Above, from left, Michele Harrington, CEO, First Team Real Estate; Craig Cheatham, President & CEO, The Realty Alliance; Gretchen Pearson, President/Owner, Berkshire Hathaway HomeServices Drysdale Properties; and David Romero, EVP of Growth, Realty ONE Group. Photo by Aidan Whalen.
Exactly two weeks after the bombshell ruling in the Burnett vs. NAR trial was delivered, five industry leaders gathered at the Anaheim Convention Center, not to further speculate on existential threats to the industry, but to share how they’re proactively moving their companies forward to end the year strong and set the stage for growth and profitability in 2024.
During RISMedia’s 27th Annual Power Broker Forum, held in conjunction with the NAR NXT Conference & Expo in Anaheim, California, brokerage leaders outlined the specific steps they’re taking to guide agents toward success, despite the ongoing fallout and increasingly litigious climate since the trial.
Titled, “A Clean Slate: Rethinking Your Outlook and Retooling Your Strategy for 2024,” the Power Broker Forum was moderated by HomeSmart Chief Industry Officer and Chief Marketing Officer Todd Sumney, and featured the following panelists:
– Craig Cheatham, President & CEO, The Realty Alliance
– Michele Harrington, CEO, First Team Real Estate
– David Romero, EVP of Growth, Realty ONE Group
– Gretchen Pearson, President/Owner, Berkshire Hathaway HomeServices Drysdale Properties
The Forum gathered a crowd of more than 200 attendees who benefitted from the sound advice, level-headed guidance and tangible tactics imparted by the panel.
Acknowledging the elephant in the room
As moderator, Sumney began by calling out what was foremost on most everyone’s minds: the class action lawsuits and how they may ultimately change compensation. He shared a message from RISMedia Founder and CEO John Featherston, who said, “Consumers will need our help more than ever to achieve their personal goals and objectives. Never has illustrating our value to our clients been more important than now in order to demonstrate that our guidance is necessary and our compensation is more than justified.”
Sumney harkened back to another tumultuous moment in the history of residential real estate: the outbreak of the COVID19 pandemic. “By the third week in February, 2020, the entire country was shut down,” he said. “And what did we do as an industry? We adapted. We changed. We continued to serve our customers as essential workers. The industry is always changing. We constantly navigate any hurdles. When you’re faced with a hurdle in a transaction, you overcome it, you adapt, you figure out a way. And that’s what we’re here to talk about today. How do we as an industry adapt right now in 2023 and early 2024?”
A 37-year industry veteran, Gretchen Pearson is meeting the post-trial call to adapt head-on, explaining that she “could not be more excited about the changes that are afoot,” and that her firm has already moved forward on buyer-side training—”the form, the presentation, the language”—in order to create better transparency.
She also quickly recognized the need for agents to adapt their approach with sellers as well, as lawsuit news quickly made mainstream media headlines. The day after the Burnett trial verdict was delivered, she reported, “One of our top agents went in for a listing presentation and the article was sitting right on the table. We had to be able to have language for sellers.”
Part of the refinement of language used with sellers involves moving away from references to commission. “We look at it as a merchandising, marketing and pricing strategy,” said Pearson, who is advising agents to break down these details for sellers, and offer them options regarding fees and how these options will affect pricing strategy.”
Pearson is not backing down from a post-lawsuit environment, whatever it may bring. “We’ll come through it as an industry,” she said. “We’re street fighters.”
Separating fact from perception
From Michele Harrington’s perspective, there’s nowhere to go but up as she sets her sights on improved business in 2024 and a potential gangbuster 2025. Whether or not to let market circumstances deter progress is a matter of choice.
“We have so many obstacles in our way right now, but our obstacles are challenges and opportunities that we have to overcome,” she explained. “Seven-and-a-half percent interest rates are bad. That’s a perception. The NAR lawsuit is bad. That’s a perception. We thought Covid was going to be bad for our industry and we ended up having one of the best years we ever had in 2020. As leaders, our agents rely on us to be factual, logical—not emotional. We need to lead them through these hard times with the facts and how we can overcome these challenges.”
While Harrington looks forward to a better year in 2024, 2023 served an important purpose—it gave agents an opportunity to hone their skills. “We took this year and said, alright, we need to get disciplined; we need to get to our core competency,” she explained. “You can’t be all over the place when the market is cracked. You have to be disciplined and you have to be focused. And in 2024, I’m super excited because we did everything we needed to do in 2023 to get our company in the right shape. We’re in great shape right now. We’re like Arnold Schwarzenegger going into the bodybuilding contest.”
Among First Team’s strongest core competencies, said Harrington, are training and coaching. She encouraged agents to close the year by identifying their individual strengths in order to maximize them in the year ahead. “Be disciplined in those one or two things so that you can capitalize on a better market in 2024,” she advised.
