cannot come and really pay for their house. VAs are screwed, right? And so we'll go that in a second too.

And that is what I don't think will change. And I'll mix this through the arguments, which is, I, as I said before, I don't think that that buyers will have to pay agents out of pocket. I don't or not more than they do today or not materially more. And then I don't think that the average Total spend on agents through fees, commission, or whatever is going to go down.

That is a fundamental fallacy in my opinion, of readiness. We're going to go at this five points, one at a time. Richard, tell me if if there's something I need to answer that, that I didn't. But if not, as I said, we're going to leave for questions at the end. And if I, if we go over, I'm happy staying a few [00:26:00] minutes over, but I do want to get through the content because I want everyone to at least see what our opinion is.

And then I can be more more fluid in the after. Okay.

Richard Kaiser: So one question coming in from Jeffrey Morgan asking about being in a luxury market. Like, how do we see this working? So he's saying we sell things people don't necessarily need. They see it more as a want. So if there's going to be a section asking for money for the buyer, he's saying this might be a problem.

And then what stops a buyer from going to selling to the broker directly? Savvy people don't want contracts. shoved in the hands out of the gate. So do you see it playing out a little differently at the luxury level versus more of the entry level of the market?

Alvaro Erize: I'll go that in a second in point two.

Yes I do. I will address luxury in particular because they are as a different percentage there of cash versus loan. So it's a little bit different. And I will address to the, Hey, why don't we go directly to the listing agent? The way, I'll say this again. I tried it. Listing agents don't call you back.

If you go to [00:27:00] the listing agent directly and you leave a message saying, I want to see this home tomorrow. No one calls you back. But anyway I'll go to that in a second. Let's go first. The buyers will get exclusive representation earlier in the funnel. Look, this as I said, is particularly a very good thing for good professional agents, especially for teams that are the only ones that can handle buyer leads, early funnel buyer leads effectively.

So now you have a very good entry point into that conversation. Yes, of course. I'd love to show you that house. I do get have to get this sign before we can do it. Which again, as we talk in the second part about the negotiation, the rate. No one's going to negotiate a rate on something that you're signing just to see a house when you're five months away, like it's going to be a I think a lot of let's just get out of the way, but even better, every good coach that, that I've heard has always preached you should push to not meet at the house.

You should push to meet at your office and to explain your value and establish a relationship. You're not. [00:28:00] You're not a clerk. You're not someone that is just going there to open a door and that they need to recognize it. So now this is an amazing opportunity to to enforce that, right? To get people, because again, you can be honest and say, Hey, I don't want you signing something to me over the internet.

Let's just meet and I'll explain my value and you'll decide whether you want to sign or not. Perfect. Once they're there, I am confident you're going to get them to sign that. Now, what this will change is I think people that focus on late final leads are going to have a problem, right? Because I think if you're waiting, I know it's more attractive to get a seller, a buyer that is two months away from buying their home.

Yes. It's for you today. If you can choose between someone that's six months away or two months away. I prefer the two months away, right? Now it's more expensive. Usually it's 20 times more expensive for that kind of lead. But but given nothing else, I would prefer the closer one, right? If they were the same, I would now that's not going to be true, right?

How many people will be two months ahead of buying their home without having a [00:29:00] buyer agreement with an agent? So think about that and think about how hard it will be to have to go in and convince someone to break an agreement so that they can be with you, right? That's a totally different game. And so where before you could have been working for someone for four months, you had been doing the work long term, you were early funnel, you were doing all of these things.

And. And then at the end, someone swiped them from under you just because they wanted to see a house and they were there when that happened. And that's something that hopefully now it's not going to happen anymore. I think that will move things towards early funnel. It will make early prospecting so much more important.

I know it's tough early prospecting is not something that's easy. I think it will become more important as this comes into play.

And so there's the question about exclusive and non exclusive again, even if it's non exclusive, even if it's non exclusive buyer agreement I, people care about what they're saying, actually putting their name on a paper. Hey, I'm working with [00:30:00] you. Even if they're saying it's not inclusive, non exclusive, I really believe will mean they will not work with someone else.

The US is a place of fundamentally honest, straightforward people that want to choose their person and work with that. But it's different if they never signed anything, if they never committed, if you just said, Hey, just let me show you some houses, that's a different deal. And so again, you can, it's on you on the level of exclusive, like those contracts have some variability, right?

But in the end, I believe that's going to be the main factor. Now, the second one for me is the one that I find sometimes a little not funny, but there's this fear that now that the, that now that you all have the commission there, people will actively negotiate the commission down.

And I'm going to actually, let me ask who here is considers to be themselves a tough negotiator like someone that says, yeah, and I like to negotiate [00:31:00] and I am good at it. Okay Jeff lost her. Come on. He was the first one. He jumped. Let's promote him and Jeff unmute yourself.

Hello. Hey, Jeff, how are you doing? Good. How are you? Where are you joining us from?

Jeff, did we lose you?

No, I'm here. I'm here.

Okay. So Jeff I'm going to ask you a question. I'm actually going to ask this question. From everyone in the chat, and I'm going to ask you to think about what I'm going to say, give me your honest answer and post it in the in the in the chat, right?

Jeff, I want to picture you to picture in your mind the last time that you went to a restaurant and you got mediocre service. Okay, you have it. You have it in your mind. Everyone at home. You have it in your mind tomorrow. Laura. Are you thinking of it? Okay, how [00:32:00] much did you tip

10 %

10%? Let me see in the chat all other answers

20, 20, I see 15. I'm gonna ask the 15th if that's in one where there is not where there was not an iPad with options. Wow. I'm sorry. Maybe it's because it's Realtors and I'm seeing much more variability. I will say, so Jeff, that 10 % that you're thinking is that in one where you were in an iPad or where you were writing down whatever you wanted on the ticket?

