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Real Estate Brokerage

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.

Real Estate Brokerage

Financial tool indie brokers can use to act more like the mega brokerages

(FINANCE) Indie brokers are often more focused on marketing than operations, but there are tools available to boost business and act more like the big boys.

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There are so many variables that go into operating an independent brokerage; so much so, that it makes coming up with the brokerage model look like the easy part.

One of the variables that takes (often the most) priority is money. You need to know what you’re spending versus what you’re making and how that adds up (pun intended).

Luckily, there are people out there laser focused on making sure that your business is properly tracking cash flow. One such business is flowpilot.

“flowpilot is the easiest way for businesses to plan and manage their cash flow actively. Cash flow planning has never been this easy!” said Founder and CEO, Bernd Thöne. “Simply upload your accounting data and get an overview of your current and forecasted cashflow. Recognize risks and optimization potentials early as they arise and get tips how to eliminate them. Make better decisions by easy and quick simulations simply without effort.”

Additionally, flowpilot presents a user’s liquidity in clear diagrams after analyzing the cash flow. It also allows a user to see projections up to five years in the future. Features include: precise liquidity management, sound decisions, and cash flow control liquidity calculation.

With flowpilot, users can achieve full transparency about the liquidity of their company. This way, they always know exactly where they stand and flowpilot can help you to make informed decisions.

The system uses real-time data in combination with AI algorithms to calculate liquidity forecasts and scenarios. With this, users can plan more strategically and create secure forecasts.

For liquidity calculations – flowpilot is serves as a financial advisor that is available at all times – the evaluation of a user’s financial data is handled by the program’s AI system.

Users register for free (a 14-day free trial is currently available), upload their initial bookkeeping, and then receive a monthly historical overview of their company, and the ability to intelligently plan cash flow as users automatically receive an informed liquidity plan for the next 12 months.

Lastly, you can recognize risks early on and switch to optimizing finances with scenarios built into the platform.

The company boasts itself as easy, smart, and fast. With a 14-day free trial, it could very well be worth a try for your brokerage for a competitive advantage in a world where only the mega-brokers financially forecast.

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Real Estate Brokerage

Is there a difference between leadership and management?

(REAL ESTATE) The two terms, leadership and management, are often used interchangeably, but there are substantial differences; let’s explore them.

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Some people use the terms “leader” and “manager” interchangeably, and while there is nothing inherently wrong with this, there is still a debate regarding their similarities or differences.

Is it merely a matter of preference, or are there cut and dry differences that define each term?

Ronald E. Riggio, professor of leadership and organizational psychology at Claremont McKenna College, recently described what he felt to be the difference between the terms, noting the commonality in the distinction of “leadership” versus “management” was that leaders tend to engage in the “higher” functions of running an organization, while managers handle the more mundane tasks.

However, Riggio believes it is only a matter of semantics because successful and effective leaders and managers must do the same things.

They must set the standard for followers and the organization, be willing to motivate and encourage, develop good working relationships with followers, be a positive role model, and motivate their team to achieve goals.

He states that there is a history explaining the difference between the two terms: business schools and “management” departments adopted the term “manager” because the prevailing view was that managers were in charge. They were still seen as “professional workers with critical roles and responsibilities to help the organization succeed, but leadership was mostly not in the everyday vocabulary of management scholars.”

Leadership on the other hand, derived from organizational psychologists and sociologists who were interested in the various roles across all types of groups; so, “leader” became the term to define someone who played a key role in “group decision making and setting direction and tone for the group.

For psychologists, manager was a profession, not a key role in a group.” When their research began to merge with business school settings, they brought the term “leadership” with them, but the terms continued to be used to mean different things.

The short answer is no, the two terms are not the same; simply because leaders and managers need the same skills to productive and respected.

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Real Estate Brokerage

Don’t settle for mediocrity – how to lead well

(BROKERAGE NEWS) There tends to be two camps of leaders, those who lead from strength and those from weakness. But who says you can’t do both?

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A lot of leadership literature has become “strength’s focused” – using inventories like StrengthsFinder (developed by Gallup). The logic in many ways, is sound. Capitalizing on your strengths and those of your team is significantly more effective than attempts to cover perceived flaws or weaknesses.

The business world has been cited for being too focused on weaknesses (and now parents are too). This a natural inclination for people. For leaders however, we should be bringing our strengths (and the strengths of our teams) to work and making “it” happen.

However, an over focus on strengths isn’t without its own challenges. Tony Schwartz writes for Harvard Business Review, a “well-rounded leader” has a greater opportunity to be more effective. As we seek to leverage our “strengths” let us not forget the complexity of our skill set and how those negatives we see about ourselves can become assets – resources – that we use to manage ourselves and our teams.

Metaphors are common in leadership articles, so I won’t break tradition.

Much like in physical exercise, poor form often causes the overuse of a muscle versus a group of muscles. Poor leadership form, while doing the lifting, leads to an overuse or over-reliance on what is good and comfortable for us.

A pragmatic leader may find themselves unable to make dynamic change move forward. Today’s leaders have to deal with a more complex environment in terms of technology, skills, and demographics. One style of leading will simply not be enough.

The big lesson here is to workout things you don’t think are your best strengths. What are ways you can take those weaknesses and utilize them? How do your rebranded weaknesses make you a good leader for a project or a team? Create opportunities to use your “positive opposites” – those weaknesses that you have rebranded.

PRO TIP: Find a mentor, find a coach, or keep reading about leadership.

You may never be able to develop those skills as strong as your primary, but you will have more leadership muscle to work with. You’ll be delivering a better leader to serve, build, and develop yourself or the organization.

Schwartz discusses the role of choices. We make a lot of choices as leaders – resources, people, what risks, what resources, what costs. When we make those choices working with clients or employees we are always using our mental tool kits.

It doesn’t hurt us to have more tools, most of the time, to allow us to handle situations.

SIDEBAR: It is important to recognize that we only have a limited amount of time. You’re still going to benefit more from developing your strengths – but don’t forget to work out those rebranded weaknesses (the triceps of leadership!). I love an 80/20 perspective – spend 80% of your learning time focused on building up those strengths, spend the other 20% on flexing those rebranded weakness.

A well-balanced leader is not a one-trick pony – they are leaders who can take an organization through many life cycles. If you seek to be some kind of leader, take some time to appreciate your own mix of strengths and weaknesses, and the unique qualities that you bring to a complex world of complex organizations.

Leadership is a whole person endeavor, and don’t skip those weaknesses (just like leg day!).

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