In this podcast episode, we discuss significant changes in the real estate industry stemming from a major lawsuit involving accusations of brokerages fixing commissions. Expert Ashley Terrell-Kayiran explains the upcoming implementation of these changes, notably the removal of commission fields from MLSs by August 17th and the new requirement for buyer’s agents to negotiate and articulate their fees directly with buyers. These changes aim to increase transparency and prevent steering buyers towards higher commission properties. Ashley emphasizes the importance of technology and education in helping realtors and consumers navigate this shift, highlighting the opportunity for agents to better demonstrate their value and for consumers to make more informed decisions.
[David] Welcome listeners, we’re going to be giving you an update on a much talked about topic. We’ve been hearing about the realtors lawsuit and the settlement. We have August 17th and we have an expert here to talk about it. I keep going back to this expert, Ashley Terrell, who is also a dear friend. And I am thrilled to have her joining me on the podcast. Ashley, good to have you here. [Ashley] Yeah, it’s good to be here again. [David]Yeah, again, we’re talking about this topic we’ve talked about before so many times. And so let’s start with what the heck is happening for real on August 17th. I’ve heard August 13th, 14th, and now 17th. You’re the official word. So is it 17th? Is that the real date? [Ashley] 17th is the day, I know it’s a Saturday, I think, have to look on a calendar, but the whole idea was X amount of days post when the settlement was reached. Now a lot of the MLSs and a lot of the brokerages, they’re implementing a lot of this before then. Like for instance, I heard I forgot which MLS it was. One of the bigger MLSs out here in California, I believe they’re putting everything into place on August 12th. was the number I heard for them. And so that’s why there was a little variation. [David] So, what does this really mean? What is really happening here, Ashley? [Ashley] Just going back to the original issue of these lawsuits, there’s really one big thing, but just a couple of components to it. So one, just to recap on why we’re here in the first place is we had real estate brokerages that were accused of working together to fix commissions, right? This was an antitrust lawsuit. I think some of the bigger issues are that agents were accused of steering. An example of that, let me just to talk through what steering is. Because in the MLS that the buyer agent compensation is a searchable field, agents were being accused of searching for properties and providing those properties to buyers that would offer the higher commission to that agent. Previously, when agents were working with buyers, they would just say, Hey, we’re going to go look at houses dah. Everything got wrapped up into the loan and there was a 5% or 6% or whatever it was commission that was given to the listing agent who then they would then split with the buyer’s agent and the buyer had honestly no clue how their agent got paid. Fast forward to today, everyone’s no, that’s actually wrong for a lot of different reasons. We need to fix that. The biggest things that are happening on August 17th or at least by August 17th, are gonna be two things. The first one, is all of the MLSs that are a part of NAR are going to have to remove the commission fields within the MLS. A lot of them have already done it. Also remove it from forms. Also remove it from whether they’re sending all of this data to, whether it’s going to other brokerage websites or any other sources that needs to be removed. That doesn’t necessarily mean that we can no longer offer buyer’s agents compensation, but we don’t wanna be able to search by that. The other thing that’s happening is now buyer’s agents are going to have to actually sit down with their buyer and say, we need to sign a buyer representation agreement. And this is currently done in 18 States today. It’s going to be new in 34 States. What’s different here is that even if they were doing it in those 18 states, those agents were still assuming that their compensation was going to be covered by the seller. That’s not the case anymore. What happens, and we’ll go into this in a little bit more detail a little further down, but now buyer’s agents, even in those 18 states that are used to it, but really in all of the states are going to have to articulate their value, say, this is my fee and no matter what that fee is, they decide on that fee. Even if a seller is willing to pay more to a buyer’s agent not the listing agent, the seller is willing to pay more. It doesn’t matter. The buyer’s agent still negotiated the fee with that buyer because that was another issue before. So, now that those buyers agents are going to have to articulate that value and they’re going to say, Hey, look, there’s a chance that seller might not cover this fee. But this is why I’m worth it. It is a big change for a lot of agents out there. And I think a lot of them are. [David] Yeah, I think I can understand which we’re to get into what you’re doing now, which is really exciting and how you help solve that problem right there. We’ll talk about that towards the end of the podcast. There is a real solution out here that you need to be making a realtors aware of in this whole deal. But what does this mean for the realtor? [Ashley] Like I was saying, this is still a new thing, realtors, now that they’re having to negotiate their compensation, it’s going to change a lot of kind of how that first phase for the buyers actually work. In