I think it was, I can write whatever I want on the ticket.

I used to, in a previous life, I used to be a server. So I know that they get paid two or 3 an hour and they survive on tips. So even bad service, you got to tip them something.

I understood. Yes. But you are the exception still that you tip 10 and I'm seeing a lot of 15.

I really ask you Americans I'm, I've seen this a lot. 90 % of people in the US will tip [00:33:00] whatever the option is there. If they give you a 15, a 20 you may choose the 15. If not, you go 20%. Everyone goes 20 % and there's no negotiation there necessary. You could tip whatever you want, right?

And so that is precisely my point, which is in the US. You will see this. It's very rare for people to negotiate fees. And again, if the service is bad, I'm reading it. That's why I didn't say bad service. If they pissed you off, I understand you're going to reduce your tip. But if it was just mediocre service, you will always usually tip whatever you usually tip.

If it's 20, if it's 18, you will tip what you usually tip. And in this particular thing, I would think the same thing will happen, which is you will have Some people wanting to represent themselves and paying zero, because that is very true in the U S if you don't agree with the price, you just don't take the service.

You just don't do it. And so some people will say, I can represent myself now. They're going to fail at it, but that's a different deal. But most people will [00:34:00] either put. Pay whatever you're asking there or just not take the service. Now, if you give horrible service, that's a different deal, right?

And that same thing, that's what I'm representing on the tip example, right? So for me, and I'll go, I have more arguments than this because I have actual proof from the past that people don't look for discount solutions in this particular service that you're providing. But my general position is, Especially five months ahead.

You will not have people actively fighting with you over how much commission you will take. Now, you will still have people that will not choose you and choose a different agent. So I do think that the most important consequence of this point is that agent reviews, client testimonials, and a clear value proposition will become.

Super important for buyer agents, which they're not today. Buyer agents today don't spend a ton of time convincing people that they're good, right? So they don't use those things that much. Seller agents do, but buyer agents don't. And now this will become a thing. So don't get me wrong, I [00:35:00] still think people will negotiate by not choosing you and choosing a different agent.

But I don't think, and we'll see a year from now if I was right or wrong, that people will actively go into a buyer contract and negotiate you down in the commission. Again, that is my theory, but we'll see. I'll do a webinar here from now and we'll I'll look at data. But the most important thing is where this money comes from.

Right? And so now we're saying, okay, sellers. Need to decide and they could have before, but now it's been very evident to them through the media through the news that they get to decide whether they're going to pay buyer compensation or not. Now, as well as I do that, if they don't pay buyer compensation, their listing is going to be significantly hurt, right?

It is hurt because people that cannot pay. by a representation out of pocket will either not be able to buy that house because they just don't have the money. A VA [00:36:00] that is putting zero down will not produce 10, 000 magically to pay an agent, right? So that means, oh, we're going to be losing all of that.

Those transactions will not happen. No, it doesn't mean that. Here's where my libertarian side comes into things. This is an efficient market. People were deciding how much they were willing to get paid for a house and they don't magically now want to be paid necessarily more. Now they may not want to pay for a buyer agent.

That's a different thing, but that does mean that they're willing to take less money for their house. So I'm going to, I'm going to apologize. Now I'm going to do a little bit math on the, on board because I know that this sometimes can be misinterpreted

If the house was listed at a [00:39:00] $100k right before you got, the buyer was paying the full hundred. The seller was getting 94 and six was going in the middle to the agents, right? Seller agent, buyer agent. The seller, this is the number that matters. He was willing to sell for 94. And so sorry, Vanessa, my, my technical inabilities, I'll maybe in the version that we hold after on, on YouTube we may put a better a better example of this from a whiteboard.

But bottom line is what I want you to center into is this seller is willing to sell for 94. And so it's willing to sell for 94. And if they're now not going to pay to the buyer commission, which is absolutely understandable. They don't want to, they shouldn't. Then what does mean is they need to want to list their price to 97.

Because they still want to get 94 and they're only going to be paying 3. Unless their seller agent is being sneaky and trying to [00:40:00] keep 6%, right? Because of that, It's on you as a seller agent. Now you will find a lot of people telling you need to do this for the industry, for the buyer agent. You need to fight for them to pay buyer broker.

I don't believe in loyalty in those things. I believe in the market. If your seller suddenly wants to get 97, he's gonna sell slower. Then the other seller that is willing for the same house to go to 94, which is what they were willing to go. And so what will happen is you will have your house staying on market, not being able to be sold.

And then it's up to you. You need to see this as a seller concession. So if you're comparing your price, you seller are comparing your price to other houses in the area that you're saying, Oh, I want a list for their price. Yeah, but they're giving 3000 or 10, 000 in seller concessions. So if you don't give it.

You just need to take it out of your prize. You don't need to give those concessions, but you need to be taking into account. And so bottom line is, if they list correctly, then things will not change. Why? [00:41:00] You say it's still a problem, right? Because even if we do it like this, if they list for 97, right?

And they're paying three to their agent, there's 94 left. So everything is the same, but the big problem is that before those extra three were coming from the bank, from the loan, and now they're going to have to come out of pocket from the buyer. And I'm going to go to a second, but the main reason is that will not happen because for starters, you could just give it as a set of concession, but more than that, The mortgage industry already knew that when they were giving a loan, let's say for a VA where it's zero, zero down payment, they were giving a loan for the whole hundred.

That included the commissions already. So we may make this argument, the lawyers might make this argument that, oh, people didn't know, but to think that the mortgage bankers didn't know that they, that commission was part, the house is not worth a hundred. The house is worth 94, right? Because to sell the house, you need to pay that 6%.

