What the Legal Battle Around Real Estate Commissions Means for You

At the Compass annual retreat last week (and everywhere else), there was one big question on everyone’s minds…

What exactly will these legal battles around real estate commissions mean for agents, in practical terms?

Don’t stick your head in the sand, {{ first_name }}. Don’t act like nothing is going to change. Change is coming.

The question is, will this change be an obstacle or an opportunity?

There are 3 things you can count on…

1. There WILL be downward pressure on commissions.

Your value as a real estate professional will be called into question, and people won’t pay you unless they believe you’re worth it. But explaining your value won’t do the trick. This is an emotional business, and you can’t overcome emotion with fact, logic, and reason. 

You’ll have to demonstrate your value by building trusting relationships, so clients feel in their gut that you’ll take care of them and put their interests first. Agents who don’t do this are going to start working for less.

2. You WILL have to reevaluate your process for working with buyers

Getting an exclusive buyer representation agreement is critical. There’s no more room for hope when the risk of not getting paid is this high. So, how are you going to face your fears around getting this document signed?

You’re going to have to master the concept of the Favorite or the Fool. People who are serious about working with you will sign. Suspects who are just hedging their bets or pumping you for free work will not.

It’s time to stop fooling yourself about who is a real buyer and who isn’t. Remember, it’s not a sin to lose business—it’s a sin to take a long time to lose business.

3. You WILL have to reevaluate your business model for generating business.

Are you focused on building a repeat and referral business, or are you just chasing after deals?

In this tough market, the difference is more important than ever. To thrive, you have to shift from a transactional to a relational orientation—i.e. building long-term relationships. 

Why? Because there is ALWAYS another agent who will do more for less. If all you’re pitching is what you’ll do for your client, you’re making yourself into a commodity. No one pays a premium for a commodity.

With a relational approach, you’re building an emotional connection based on mutual respect and trust. They’re buying you, not some itemized list of what you’re going to do for them.

It all comes down to one thing: Tactical Empathy.

Tactical Empathy is the art and science of making people feel understood. 

Most agents never do this. They stand on the opposite side of the metaphorical road from their clients, shouting at them about why they should come over and follow the expert’s lead.

Tactical Empathy means crossing the road, standing shoulder to shoulder with your clients, and seeing the world from their perspective. It’s pointing out the landscape and the different possible paths, then letting the client choose which one to take.

This is the difference between explaining your value and demonstrating it.

In this new commission environment, Tactical Empathy will dramatically increase your chances of success. If you're committed to mastering it, here's what you can do:

• Read The Full Fee Agent if you haven't already—it's an invaluable primer on the basics
• Sign up for a 2-week free trial of our Daily Accountability Calls, where I coach this stuff every day
• Mark your calendar for The Full Fee Agent Conference on March 25-26, 2024 in Los Angeles—two full days of learning from the masters and networking with like-minded agents

If you're not already practicing this stuff every day, now is the time to start!