theory, a buyer could actually shop agents based on their value. You might have one agent that’s charging a $10,000 flat fee. You might have another agent that’s charging 2% or 3% of the list price. I saw a study recently from 1000watt they’re an incredible marketing agency and they work directly in this particular case, they surveyed consumers and I was a little relieved to see that regardless of what’s going on with the lawsuits, most, I can believe it was 66% would still rather pay a percentage commission versus paying a flat fee or paying hourly. Actually hourly was the lowest, just consumers don’t want to pay hourly. And it was like 14% that actually they pay. [David] Do you think that is because we’re still, they’re still stuck in an old paradigm, but as this thing moves along down the road, that we could find ourselves people reevaluating this and that survey, if it’s done two years out, even a year out, we’ll shift to a different percentage distribution. [Ashley] Maybe I, where we have a huge gap today is what buyers have an understanding of what the agent actually does. And so, they think they just buy a house. They, a lot of consumers look for the house themselves on Zillow. They think that they find the house and the realtor opens doors and that’s it. We actually here at my company at Raise, we partnered with Wave Group and did a study with about 500 buyers and of those 500 buyers. 25% of them thought their agent spent 10 hours or less on home and then almost 50% it was 15 hours or less is what they thought their agent actually spent in reality. And we’ve done studies on this agent spend on average 86 hours over the course or 87 hours actually. Over the course of 56 days, they do about 114 activities and those activities can equate to over 200 different outcomes. And so all of the stuff that the agents are doing, they don’t do a good job articulating this. So consumers don’t actually really know what they’re paying for or what the service is. [David] That is so fascinating. Over 200 different things that they do in someone between 80 to a 100 hours. That’s pretty mean. What is the consumer risk that needs to be mitigated here? [Ashley] So, there’s two pieces to it. If we’re looking at first the sell side, then if there is no buyer’s agency, just even looking at the insurance liability of it. All of that potential liability and I heard a study that I am not going to reference the source only because I don’t remember where it came from, but I have heard this before that there’s a 60% higher chance that something could go to litigation if they do not have equal representation on both sides and what could end up happening. [David] Makes sense. [Ashley] Yeah, it does. It completely makes sense. And what could end up happening in that case is now you have all the liability falling on the seller and you have all of the liability of that transaction falling on the listing broker. And that can have a big impact on the insurance. So, there’s that component of it. And then there’s the other component of it is the seller, let’s just say if they’re not offering compensation, we should actually stop saying that, let’s just say if less buyers can get into the home, because they’re concerned about getting their compensation covered, then is that seller really going to get the top dollar for that property? And those are some answers that we don’t know yet. [David] So Ashley, what should happen in negotiations today? [Ashley] So, first I’ll talk about the sell side. And then I want to get into the buy side because that’s the big piece of this. But there is something on both, right? Listing agents, when they’re sitting down with their seller and no joke. I got this text message. I posted this on LinkedIn the other day, the text message from my mother on Saturday that says, what do the new lawsuits mean for me when I sell my home? I’m like, Oh God, when mother knows. And she thinks she’s I could save 2 ½ or 3%. That’s what she thinks. And so I call her, I’m like, no ma’am, that’s not the case. So when a listing agent sitting down with the seller, what they should be doing is saying that we need to incentivize buyers to come to this property and in doing that, we are going to entertain any and all offers that are brought to us. So, they are not excluding concessions, which is the new way of potentially doing that without actually transferring money from one broker to the other broker, et cetera. But we might get concessions, we might get this, we might get that, but what we need to do is we need to look at the net. And so that way the sellers can get their mind off of this silly saving 2% or 3%, but instead they’re really looking at what is going to get me the highest net for my property. And also when you have listing agents that are sitting down with their seller and talking about how to price their home. And this is something I just learned from reading a couple of articles and listening to a podcast that had Ed Zorn. He’s the general counsel for California regional MLS. And brought something up I didn’t even think about. But when you’re sitting down and doing C-M-A. Comparative Market Analysis, sit down and look at what the concessions were, because just because your neighbor’s house sold for a million dollars doesn’t mean that the seller walked away with a million dollars. When you’re doing that CMA, look at the concessions, look at everything. [David] Great point. Really good point. [Ashley] But I didn’t think about it until I heard the other day. [David] I’ve listened him. He brings up some good points every time I’ve heard him speak. [Ashley] He’s super good. But it gets