And so for me, the big point in all of this is [00:42:00] if the problem now will come from misinformation, right? If the seller wants to not pay buyer and still keep the same price as before, that is a problem. You have that problem every time that you have to explain to your sellers why this estimate is wrong, right?

So you having to explain to a seller that if they price above where they should be, they're not going to sell in time is not a new thing. But agents need to be intelligent enough to say, this is one more aspect of the house now, whether you are doing this sort of concession or not will affect the price of the home that you can list for.

And so I need to ask you, do you want to do it or not? And if you don't, that's fine. You need to take it into account when you're listing. You need to take into account into the price.

It will require smart seller agents, but I don't [00:43:00] think that necessarily means that the seller agents need to force the seller to still offer buyer compensation. The only thing that it means is that the seller agent needs to explain intelligently what intelligently to the seller that that If that if they don't offer seller, that seller concession, if they don't offer compensation for the buyer broker, then that's something that will affect the price versus other properties.

In particular for people in VA loans or first time home buyers this will become a big issue, right? Because they are not going to be able to do this transaction if they're not able to to cover that cost. Sorry. I lost the chat here. Sorry.

And on, on the constituent closed property, this can happen before the closed property, right? It could happen again. That's where we go into technical and I'm trying not to go too deep into the technicality of it, but conceptually, right? The, in that home that we were just looking the [00:44:00] appraisal is still a hundred because it's using the comps from before this, right?

And so one way or another, nothing has actually changed. There's the concept that the seller was paying the commission is false. Let's start by one concept. Who pays? Laura, let me ask you a question. Who pays the, when you go and you buy something at a store, who pays the sales tax?

I do. If I purchase something, I pay the sales tax.

You do. Really? Let me, if I change tomorrow and I think some states are like this and I said to the store owner, you cannot separate the sales tax anymore. It needs to be as part of the price. And so instead of charging you $5 for the meal and 50 cents for the tax, they now charge you $ 5.50 for the meal.

Who's paying the sales tax there?

It's the same.

It's the same. So who is seeing it is not changing. The truth is both you and McDonald's are paying it. Yes, a [00:45:00] friction on the transaction. Sorry.

No, this allows us to be professionals again. I'm excited for this change. I think we get to be professionals. We get to go out, say what we're worth, have people actually sign compensation agreements prior to showing property. Oh, hey, you want to meet at a house? Sure. Let's go. No, you need to be professionals. This could be a great thing. We just have to look at it in the positive and realize that it is going to take a minute and some people are going to be Aspects about it, but in the most part, this will make our industry better.

I, so I agree. And again, the main aspect of this one in particular is the seller commission has the only thing moving it from one side to the other. Doesn't change the fundamentals. It changes it only if you believe that now the loan, the banks will not cover the loan, right? Then if you believe that will make a difference.

But again, and I'll quote now the DOJ tell you that's absolutely not going to happen. [00:46:00] I did there was a question about the dual agency and I saw someone there say why wouldn't they go directly to the listing agent? I'll give you my real experience. I bought a home here in Atlanta. I use my realtor JD column.

Amazing, amazing realtor. I was Embarrassed to ask him to take me to one more house. I saw 40 houses in person during a year before I bought my house. So I did not want to call JD and say, can you show me one more house? Because I felt bad. So even though I was going to pay my buyer agent commission I still wanted to go to the listing agent directly and try to get to see some houses on my own.

Out of 10 houses that I tried that with, I only got into one. Listing agents were not answering me. And so again, what you're saying may be true of a danger. If you survived all the way without an agent to the end, I get it. But if during the process, you started working with an agent, you have a buyer agreement, that's not going to happen.

And yes, you will have a few that will now [00:47:00] say, I'm going to represent myself, just to see if you have. For sale by my owners. You have it. It's a small percentage. They're there and then they fail and they get called by agents to try to sell their house. And as a buyer, when you try to get into houses and when you try to see houses and you don't and you don't get that possibility and you start asking yourself questions and you start getting scared about the inspection and all those things and you don't know.

Sooner or later, you're going to end up on an agent. But even if you don't, we're talking about a five to 10 % of population, in my opinion, that is going to go that route. And so this is, again, I've, this for me is the main, the other main point when we're talking about flat fee versus, versus a fee at the end, right?

It is massively important for the buyer to not spend money through the process. Now, if you're in a luxury market, as that was the question in particular, that is already banged. 50%, 70%, [00:48:00] 90% out of pocket, all cash. This changes nothing because again, you are moving a fee that the seller knew that the fee was there.

They knew that they were paying 6%. So when they decided what was the minimum that they were willing to get for the house that was in there. So if you're moving that to your side, the market itself will make it that you have zero difference. Me as a buyer, an all time old cash buyer. I'm going to move it now.

The only difference it might make is that now, because I feel it more and I have it in front of me, I go I don't want to pay that 3%. I can tell you, I've been surprised in this industry, how many non realtors, but experts of this industry have told me, Oh yes, I would do it. And then I asked them, did you pay 3% the last time you bought a house?

And they absolutely paid 3%. And I was like, why? You knew you could go to the listing agent directly. And they all respond to me that it was a special situation for this or that. No one wants at any value, in my opinion, to take that risk. Some will, 5%, 10% will see it. But but the truth is that the market has been, you have Redfin, I'll go that in a [00:49:00] second, has been offered this service for a long time, and no one is taking it, but I'll go there in a second.

The important thing about the not paying out of pocket which for me is the most relevant part is if you don't have to pay out of pocket, people will always prefer to put an extra $10, 000 on the mortgage at the end than to have to pay $250 to go see houses today. That's gonna be the reality.

