Bob Mangold Real Estate Strategist | Understanding the Department of Justice & NAR

This week on the iBuyer Experiment the team is talking with Bob Mangold. Bob uses Zoodealio with about 1,100 agents throughout his Homeboss platform.

Bob started his real estate career on the lending side and change to the agent side when he couldn’t find agent who could always get the job done. After several years he opened his own franchise brokerage, that is where he figure out that running a traditional brokerage isn’t the best way to build wealth. So he again teaching his agents a three-pronged strategy: One, build cashflow from your listing income; two, build referral income; and three, use the income from those to purchase income producing assets, like rental properties and Air B&B properties.

Another important part of being a real estate agent is keeping up on what is going on. Let’s look at what is login on with the Department of Justice and the National Association of Realtors. At a recent talk with about 1,000 agents only about 5% knew what was going on when asked.

The government is discussing regulating commission rates for real estate transactions. NAR is fighting this, but DOJ has more money and can spend enough to bankrupt NAR. In a situation like this it dopant matter if you win or lose, or if you are right or wrong … It just matters if you can survive. NAR will have to find a way to survive this.

At the end of the day this is all about the commission and how transparent we are. A lot of people question why the seller pays for an agent to negotiate against them, the sellers know how the system works though. In the listing appointment they talk about how much they need to net and what that looks like with the commissions paid to their agent and then add the commission to the buyers agent gets tacked onto the number to make the numbers work to get their net. What DOJ is saying is that the buyer does not understand this and specifically how the price of the home increases to cover paying the buyers agent. It really is form the seller inflating the price of the home to cover their agents commission.

Do we really want the government regulating what we charge for commissions? For Bob and everyone in the room that is a resounding no. If you are a real estate agent you have to know what is going on, these issues are coming for your career. It’s important that agents understand compensation and explain it.

The job of a real estate agent is actually quite simple. The job is to put your home in front o as many people who are ready, willing and able to buy it. The more people it is exposed to the higher price it will get.

Here’s a bit about how Homeboss addresses this NAR and DOJ issue. First the platform is completely open and transparent. We drive a lot of traffic to the property and do a big two-day open house (often with hundreds of people in attendance) that is well advertised and they open their platform to everyone to make their offers and set a date for them to be adjusted by. The seller pays them 3% and the buyers agent gets 3% (or what has been negotiated), BUT that is added to the price of the offer that was received, that way the buyer is paying their agent and can negotiate that rate if they want. Now the buyer and seller both understand how the buyers agent commission affects the final price paid. It is 100% transparent and it’s an answer to what the DOJ wants.

It is difficult for agents at first to understand how this helps buyer and sellers and the industry as a whole, but buyers like the idea when they understand it is about transparency. Agents just need to explain how this works in a way that shows the open and transparent nature of the system. Agents need understand that they are going to have to adapt or become extinct.