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NAR seeks dismissal of flawed anti-trust lawsuit (Moehrl v. NAR, et. al)

(REAL ESTATE NEWS) The fallout from the widespread, flawed anti-trust lawsuit against the real estate industry, is beginning, and NAR says they intend to fight back.

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At the annual Association Executive Institute (AEI) event, there was an underlying vibration of curiosity leading up to the legal update over lunch. While a handful of people were cheerfully humming along to a Beatles song being played in the massive ballroom, the majority were whispering about the class action lawsuit recently lobbed at the industry like an irrationally thrown surprise molotov cocktail.

Filed by Minnesota home seller, Christopher Moehrl, the suit claims there is a “conspiracy” to price fix broker compensation in the 2.5-3% range, naming the National Association of Realtors (NAR), Realogy, HomeServices of America, RE/MAX, and Keller Williams (with more to be named, inevitably). The complaint intimates that by requiring brokers to offer buyer broker compensation when listing a property on the MLS, fees are “fixed” and inflated, violating anti-trust laws. In short, they believe buyer’s agents shouldn’t be paid because buyers can find their home online now.

NAR has been sued before. All major brokers have been sued for similar “conspiracies,” and agents know the drill. The industry has been sued before. It’s one of the most litigious lines of work in America. And everyone in the industry agrees the claims are outlandish and untrue. And frankly, worthy of an exaggerated eyeroll.

So why the palpable angst?

Because the suit is led by big scary attorneys that are famous for winning billions in class action lawsuits. Look at the final two pages of the suit – this isn’t just some random lawyer on a whim, it’s an overcrowded dais of dynamism.

Not to mention real estate consultant Rob Hahn’s observation that if the lawsuit is somehow successful, “REALTOR Associations evaporate, the MLS likely dies off, and the entire infrastructure of residential real estate in the United States has to be remade.”

Of course a room of over a thousand Association Executives (AEs) would wonder what NAR has to say next. NAR’s response leading up to this luncheon had been to publicly denounce the suit as “baseless,” noting that “The U.S. Courts have routinely found that multiple listing services are pro-competitive and benefit consumers by creating great efficiencies in the home-buying and selling process,” and that “NAR looks forward to obtaining a similar precedent regarding this filing.”

The lunch began with NAR General Counsel and Chief Member Experience Officer, Katie Johnson, updating eager eaters on insurance topics, and afterwards pondered that there was something else she was going to talk about… Oh, what was it? Oh yeah, the lawsuit! Her zinger was awarded with thunderous laughter and applause. The presentation behind her said in bold letters, “We’ve been sued… now what?”

Johnson described home seller Moehrl as a “standard transaction” that is in no way unique. She proclaimed that the industry would prevail. That this isn’t the first time they’ve been sued.

She asked the anxious audience to “step back 100 years,” noting that “it is important to understand and be able to articulate why our system today works.”

A century ago, before associations and licensing laws, it was “very chaotic” and not at all consumer oriented, with little to no consumer protections. A home seller would have a dozen brokers put signs in their yard, and not only did the seller have to give their personal financial information to multiple brokers, but had to also give physical access to all of those brokers. Mass confusion ensued – who actually has all of the details? Who represents the home?

And buyers had to know a broker with a sign in a yard in order to find a home to buy. Johnson called this time as one “shrouded in secrecy and was not transparent – it was not good for consumers.”

Thus, brokers began getting together and exchanging information. The idea was that a broker will list the home, and if another brings a buyer, they’ll be compensated. Agreeing to share inventory was what Johnson called a “wild sea change.” Consumers could give their private information and home access to one trusted broker, and that represented buyers were legitimate.

Buyers could come to one place (the association exchange) for the data, which opened the market to consumers. Many iterations of how the data has been shared include notecards, then books/binders, computers, and ultimately the internet.

“In the end,” said Johnson, “cooperation (sharing your listings and compensation), agreeing to pay the representative of a buyer who is going to ultimately sell your inventory is the basis of the MLS and is what is on attack.”

The class action suit claims that because the seller has to pay the buyer’s agent, commissions are inflated. The truth is that although it is NAR’s rule to require compensation, it could be as little as one cent, and Associations support all compensation models (flat-fee, discount, rebates, traditional 3% per side, and even higher on luxury listings).