And so again the question comes back to, will they really have to pay out of pocket? I'm going to quote the DOJ hat here because. You are going to hear a lot about what if the DOJ split commissions and all of that. The last thing that the DOJ wants is to is to split the commission in a way where the buyer has to pay out of pocket.

I'm going to let you read this quote. I take a drink here. This is the DOJ statement in February that they did on the MLS settlement.

And you can read this last phrase that [00:50:00] specifically says, while some buyers might choose to pay their buyer brokers out of pocket, other buyers might request it in the seller. The center to pay a specified amount on the proceeds of the home sale. So they're specifically saying, even though they're upset with the settlement, they think that they didn't do enough and they're all of that, and they still want more clarity and more transparency.

They're specifically saying, we don't want the buyers having to pay out of pocket. We're not going to force things to go that way. And so again, no one has an incentive here for that, not to be on the loan. The seller doesn't want that to be, not to be on the loan. So if after we negotiated the price, we agreed on everything, and at the end you tell me, Hey, can you add the 3%?

If it's why not? Like you've, we've already agreed on a price. I'm gonna add the 3% and you, here you have it. The banks also don't want that to change. The banks have been doing this, loans all this time. Knowing that the commission was in there, so they don't take more risk now that the commission moves to one side to the other.

So there's no one has an incentive for this to come from the out [00:51:00] of pocket from the buyer, especially VA loans and first home buyers that the government has always tried. Again, you have a government that wants to make this as a priority. popular win. The last thing they want on earth is for the buyer to have to come for a VA that was paying zero down to have to pay out of pocket.

Remember that VA was being loaned by the bank money to pay for the house and to pay for both commissions. Because again, as we just said with Laura, Both are paying for that, right? So if a VA was buying a $100k house and he was getting $100k in a loan that included paying both agents. So the banks were already paying for those for those two agents.

So again, we can go into the technicalities deep and that would be a three hour webinar. But. But in the end that's what I think that nothing has changed. And therefore the buyer out of pocket will not happen. And because the buyer out of pocket will not happen, the actual commission will also not change because you [00:52:00] have a difficult transaction that and I know I've gone horribly over time.

So after this I'll open for questions, but. You have a buyer that has done the biggest example of why this doesn't work for me is Redfin. So Redfin has been offering a 2% back on, on commissions for a very long time to buyers. You just have to pay $250 upfront for a home tour. No one takes them out.

No one, because no one is willing to make that trade off. And because again, Americans consider discount, they were cheap in the U S it's a bad thing where the rest of the world is a good thing. And the U S it's a bad thing. It assimilates bad quality and no one wants to take the risk on their biggest transaction of their life.

We think we can do all of this. Yeah. I could buy search for homes on my own until we actually have to do it. It's a scary transaction and just the numbers don't lie. Redfin is less than 2% of the market. Like you're talking about an organization that offered a 66% discount on the product.

Like on the seller side, Redfin gives you a [00:53:00] 1%, explains perfectly about the buyer commission. They've been doing everything exactly how the DOJ would want. And they're less than 2% of the market. In any other industry, if you have a service that is really a commodity and you're able to give a 20% discount.

You've won. You, that's how Walmart's dominated, right? Why a player here is offering 66% discount and failing to have more than 2% of the market? Because it's not a commodity, because it's a complex service that people don't want to run a risk with. If this was not true, if I was wrong in what I'm saying, Redfin would be 50% of the market today, and it's not.

It has a bit of the market of people that that really care. Or I see someone got out here, but I don't know if that's.

And okay. So that's my general points there. I know I've gone super over look, this is the original discount broker. So let's hear it [00:54:00] from himself, right? He offered, he's saying, look, I offered the $ 250 with two thirds of the buyer's commission back as a rebate. And I didn't succeed.

I could not get people to take it. I've now become convinced through bitter experience that people need someone to talk to before they make an offer and people will pay for that service. This is the original discount broker, right? And so again, why now this will change this fact. If this was true, Redfin would have been winning all along.

And so those are my general which are, and I'll actually go to the next So this is for me, what changes coming, right? I think there will be a time of turmoil. I think right now you're going to have sellers that are not smart, that are want to not offer buyer compensation while still offering the same price, that's not going to happen.

They're going to stay on market or they're going to have to bring price down or more probably are going to be convinced to offer the broker compensation long term fundamentals. Nothing has [00:55:00] changed. If you truly believe in the market, there's not been a single change that would change how much people are paying for stuff.

Unless you really believed that the sellers didn't know that they were paying 6 % and that part of that was going to the buyer. And I don't think we believe that. I certainly don't believe it. I think the lawsuit was BS and all of that. But if you don't believe that, then you cannot believe that this will change the fundamentals of the market.

I do think that buyer agent skill and buyer agent man training will make become much more important. I believe that the buyer agent now will be like a seller agent that has to defend their value. That has to go and say, this is why. But I don't believe that will mean that it has to bring down its commission.

So I don't everyone that's saying we have to offer a menu of services. I don't think so. You have people that will come up with flat fees. Yes. You had it before again, Redfin has been doing it. And good question. Going to market for leads with information about signing buyer agreement.

Richard Kaiser: I think that was one of the questions there. I know you'd mentioned some of the ways sinks going to [00:56:00] be. Working on this. I think some of the people in chat were asking about that earlier on.

Alvaro Erize: Yes. Yes, I'm sorry to anyone that is dropping. Again, we will, I'm going to stay here and answer questions for another 15 minutes if we have them.

But it will be after in YouTube. So don't, I don't feel bad if anyone drops. So again, I cannot believe we have more than 300 people. I hope when I do my next product webinar, I get as many people, but anyway, then my point is this. So what is CINC going to be doing against about this and what does CINC not going to be doing about this?