Drawing on pandemic lessons
From the economy to the trial, David Romero drew upon lessons learned at the height of the pandemic to get through the challenges of 2023.
“We saw companies and agents go in two different directions, right?,” he said. “There were the companies and the agents that embraced this and adapted quickly, and we saw those people thrive; and then there was a group of people that panicked and hid, and we saw those people struggle. And I think this will be very similar to that, but the opportunity is there. I believe in the value that we present to the market and the market will always pay for value. We need to help our people clearly articulate their value proposition.”
This positive outlook led Romero to offer a few bold predictions for the year ahead. “I think that next year will be better than this year, and I think ’25 will be better than ’24,” he said. “We’ve had some great news this morning with inflation (at press time)—the lowest inflation in over a year. I think we’ll see rates in the sixes by spring. I think that there were a lot of life events that would have normally triggered listing inventory this year that we saw people put on pause. I think those people will start showing up next year. I’m also anticipating a healthy single-digit appreciation for us. So I think we’re in good shape for next year.”
Drawing on feedback from The Realty Alliance’s (TRA) some 60 member firms, Craig Cheatham echoed the spirit of optimism panelists put forth.
“I love listening to the optimism, which really characterizes our industry,” he said. “We just had a gathering in person, and I was expecting that the mood would be more like a funeral among our owners. They have skin in the game and they live this out on the front lines every day, and it was the best event we’ve ever had. There was a real energy there—just leaning in saying, ‘oh yeah, we got this,’ and accepting the challenge.”
Cheatham reported that TRA members are capitalizing on the rich value proposition they’ve built over time. “We think now is the time that agents and consumers need what our companies deliver,” he said. “We do believe 2024, as a whole, is going to be tough. But it doesn’t matter so much what we think. It’s what the Fed thinks. And I think they don’t believe inflation’s going to be where they want it to be until 2026. So we’re going to be watching what they do, probably disagreeing with what they do, but we’re always optimistic in real estate and we do see opportunities in 2024. We want to seize those.”
Action steps for the year ahead
Sumney concurred with the proactive approach put forth by panelists, adding that at HomeSmart, the goal is to adapt to challenges while staying focused on goals. “We’ve learned not to stray from our original plan, from our vision—to not be dissuaded or taken off point by some of the things happening around us in the world,” he said. “We always want to make sure we stay true to that original vision and really serve agents and serve consumers.”
In order to adapt while staying true to the company’s vision, Sumney is stepping up efforts with agents in four key areas:
– The frequency and quality of communication
– Education through mentoring and masterminding
– Live interaction through planned social events
– Technology that enables transactions to go more smoothly
Panelists offered additional strategies and action items for moving forward in 2024:
– Removing biases, creating “real estate without walls” and focusing on buyers. “There’s no longer geographic boundaries,” says Pearson. “If you were to go ahead and really embrace the buyer rep piece, you could turn traditional market share on its head. It’s a way to break that boundary. We’re really planning on taking market share by enlisting buyers under a buyer rep.”
– Taking advantage of underutilized assets. “What are our biggest assets in our business? Our people—our leadership, our managers,” said Harrington. “If you have managers that are now managing half the agents or half the transactions, are you really utilizing them to the best of their ability? Instead of getting trained from one manager, now our agents can get trained from 15 different managers and 15 different offices, and we make those trainings available to all agents across the company.”
– Focusing on business plans. “I think that there’ll be no margin for error in 2024,” said Romero. “So we’re making sure that all of our agents, all of our franchises, have rock-solid business plans for success for next year. And January 1 is all about execution.”
– Reengaging with customers and clients. “We’re asking our sales force to re-engage in relationships with customers and clients,” said Cheatham. “We have this sense that in the future the successful real estate professional is going to look more like a financial planner. People need counseling, they need real information. They need to know about all these other aspects and how they apply to them because they are seeing the national headlines.”
Parting pearls of wisdom
To close the session, Sumney asked panelists to leave the audience with a brief pearl of wisdom, or parting advice.
David Romero: “One thing that the best (agents) do is live according to their priorities. So for 2024, get super clear about what you want to do, have a plan and work every day to make that happen.”
Craig Cheatham: “The future is all about options. Consumers are going to expect options from us. The real estate professional in the future that comes in with one option may not be chosen as often as those that provide others.”
Gretchen Pearson: “Wake up every morning and take a courage pill. We get so nervous about making a decision. You’re a leader, and people trust you to navigate out of cloudy times. So take your courage pill and do it. It’ll be just fine.”
Michele Harrington: “Now’s the time to look at yourself and say, how can I be better? We all must suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons.”
Todd Sumney: “Think about who your customer is and what they want. They want service and support from you as brokerage leaders. Step up your service and support to your agents right now. They need it.”