And their “conspiracy” claims that buyer’s agents are unnecessary since listings can now be found online (but the suit fails to mention buyer’s agents’ fiduciary responsibility to protect their client and guide them through a convoluted process). And ultimately, they name “co-conspirators” as brokers who have conspired to violate anti-trust laws via their membership to an MLS.

Another flaw in the Moehrl case is that they argue that home buyers can find their home online without representation, ignoring that the converse argument would also therefore hold true – a homeowner can sell their own home without representation (and without paying commissions). The plaintiff saw the value of the MLS and cooperative marketing when buying and selling their home, and used representation rather than opting to list on their own on Zillow or a For Sale By Owner site, which they had every right to do.

And finally, there is a massive conflict of interest with these attorneys – it is essentially legal for attorneys to practice real estate (local laws vary), so why wouldn’t they collectively push against an industry they could theoretically take over with the bang of a lone judge’s gavel?

NAR has filed a motion to extend the time to respond, and will push for a dismissal. Johnson said, “we have really good legal standing,” noting that “anti-trust [laws are] complex, and not often won on a motion to dismiss,” and while they know it’s not often granted, she notes that it may take time, but, “we’re going to defend it and win.”

The session ended with shuffling plates and standard conference noise, but there were more people humming to the Beatles after the session than before. The fight was on, and the AEs appeared to stand taller, newly empowered by Johnson’s battle cry.

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Lani is the Chief Operating Officer at The American Genius and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Real Estate Brokerage

Best ways to handle stressed-to-the-max customers

(BROKERAGE NEWS) Moving can make even your calmest clients nightmare wackadoos. Here’s how to manage them.

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Three researchers have published an interesting study on how customer service can be improved by recognizing a customer’s stress level before a connection with your business is made.

For example, a customer can often be anxious over using a particular service, i.e., a funeral home or a lawyer in connection with a divorce. By learning more about how your clients feel when they call your business, you can better manage the customer experience. This offers your business a more effective customer base of referrals and repeat business.

The researchers identified the following steps to manage stressed-out customers:

1. Find out how your customers are feeling when they need your service.

One reason so many breast cancer facilities are free-standing, away from the main hospital complex, is because women voiced their ideas to the healthcare team designing the facilities. Women wanted coordinated care under one roof, but felt like the hospital was not a calming environment. Use your empathy to walk in your customer’s shoes to change the experience.

2. Hire not only for skill, but attitude and personality.

Employees who love their job can’t be trained. The passion and enthusiasm, even for a high-stress career like a cancer nurse or funeral director, cannot be taught. Look to bring on team members who have empathy for your customers and understand that business is all about customer service. It’s far easier to teach someone the skills needed for a job than it is to teach them to be motivated to work.

3. Study your approach to the customer’s journey.

How does your business interact with the client? From the first link online or phone call, to the payment options, what is the customer’s experience? Address the high-stress interactions by providing information about your services. For example, when calling to view a listing, what can your customer expect?

4. Give the customer more control over the service.

Dealing with a mechanic who tells you that your engine is shot is highly stressful. Instead, learn to be more specific and talk to the customer in a language that can be understood by someone without technical knowledge. Make sure your customer has one point-of-contact throughout their experience. Have a plan B in place for when that individual is sick or goes on vacation. Empower your customers through today’s technology, maybe an app that tracks the sale. There’s no excuse today for poor customer service and information.

I would highly recommend that every real estate professional read the research from Harvard Business Review. Leonard L. Berry, Scott W. Davis, and Jody Wilmet packed so much information into their report that there’s no way I could cover it all here.

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Real Estate Brokerage

Inexpensive mental health resources for real estate pros

Mental health issues are often untreated when no insurance or few resources are apparent, but there are many resources available to keep the entire team cared for.

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There’s no shame in needing a doctor when you’re physically sick, but sometimes people think that mental illness should be hidden. No one likes to admit they’re struggling with an addiction, grief, or depression, but trust me, friends, family, and co-workers most likely know you’re struggling – they just may not know how to help.

Mental health assistance can be very expensive, especially without insurance. With the ACA, more people have access to services, but it may not be immediately evident.