So for me, it's very important to get the buyer contract. In early EC and make it almost it needs to be, it needs to be a habit. It needs to be something we do. So I'm going to show now after this we have already worked with our friends and sister company Skyslope to bring their contracts in.

And we're going to deploy this very quickly where you can at the click of a button, send your buyer contract. It gets prefilled. I'm going to show it in a second. And the second part is we are going to be at the forefront of you [00:57:00] offer of your. Sellers being able to show who how much are they willing to share with?

And again, we'll check with legal and everything. But bottom line is for me, as long as you're showing it to consumers, there's no one on this country that can come and tell me that being upfront and honest with the consumer about whether they're going to have to pay out of pocket is going to make a difference or not.

And then the third part, which is big. And unfortunately for two weeks time, I cannot really fully announce it as We have something very big coming on reviews and on an invaluable position. I do think that now it is very important for your buyer agents in your team to be able to explain the value proposition upfront, even before they, someone talks to them and reviews and testimonials are going to become exponentially important in this new work.

So we need to provide you with a huge platform for that. We're ready to do it. We've been actually working on that for six to 12 months. You might think it's foresight or maybe luck, but we have it. We're ready to go. And it's an announcement that we're going to be doing in a week or two. [00:58:00] And then two things we will not be doing.

So again, a lot of people just as happened in 2020, A lot of people just try to tell you whatever you want to hear so that you feel, Oh, they're reacting. And they're like, I tell you what we believe and we stick to it unless we're proven wrong. And luckily in 2020, that was not the case. And that was very good for our clients in here.

For me, shifting away from buyer leads would be a critical mistake. It would be very easy for me to tell you, I have this new seller lead product that I'm rolling out and all I would not be making you a service. So we're going to Buyer leads are going to be more valuable than before. Early funnel buyer leads are going to be more valuable than before, because now you're going to be, have a higher percentage chance of getting them into a buyer contract before they become a late funnel lead.

So they become more important. They also might, if enough people are stupid, they're Become cheaper with our cost per lead has been going down for the last three months. And if people become disenchanted and think that the low hanging fruit is not as easy to [00:59:00] get, there might be less competition for them.

We're going to bounce on that. Now, I also know and believe that buyer leads are the most inexpensive way of getting seller leads. So I still recommend that to many clients. So if you come to me, Personally, and you say, Albert, I wanna talk to you because I wanna move all my out. Spend two seller leads.

You're gonna have to argue with me for a little bit because I really don't think that's the right call. And as I've always said, I'm not here to make clients happy. I'm here to make clients money. And my best way of making you money is to push you to do what's gonna get you the best return on investment.

So CINC will continue to strongly emphasize the buyer lead as also the best path to getting seller leads. And then the last time, the last thing that I will say. Is we will not endorse any commission auction model. If you think that the future is a race for who offers the price, the lowest price on the buyer commission, and that the ones that are going to take market share and not the high profile agents that can.

Are you the value, but rather the ones that are willing to do it for 0. 5%. We're not going to be the platform for that. [01:00:00] So I'm telling you now that if that's what you're hoping from us, we're not going to put in place what other people are saying of we're going to put these things so that people can search and commission and go for further for the lowest bidder.

That's not us again, not because I'm good, not because I do it for loyalty for agents. I don't believe it's the best for consumers and it's not the best for the industry. And the industry is going to be about defending your value. We're going to give you more tools for that. So with that. Very quickly, I'll pass through this.

So we're going to have right now, and this is from our friends at Skyslope. That's why we have it like this, which is we are including right now from your lead in the more bottom two, so that we don't even have to put an additional bottom. You're going to have now the send a buyer contract and that will immediately, and you don't need to be a user of Skyslope to do this.

You are immediately going to go into Sky Slopes forms where you can put your information. It's going to get pre filled and then you're going to edit it and you're going to [01:01:00] have your contract ready to go. And again, this is just simplicity. Now, after that, if you want to keep using forms. We're going to put you through to skyslope and they'll be happy to take you as a customer and to use their forms, but you don't need to with CINC.

You will be able to have your buyer contract immediate at hand with all the, it's not just any buyer contract. Skyslope is specialized in this and has every state regulation and is already going into their platform where it attends all the legal matters that I don't know, and I don't want to learn. And we're putting you through to them in a seamless way where you can do this. And then internally, and again, I'm promising that now, but I am going to, of course, run it through letters a couple of times, but I truly believe that we are the ones that need to start showing consumers who is going to offer who's going to offer broker commission again, I don't think that certainly it's been said that you can do it.

Absolutely. With your with your listings. [01:02:00] And so we're doing it on your listing page. Okay. But I think in the future, this is going to have to become something where everyone can known at any point who is offering that and who is not. And I don't mean agents. Consumers for us for now, we will put it in your listing.

And that's it. The other part, I don't, I cannot show you anything about the reviews and testimonials part. I'm going to do a webinar on this in a couple of weeks when we have it in hand and we're ready to start releasing parts of it. But but it's very exciting. I tell you whether it's with us or with someone else, if when someone asks you, show me some reviews of you, you send them to Zillow.

That's a horrible answer. So you're going to either you have a big, a great Google business account, a frothy Google business account with a lot of reviews. Or you're going to use what we're going to give you, which we're going to almost push down your throat because I believe that it is extremely important for you to have this you don't need to integrate to Skyslope to use what we're saying.

You don't need to integrate or take anyone. You will do it from CINC. We will [01:03:00] use their forms, but it will all be through us. You don't need to do anything else. And then after that, if you do want to use their forms for other things, you can, they'll be happy to serve you. So that's it. I'm going to, I'm going to actually that's me more relaxed than when I started hearing about NAR.