down to the net, right? That’s what the seller cares about. And so we need to get their heads out of what they’re hearing in the media, saving this money or whatever it is, because we can probably get into this a little bit more in a second, but I just don’t think that realtors, brokerages, NAR, anybody has really done a good job marketing this correctly to consumers and all the consumers are hearing about is what the press is putting out about the lawsuits. And I think they’re confused and they don’t really know. So that’s where I think sellers are getting in that headspace. Now talking about the buy side for a second. [David] That’s where that’s where so much of it’s happening. That’s where the real action is. [Ashley] Yeah. And this is something that I’ve found. I’m very happy to see over the last couple of weeks, a lot of lenders that are starting to pick this up because realtors aren’t and realtors are still confused. I’ve been in the room with a lot of realtors and I’ve heard the confusion about what are we supposed to do? What exact changes are happening? And because so many lenders out there are working off the referral business and their relationships with the realtors, they almost are an extension for us to get this message out there to help them and really help your referral partners. So going to the buyer’s agent, they need to really be able to articulate their industry knowledge. They need to be able to say, this is what I do, and this is what to expect in the process and this is what I’m going to do for you. [David] And this is something they’ve never had to do before that they should have done. And I guess the better ones probably do it, but maybe it’s in those states that they did. But this is bringing such a bright shining light on this area of, I’m going to call it opportunity rather than a deficiency. Because this is going to distinguish the better buyer agents as you move forward. Would you agree? [Ashley] A hundred percent. And I have a point I’m going to make, and then I’m going to tell a story. Going to the point, look at all the other transactions we do today. If you look at Amazon, if you look at Instacart, consumers are paying more for a service with transparency. We need to provide transparency in the real estate transaction. And so, you look at Amazon and you know everything that’s happening until that package arrives on your door. But in real estate, they don’t, they probably think that the realtor is finding a home online, which they can do on Zillow and then open up a door. But going back to my earlier points, there’s 202 different things that they actually do over the course of 80 to 100 hours. And so there’s a way to do it now where I feel like realtors in the past where they used to say, I know that this is an anxious transaction. There’s a lot that goes into it. Let me be your realtor and you go keep worrying about your life and I’ll get you this home. They should still do that, but they could do it in a way to say, Hey, here’s everything that’s going to happen. Here’s what you can expect. Here’s my expertise and everything I’ve experienced with my past customers and what they went through and what they expected. This is how I’m going to get you the best possible price for a property. And this is how I’m going to handle my marketing and my negotiations to try to also get my feet covered in this process. And so, there’s a big opportunity for that if they can just learn how to articulate that value. [David] Yeah. And there’s a key. Learning how to articulate it and then backing up a documentation, which is really what Rayse does. It helps them within the realtor, the buy side realtor so strongly. [Ashley] Exactly. That’s what we’re doing here at Rayse where we’re helping the agents actually understand everything they do first off, and then be able to display that back to the buyer, whether if it’s presale and a buyer presentation, whether if it’s during the transaction, just to Uberfy or however, we want to call that experience through the transaction and then closing to say, Hey, this is what I did. And don’t forget, even though I did all of this stuff for you, and here’s the recap, I also had to pay my 30% to 40% fee to Zillow for a referral fee and this much for a brokerage split and this much on my taxes, cause I’m an independent contractor and this much on expenses to cart your butt around and look at houses. I don’t think people realize that. And the story and I’ll say this. Quickly, this story that I wanted to share after my mom called me or texted me the other day, I got on the phone with her and we talked through this. And then she started talking about her realtor. And she told me lead on Zillow, found a house, bought the house. Cool. Most importantly, the realtor stayed in touch with her and the realtor helped her appraise her house when she, and then the realtor helped come and advise to her how to build out an ADU. And the realtor came to her, all of this post close and advised her when rates dropped on how to like where to go about getting a refi. And so I asked my mom, I said, Hey, if you knew that Jake, your realtor was going to do all of this stuff for you. And I did the math and I’m like, Jake make less than $5,000. I think it was like $4,800 that I estimated on the deal, I’m like, if you had to, would you have paid that fee yourself just to get this representation or would you have rather try to save that money? And she’s no, I would have paid it. Cause he’s done. And I’m like, great. And honestly, Jake probably would have been able to charge more, if he was able to articulate everything. [David] I think there’s the