Attention Brokers:
We recommend sharing this article with your team accompanied with a note explaining why. We’ve known many agents that suffer through drug addiction, unmedicated bipolar disorder, sex addiction, depression, and so forth. Open the door to a conversation. Everyone on the team deserves to be cared for, with or without insurance.

Free or inexpensive ways to get help:

If you or someone you know is in need of help or someone to listen to you, please do not be embarrassed. If you (or the person you’re concerned with) don’t have insurance or have limited resources, here are some places to get help.

  • If you are in a crisis, dial 911 or call 1-800-273-TALK (8255) for a 24-hour crisis center.
  • Check with your insurance company. You may not realize that you have mental health benefits, or understand how to find a provider that fits into your plan.
  • Talk to your primary care doctor. Your doctor may know of local resources that are available to you.
  • Most communities have local mental health centers that provide income-based services. Ask about discounts or reduced rates.
  • Dial 2-1-1 in Texas (and most states) for referrals to agencies that are in your community.
  • Go to your religious organization. Spiritual leaders are often willing to listen and help you get back on track. They may be able to direct you to resources within their community and network.
  • Search for your particular issue. The Anxiety and Depression Association of America (adaa.org) has a full list of resources and help for dealing with every day and chronic stress and worry. If you get too many hits, try using the phrase, “national foundation” then the issue, for example, “national foundation OCD.”
  • Go to the library and seek out a book. Self-help books on grief or depression can help you navigate your own feelings and find a way out.
  • Go to the App Store. Type in what you need help with. You might be surprised at what comes up. Happify is a good app that helps you work on being positive. 7 Cups of Tea offers trained listeners to get you through anxiety.
  • Talk to a friend, a trusted mentor, or family member. Reach out for help.
  • Exercise. Get out of your rut.

The bottom line is that whether you’re struggling or trying to help someone else who is, neither of you are alone. It may take more than one try, but we urge everyone to bookmark this page for reference, should it be needed now or int he future.

This story was first featured here on September 2, 2015.

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Real Estate Brokerage

The game doesn’t matter until you keep score

(BROKERAGE) How you collect feedback can determine whether your service actually improves or not. #science

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Every significant endeavor utilizes measurements and scorekeeping to record activities and progress. The most trivial of human pursuits often involves record keeping and statistical analysis.

While the sales and production side of real estate services are measured in-depth, the service side of the business enjoys less measurement, scorekeeping, and analysis than one might find associated with the performance of a neighborhood Little League team.

What does this truly say then about the importance many brokers, owners or managers place on service delivery, customer satisfaction, consistency and service performance?

It’s true that a few organizations do attempt to measure service performance by means of a customer satisfaction survey. Most of these programs are produced and administered internally. The surveys are sent under the company banner and the company tabulates the results.

First, when a customer is asked directly by the professional or the company for performance/satisfaction feedback, that feedback is always more positive than what is obtained by an independent, third-party asking the same questions.

This is known as the halo effect. Consumers are more diplomatic in their response to the person or company that provided the service.

Second, internal service/satisfaction assessment programs typically develop standards and objectives to validate the belief that good service is already being delivered. Thus this positively biased feedback data suits the objectives of the internal program just fine.

It’s just that measurement of those areas of service performance that sellers and buyers feel are important is not taking place.

For those more serious about customer service satisfaction and service performance assessment, there is recognition that the halo effect lessens the value of the data for internal use, and that keeping score of one’s own results has less credibility externally.

Instead, they seek the objectivity and credibility that third party validation of service assessment can provide.

Ironically, even without expert resources and objectivity the attention that measurement brings to the organization will effect positive results and performance improvement. This phenomenon is known as the Hawthorne effect.

The effect was first noticed in the Hawthorne plant of Western Electric. Production increased not as a consequence of actual changes in working conditions introduced by the plant’s management, but because management demonstrated interest in such improvements.

Unfortunately, this phase of initial improvement is not sustainable. Sustaining improvement requires more than measurement and leadership interest. Action steps that result in the actual improvement of the situation must follow collection of data.

Measuring service results and satisfaction in the real estate organization is an important first step. It will certainly gain the attention of the organization and send a serious signal.

Sustaining organizational interest and performance improvement requires more.

It requires systematic and timely feedback, objectivity, systems and service delivery processes, coaching and recognition/awards. But it really all does start by keeping score.

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