So I'm going to get off the share for a second. And now

Richard Kaiser: Alvaro, I think a few of the questions asked early on there, so we're going to get back to, I know you've talked to me about it a few times. I know it's been from some of the top clients that you've talked to particularly dealing with veterans and VA loans.

I guess how you see that playing, like the nuance of that playing out?

Alvaro Erize: Yes, I'll answer a quick question from Barry. He's there. He's asking whether we will eliminate the listing information on the property display. We won't of course, the MLSs don't allow it, but also depends on the MLS and everything, but I also.

We will, you will be able to call me on this, that feeling that everyone is going to go to the listing agent directly as a buyer is [01:04:00] I believe an unfounded fear. It's been possible all along and no one has been doing it. Yes. Now some more people will do it just because It has been advertised so much but I tell you, as someone that has tried it, listing agents don't answer the phone.

They don't like to show houses to people that is not being represented because they don't know if you're serious or not. And when they get flooded with ton of Luke's that are just going around and trying to see houses without having to sign anything there, they're going to be flooded and drowning in that.

And it's going to be even worse. And the listing agents will not follow them. They'll have either to go to the open houses. Or they're going to have to come to buy our agents. But no, for now, we're not taking a listing agent from there. What was the question again, Richard? Sorry.

Richard Kaiser: So, on particularly, there are a few questions about dealing with veterans.

I know particularly there's been some nuance with those VA loans. If you just speak a little bit more to how you see, that playing out and particularly what else needs to be decided [01:05:00] before, right? We know what the future that is.

Alvaro Erize: Perfect. Okay. So why don't we do things? So first, thank you everyone that was promoted at, it helps me a lot to, to see you as I speak.

Maybe Richard, if it's not difficult, we unpromote them and now we promote whoever is asking a question. I'll let you handle that in the meantime. I'll just answer if we pull it off. Great. If not, but everyone. Laura and everyone that was at Christina. Yes. It helps me. It's very tough to talk to an audience that I don't see.

So even having two or three people there, it helps me a lot. So on the VA loans, again, this is the, this is one of my main reasons of why I think this will not happen. The U S is very it takes care of, should do it better, but veterans are an important part. There is a reason that the U. S. Is needed so that they can buy a house putting zero out front.

They do believe that they're reliable and that helps, but but in general, through several means they have produced that same thing with four first time home buyers, right? The U. S. The [01:06:00] government has been pushing for them to be able to buy with less and less money upfront. In this case that nothing has changed.

There's many ways in which this could be solved. There is the seller concession that for me is the easiest, but you also have the ability of a bank to extend a note. You also could just put a different ruling where mortgage bankers could just add that to the loan. There's multiple ways and bottom line is.

That they were already covering these commissions that they were already included in the mortgage. So even I'm not understanding the technicalities of the loans itself, conceptually speaking, there's no new risk to the banks for them to continue to cover this in any other way. So I strongly believe in the short run.

What I think is very simple. If you're going in a house that is on the lower side of where, like the VA loans and the FHA loans. What will happen is you're either going to price, you're either going to cover buyer commissions, which is what most people will do in my opinion, or you will [01:07:00] have to decrease your price proportionally to attract people, even though you're not covering the buyer commission.

And if you do reduce your price proportionally, that will leave the door open to at the end, put it back in. So either way, I don't think that will change.

On the buyer, Rosemary, if I understand your question correctly of whether You should leave that open depending on what's on the seller is going to offer. I really don't believe that. I believe you are providing a service and you put the price on your service like everyone else in the U S and I think that you say, look, it's okay in the end.

You can adjust that if you want to be, if you want to be generous, you can say, look, we'll see at the end if they're not offering, we can discuss then. And that could give something at the end. But at the beginning, you should say, no, look, I'm 3%. I'm the best agent. This is why. And look, you can go on and haggle another agent down.

But is that the agent that you want negotiating for your home? Because I am going to fight for you and I'm going to, and I'm going to do this and this is what I'm [01:08:00] worth. And you can say, but if it remains that at the end, you need to pay it out of pocket, we can discuss something there. And so in the end, they will not have to pay it out of pocket.

That's my fundamental belief, but no, I would not. You need to put your price and that needs to be clear. And also I'm just, I don't think I'm being naive. I think that's what actually will happen. And yes, you will have some discount brokers out there. You've been competing with the Redfin for the last 10 years and Redfin took less than 2 % of the market.

My biggest fear is that The brokers themselves succumb to fear out of all of this and proactively reduce their commissions in order to face it. There's no real reason to do it. People have been able to negotiate, or they don't even need to negotiate. They could take Redfin all along and pay 1% as a seller or as a buyer, and they haven't chose to do it.

They have not. So there's no reason for you guys to discount it. It may go down a little bit. Absolutely. I don't see a world where the buyer commission is 1% or even 2%.

Richard Kaiser: [01:09:00] There were a few questions on there of do you see it playing out much, right? The dual agency where somebody is representing both sides and neither sides getting representation, like, how likely do you see that playing out? What do you see the risks there?

Alvaro Erize: First thing I'll say is, again, you only know.

You can only be represented by the seller agent once you know your house, right? So again, you need to know that's where dual agency makes sense. If you're buying from a friend and we both know, like we're going to pay for only one agent, right? That's a different deal. But if I'm searching for homes, how can I count of that?

Unless I go, no, I'm going to do all the work. And at the end, that's it. I, yes, I'm going to ask them to represent me or I'm going to pay a That can exist, but the, but you're again, once you found the house, that's the only moment that the dual agency can happen, I tell you something, someone from Argentina, this is something that I get really offended when people say, Oh, the buyer agents are something that NAR invented or something.