point, I think there’s a thought, people have been thinking this can commoditize the buy side of the transaction. And it’s just going to drive down the buyer agent fees. And if it’s being done right, there’s certainly an opportunity. I don’t doubt there’s going to be some discount people coming out and doing some very low service levels for lower budget, but it’s like anything else in your buying or selling out there you get what you pay for, and this is a real opportunity for us as lenders to come alongside of the realtor and help them understand how they can add the value. So, let’s get into some of that, your mom is a great example of that, but what should the industry be doing as to really help people transition through this? [Ashley] There’s two components to it and to summarize those two areas, first one is going to be education for the realtors, because a lot of them are really struggling. The negotiation skills are going to be so important for them now because they are going to be tested probably a little beyond what they’ve had to do in the past and I do think it’s going to be out of the comfort zone of a lot of them. And then there’s another piece of the consumer where we need to reach consumers because to my earlier point, they’re only hearing right now what is in the media and generally that is, one of those ads that pop up, did you sell a home recently? Did you know that you could be subject to, you could receive compensation from a class action lawsuit. And NAR starting to put out a campaign, but I really want to empathize with buyers for a second and then empathize with the realtors eventually but even just looking at buyers, the ones that are going to get affected the most are VAs or the veterans. It’s going to be minorities, low income, and it’s going to be first time home buyers. [David] It’s really true. [Ashley] Yeah, and this is generational wealth that we need to be able to create. Owning a home is, and actually I just saw some other stats that the highest impact of this is going to be for homes that are worth $400,000 or less. It’s not going to be for that $150,000 a year earner that is getting a million dollar home. We’re actually really hurting what America I believe stands for when it comes to the idea of home ownership. [David] There’s been so many hands in the pot on the American dream, it doesn’t really redistribute that. There’s other ways that’s going to be happening, but I really think this is an opportunity for us to up the game of how homes are being acquired bought and the agent opportunity for the agents to really become a coming across a whole lot more professional, and I think it’s the opportunity for us to partner with the agents and this is really good. Talk about the brokerage marketing aspect. [Ashley] Yeah, if we were to break this down between how we can reach agents and consumers on both sides, NAR they have a big marketing budget. I heard a rumor. I’m very good at rumors. Heard a rumor, it’s $30 million a year. And so that’s a healthy budget to be able to go out and educate and they’re doing a great job with agents. They have a buyer’s agent toolkit that they built out, but even to the consumer, this is emotional, like buying a home is emotional and inflicts anxiety. It’s a big deal. And I really think that it’s important for us, especially we have an election coming up, there’s, and it doesn’t matter which side you’re on. If you are Republican, Probably love veterans. If you’re a Democrat, you might be leaning a little bit more towards minorities. It doesn’t matter. Every side wants to achieve home ownership. It doesn’t matter which side you’re on. And I do think that there’s a big opportunity for us to really push some of that marketing budget into educating consumers just like we’re doing with the agents and then on the brokerage side and brokerages are starting to do this but like you go to a brokerage website for instance, there’s opportunity even on that website for them to be able to educate consumers when they’re coming to the website. Right now they’re starting to in the buyer’s agent presentation and starting to put together templates and that’s now becoming a thing but even so like brokerages that are really tapping into their community, a lot of these brokerages too, they’ve been there for a long time, people like to transact with people that they know, they have a good opportunity to really touch the community a little bit more hands on both in their own localized marketing as well as at the agent level. And then for me, I think the biggest thing is it was like lenders or any other ancillary partners that are working with the realtors. Like I said earlier, realtors really need help right now. They’re confused, they’re getting better. They may not always have the right information and I have always seen lenders as a really great way to help and support the realtors because in turn, both businesses are supporting each other. And actually my friend she has a mortgage company here in Orange County with JJ Mazzo and Kimberly Mazzo. Kimberly is a great friend of mine. She is actually doing that where she’s doing seminars and she’s bringing in agents, and she’s helping them understand how to articulate their value and how to navigate through these changes. And I do think that lenders have a good opportunity to help with that outreach and any other partners. It doesn’t just have to be the lenders, but any other partners that are wanting to work with the realtors. [David] Yeah, really good. Let’s talk about Rayse, and exciting product, James Dwiggins, who you introduced me to, who’s now become a friend and someone I’ve