No. [01:10:00] Let's talk about how this came to happen. In every country in the world, it is true that you only have the seller agent. And in every country in the world, or most countries, what happens, coming from Argentina, is you as a buyer have to go to five different brokerages in one neighborhood, where each brokerage is only going to show you their houses, and where your whole negotiation, you are a beggar.

No one cares about you. The broker only cares about the seller. You're not represented. It's a mess. Many people go and get lawyers independently if it's an expensive home, if it's a cheap home. Unfortunately, people are just get taken advantage of, but that's what it is. And so the only thing that happened in the U. S. is that some smart agent one day said, you know what? I'm going to pay part of my commission to anyone that brings me a buyer, right? That's how all of this started. And in the end, so in most countries in the world, if you want to show your house in a portal. You have to pay to be in that portal because you are the marketing arm.

You need to show their houses in the U S because of this very efficient way in which you'll evolve. You as a lister are [01:11:00] not paying to put your house on sale, right? Zillow puts it for free. It's not free. They're charging it from the other side. And that's how this works. It's a very efficient market in which there's active buyer agents that are advising buyers and are helping them interact with the listing and find it.

If the buyer agent disappeared, although it costs seller agents would be charging more because they would need to do more work. That's the reality. And that's how it is in most countries. And again, for me here. The dual agency thing. If you're a super committed buyer and you're going to go to all the houses, you're going to go to open houses because no one is going to show you a house, but you're going to go to open houses.

You're going to do your online, then you're going to actually go there. You can do dual agency or you cannot do, you can do nothing at all. You can just say, Oh, it's okay. I'll use a lawyer for whatever I need. That's going to exist. I think that's going to be like for sale by owners. Same thing. They exist today.

There's less through time because they learned that it's not great for them. Because in the end, it's an insignificant part. Again, [01:12:00] when we talk to the 3 % commission, if it's in the moral edge. Hopefully I've made my argument that it's going to be part of the loan. Imagine the impact of a 3% on your 30 year loan.

We're talking about $15 a month in mortgage in your mortgage price. $15 a month. It's insignificant for someone to really, it's the last of their worries. It is a big worry if it is out of pocket, then it becomes a non, it becomes a deal breaker. If you're in my VA, I'm not going to be able to produce $10, 000 versus $ 0 that was producing before.

So again, the commission itself is not an issue unless it has to be out of pocket. And I don't think it's going to be out of pocket.

Richard Kaiser: I think a good point by Jody, we've also talked about, right? That's in states where it's even legal to do dual agency, right?

Alvaro Erize: Also true. And there's protections because dual agency is fundamentally not right, unless it's a special situation where there's a sense for it, right?

And okay, we've gone 20 minutes over. I'm going to, I'm going to take two last questions. And then I think I think [01:13:00] we, we closed the, I hope this has been valuable for all of you. Again, I'll do my disclaimer. Once again, these are nothing by my opinions. I do take them seriously. I research and I think I have some basis for them, but in the end, I'm just one more person giving you the, their view, what is hopefully yes.

Exclusive from us is what our view of what CINC will do. So I can tell you that this is where we're going. We still believe buyer. Buyer agents are extremely valuable. And we will continue to invest in them. We will protect your commission in every way we can. We will make it easier for you to do buyer agreements.

I think this is going to be reinforcing of buyer agents. The people that win here are teams, in my opinion, teams, professional buyer agents, and early funnel leads. So those are three things that make me not unhappy at all of this, I must say. But I do think that I feel for everyone that has been impacted negatively out of the settlement.

I don't agree with the settlement. But but it is what it is. And I do think going forward, it will not change the [01:14:00] fundamentals of how this industry works. And we're going to keep betting on that. But I'm open to more questions.

Richard Kaiser: Matt Heedman was asking, he believed we were talking about a plan to be able to communicate buyer commissions is being offered by list.

I think you might have spoke about it a little bit earlier. He was asking can you expand on that a little bit more?

Alvaro Erize: Could you repeat the question? Sorry. So

Richard Kaiser: He said he heard us talking about us coming up with a plan to be able to communicate buyer commissions that is being offered by the listing.

And could we expand on that a little more?

Alvaro Erize: Yeah. So it's what I showed before. And again, I'm going to say the caveat that this will take me, it's less of a technical time that I need to spend on it. I'm going to spend a lot of legal time on it, making sure that we're not putting you at risk in any way.

But we are developing the way of you to show in your listings what you're offering, what your seller is offering of of buyer broker compensation. And I would also like to have additional safety for you. In the end, all of this is if there's a way of proving that the seller is in agreement with that.

[01:15:00] We are you're completely covered, right? No one can tell you that it is illegal for you to show what your seller is asking you to show. Which is not, it's incorrect, but that's the basis of the lawsuit.

So all that we need is for you to be able to prove beyond a shadow of a doubt that your seller knew what you were doing, knew what you were sharing. And no one can tell me. That it is wrong for you to tell the buyer whether you're going to cover that cost or not, because this is massively important for the buyer, whether you're going to do that or not.

And if you're not going to do it, then they should know it because they should be asking for a lower price from you.

Thank you, Darcy. I'm trying to keep it correct. As a foreigner, I sometimes go a little bit off the rails.

Richard Kaiser: All good. And I say, I know, Melinda, we've got you here. One of the questions, Melinda, you had asked.

Alvaro Erize: Sorry, one point, because it says it's a seller agent that is offering the commission, not the seller.

That's the point here, right? Because if it was really that, [01:16:00] Then the lawsuit would not have succeeded. The basis of the lawsuit, because if it's and I agree with you that it's this is my commission. I do whatever I want with you. It's ridiculous that I got sued for giving that commission to someone that is going to help you sell the house.

But if I had kept it to buy a yacht then that was fine. So I agree with you conceptually, but in practice, what the DOJ is saying is, or what the lawsuit was about is the seller complaining, Hey, I never agreed for you to give money to my opponent. Which again, it's not right. I don't agree with it, but that's the case.