had on the podcast does an amazing job. He saw this as an opportunity and started a company Rayse, R A Y S E, and the best part, he talked you into joining him and I’m so excited about this. I knew you at your previous Milestones where you were at first. He did an amazing job there at Milestones and what you helped them through their growth. And I’m really excited what you’re going to be doing here, but let’s talk specifically about what the Rayse product does and then your role and then how people get ahold of you. [Ashley] Yeah, definitely. So excited to be working with James. I’ve known him for several years now. He was a customer in his day job. He’s the CEO and Co-Founder of Next Home, which they have about small little company, 6,000 agents, 650 offices nationwide. And he’s been a great thought leader, probably the thought leader in the space on this particular topic. [David] And by the way, we’ll put a link to his podcast in these show notes, because you gotta go listen to this. He’s so articulate in here. That guy, it’s just a fun to listen to, highly informative podcast. So it’s excellent. And even after this all gets settled down, it’ll be a still a great place to go back to in a resource. If you’re looking how to get insights with working with realtors. So how does this product work? How is it that you actually measure and able to articulate, document, and articulate with data, actual data, tangible data, all that there, that the buyer’s agent is doing for the consumer. [Ashley] So what we’re helping them do with technology is helping first the buyer’s agent really understand everything they are doing, and offer a method for them to actually track this in an automated fashion, and then on the consumer side, this is being displayed to them, as I said earlier, three parts when it comes to even just pre buyer representation agreement where the buyer’s agent is sitting down with the buyer and just wants to articulate their value. And then we have the component of the actual real app where the consumer can fully understand what’s going on through the transaction process and then that closing component to it. But then more importantly, outside of the fact that we’re helping the agent track all of this in an automated fashion and display this back to the consumer in an automated fashion. All of this data is stuff that we are tracking. And so, we can really understand what’s happening through the transaction process. We can help the agents navigate on how to do things better. We can help give the brokerage insights on the operational side of things and how the agents are behaving. We can do a lot of work with helping ancillary partners get in front of the consumer and get in front of the agents. So, we’re still new. We are very early stage startup. We actually are just in the process of starting to roll out for our investor network. We will be focusing on our investor network, which is pretty vast. It’s some of the top real estate brokerages, franchises, MLS associations across the country. We will be focusing on that over the next couple of months and then starts distributing it out to the kind of the rest of the industry shortly after that. [David] Very exciting. Yeah. And your role there? [Ashley] I’m our Chief Revenue Officer. [David] All right. Yeah. No one better at doing that than you, how can people reach you, Ashley? [Ashley] So, my email is Ashley, that’s A S H L E Y at rayse.com. Rayse spelled R A Y S E dot com. And then Ashley Terrell on LinkedIn [David] You are active on LinkedIn. I love your posts. You are gauging. You and my good buddy, Greg Sher. I gosh, you guys are going back and forth and it’s really fun to see this next generation come up of influencers. You’re doing a great job. I love how you do this sometimes from the horse barn or just outside the horse barn. It’s a stream of thought, but yeah, wherever you’re at, it’s just wonderful. That’s what cracked me up when James and I were first talking, he says, I don’t want my wife talking to Ashley anymore because they’re either buying another horse or they’re buying more horse equipment or something, so awesome. Thank you so much for being here. [Ashley] Thank you so much for having me, hopefully it was helpful. [David] It was very helpful, very informative. Thanks. Have a great rest of your day and good luck as we navigate this and wishing you great success in your new career. [Ashley] Thank you.Important Links
Ashley Terrell-Kayiran is a seasoned proptech executive with extensive experience in the real estate industry. Before joining Rayse as Chief Revenue Officer, she held executive level positions at Homeowner.ai, Percy, Constellation, and Real Estate Digital where she has helped acquire and retain close to $500M in SaaS revenue. In those roles, Terrell also acquired many awards such as HousingWire’s Women of Influence, HousingWire’s Rising Star, Inman Future Leaders, and many RISMedia Newsmakers mentions. Terrell’s passion for Real Estate started in 2002 when she helped her dad find a home online. After several years in luxury hospitality, and after finishing a Master’s in Business Administration with focus on Marketing & Finance, she found opportunity in the Real Estate industry through relationships built in her hospitality career. Terrell’s ability to build long-lasting and meaningful connections with people, while also being strategic and growth-minded, has helped accelerate her career. In addition to her proptech career, Terrell is also a decorated equestrian with some of the nations top awards. She currently resides in Orange County. CA with her husband, stepson, two dogs, and horse.