That's the basis of it. So in my opinion, even though it is your commission that you're sharing and it is the agents making sure that the seller has agreed to it and that it is clear and that you can prove it is an important part of protecting you.

Sorry, Richard on the MLS. So the question is whether the MLS will shut us down if we show it in any way. Depends. The MS is shut it down, shut us down for you showing it on your particular listing. They cannot, because that is explicitly what the NAR settlement is saying. That can [01:17:00] be done.

Now if I started aggregating in a way and allowing people to even a consumer, which I think it would be okay to allow a consumer to do it, but if I allowed. Then to start, if I aggregated it in a way, then yes, I could see MLS is saying no, you're breaking NARS agreement there. So to be clear, we're going to be very careful.

And look, everyone that has been with us for a while knows that. We, as part of Fidelity, we are very careful on what we do. We have lawyers. We research things strongly. We're very proud by the fact that we were ahead of everyone and that our deliverability and texting is beyond everyone else because we've been, sometimes we got a little hate mail because of it, but we've protected you at every step.

We're not going to roll out anything that we believe is incorrect. At the same time, it's your own risks. You can always tell us what to do or not, but we are, I do believe that putting your, how much you're offering in your listing cannot be challenged. Of course we'll check it with MLS and with lawyers.

Richard Kaiser: And so I think that's the flip side of the [01:18:00] question is so that's how you can discreetly do it on your side and do it in a way that you're legally protected. The second way is okay as a buyer agent, right? You're trying to figure out what the seller agent and sellers are offering out there.

And I think people were having a conversation around what are strategies or what are ways people might be able to uncover that. I'm curious if you have any thoughts or, where you see the...

Alvaro Erize: I think it doesn't matter. I think it doesn't matter because you need to be worrying about, I understand you need to be worrying about your client.

And I understand you can tell me it's naive. You can say, yeah, but I have to go and tell my client that they may need to pay 3 % out of pocket. And that might be unrealistic. I don't think so. And especially because you can say you can always come down later, right? You cannot go the other way, but you can come down later.

So you will have time. If at the end, the seller is only offering 1.5% and you want to go back to the buyer and go look, I know you don't have it out of pocket. We're going to do this. You can do that. And so for me, I [01:19:00] think. The and again, I'm seeing in the chat, this is very much like a referral.

This is a referral, right? This is how this started. And so my position is you need to focus on the value of the buyer agent. You need to focus on being able to explicitly defend your value. And then you need to say to your buyer, this is my contract. Here you go. It's 3% or 2.5% , which is more what is realistic today.

Come to my office. Let's discuss it. And I think that's, and then you don't need to know as you're working with the seller, when you land on a house, they're either going to be offering it or not. If they're not offering, which you will ask point blank at that point, email phase, one of two things will happen.

Either you'll say then my buyer needs to walk away because they cannot pay for out of pocket or they're going to put a seller concession and they're going to put it in. There's multiple ways of doing it. I think you let it play out. But the most important thing is. You need to set the stage correctly with your buyer upfront.

And I think that's not going to be a problem.[01:20:00]

I get you, Darcy. Again, we're going to look at what, again, we My philosophical position is that it is important for consumers to know whether each listing is providing that or not. I'm going to make very sure that I'm not doing anything that goes across NAR or goes across the MLS. So I'm going to research everything we do.

But conceptually speaking, what I know I can do for sure Is put your commission on your listings for sure. Then we'll start to explore other things. And again, my objective will always be more transparency and the consumers that buyers knowing not the buyer's agents, the buyers knowing whether they're going to have to pay out of pocket or not.

And we will work towards that.

One more or are we good Richard? Sure take. You want to [01:21:00] do? If someone wants to put a question in caps, I'm going to take it. If not, I'm going to close it. Someone's putting one in there. I did.

Richard Kaiser: I know Darcy's been active in there. Appreciate out there. One of the things Darcy said, I guess it'd be counterpoints.

My question there is, he says, I train my team, treat every now just treat everything like you're going into a FISBO. We already have that problem right now, or you're not guaranteed the money.

Alvaro Erize: So just assume they're all like that, but that's, and that's the thing. And, but again, but before when you were going, you didn't have the buyer contract and it was difficult to enforce.

So now my point is just, this is all going to be about that buyer contract. My commitment is we will move very fast for you to have your own website page where you can provide your value proposition, where you are aggregating reviews, where you are aggregating testimonials, something that you can easily say, this is me.

I'm going to, we're going to meet on my office and we're going to talk about this buyer agreement. This is me. This is why I'm worth it. Okay. With that, I am going to [01:22:00] close. I'm going to say one last thank you to everyone for being part of the CINC family. Again, this, take it truly as my opinions. It's not strategic to anything CINC.

We could be taking different positions. We could be saying yeah, now it's all about sellers. I'm telling you what I believe and we are going in the direction that I believe. My personal recommendation to you is don't take your pedal off those two wheels. buyer leads. Don't take your pedal. There's going to be a ton of money.

It's going to be another 2021. I told you 2020, and I was not wrong then telling you don't take your foot off the pedal. We're not going to do it where we've just, if you're not on real verified leads, you should be on real verified. So now you know that this is their phone number and it's never been better to go after them.

And again, you know that you're my client, whether you do buyer leads, whether you do seller leads, whether you want, whatever you want, because we're the platform for you. I'm just telling you what I think is the best path. And I hope and I hope you follow it. And I hope you make a lot of money with it.

I think there is going to be a lot of market share being, being captured by professional buyer agents and teams [01:23:00] that are able to train. Thank you so much. And we'll see each other soon again.