The Future Of Buyers Agents (And Some Marketing Ideas To Consider, Following The NAR Lawsuit Settlement)

Grant Botma: And I think that's the real good news that people need to understand as agents, that no, they're going to be getting taken advantage of by buyers way less often. Now it's going to take some work. You're going to have to be able to list all the things that you do for buyers. You're going to have to get very detailed. You're going to have to edit that list over and over again. You're going to need to make sure that it's refined and has very good words and the marketing associated with these suite of services is very clear. That's going to have to happen.  

Tim Chermak: This is the Platform Marketing Show where we interview the most creative and ambitious real estate agents in the country, dissect their local marketing strategy, and get the behind-the-scenes scoop on how they're generating listing leads and warm referrals. We'll dive into the specifics of what marketing campaigns are working for them, how much they're spending on those campaigns and figure out how they have perfected what we call the Platform Marketing Strategy. 

This is your host, Tim Chermak. I'm the founder and CEO of Platform, I love marketing and I talk too much. So let's dive in.  

Tim Chermak: Hey guys, it's Tim Chermak and welcome back to another episode of the Platform Marketing Show. I'm joined today by a Grant Botma. Grant's in the Phoenix, Arizona area. Grant, welcome to the show.

Grant Botma: Thanks for having me on.  

Tim Chermak: So what we're going to discuss today, it's not going to be the typical Platform Marketing episode where we do a deep dive into a specific marketing case study. We're definitely going to be discussing marketing and the implications of how the real estate market is going to look and feel in 2024 and beyond. But really what we wanted to discuss on this episode is the fallout and the ramifications and the implications of the recent NAR lawsuit, the NAR, National Association of Realtors. 

It's been all over social media. Agents and lenders and everyone in between is freaking out about what it means and will I be working for free and will buyer’s agents ever be paid again? And now I guess I'll have to only get listings because no one's going to be able to make a living as a buyer's agent. And I mean, there's all this, I hate to use the phrase ‘cause it's been beat to death over the last couple of years, but you know, misinformation and just rumors spreading around.

And I thought one of the people I most respect in the real estate world is Grant Botma because Grant doesn't just look at the agent experience or what things mean for lenders or the investor side. Grant really sees all of it. Grant started Stewardship Financial in the Phoenix, Arizona area. Grant, how long have you been running Stewardship? 

Grant Botma: Oh, man, getting close to 20 years now. 

Tim Chermak: Okay, so he didn't start two years ago or three years ago, right? Like he's seen the ups and downs in the market. And I think that's important to point out because up until really the last 18 months or so in the market slowed down a lot. If you had been a realtor for any less than 15 years not four or five or six, but 15 years, you actually had no memory of any market that wasn't getting better every year. Because you know what? In 2009, the market was better than 2008. In 2010, the market was better than 2009. In 2011, the real estate market was better than 2010 and so on. And that repeated for 15 years after the great recession, after the big mortgage crash. So your experience actually…

Grant Botma: Yeah, I literally started my mortgage company like a couple of years before the great recession. So I was like right in the throes of it right at the beginning.

Tim Chermak: Yeah. So like, good timing, right? You've seen ups and downs. This isn't your first rodeo, right?

Grant Botma: No.

Tim Chermak: And I want to point out that the reason I respect Grant's perspective and his opinions and you don't have to agree with all of Grant's opinions. I maybe don't agree with all of Grant's opinions, but you really have to respect the perspective that he has. Because he owns a real estate brokerage, he owns a mortgage brokerage. He operates an independent insurance agency. His company offers financial planning. So he really sees all of the different areas of building wealth that's related to real estate beyond just the real estate transaction itself. 

So Grant, as we dive into what we think is going to happen and kind of Tim's and Grant's predictions on what the real estate market is going to look like in the future, before we dive into that, why don't you just share a little bit of background of yourself, how you got into real estate? What's the origin story of Grant Botma and Stewardship? 

Grant Botma: Sure. Yeah. When I was 15 years old, there was a job fair at my high school that I signed up for just because I didn't want to go to class. And in the job fair, Discover Card was there and they were doing some interviews for their credit card company which was local in the area where I went to high school. And by the time I got home, there was an answering machine message from my father and they were asking for his permission for me to go to work. I guess they had liked some of the things that I said in that little mock interview or whatever that I did.

So I started working for Discover Card. And got into the credit card industry as a credit card collector. And I actually had some success in that world, oddly enough. It was weird because I was just a kid. 

Tim Chermak: How old were you again?  

Grant Botma: I was 15. 

Tim Chermak: You were 15 and working for Discover Credit Card. 

Grant Botma: Yup, yup.  And I ended up being one of their top collectors, kind of out of like a weird situation. I was just a kid and if I got fired, I got fired, and I didn't really care. I mean, they had some good training, but some of the training that they were making me do and what was normal in the industry was basically to like, stoke fear in the hearts of the people who owed you money. I just didn't feel good about that. 

Tim Chermak: So like, just to be clear your job at age 15 working for Discover is calling people who are behind on their balance for Discover and calling them and saying, “You need to send us money.” Like you're literally a debt collector. 

Grant Botma: Correct. That was my job.

Tim Chermak: At age 15 like before you can legally operate a motor vehicle. 

Grant Botma: Yes. I was riding my bike to Discover Card. Yep. 

Tim Chermak: That is amazing,

Grant Botma: So whenever I was calling people, I never really asked for money right away. And it kind of got me in trouble at the very beginning, but because Discover Card was this big behemoth, they have these like processes that you have to go through before you can get fired. So I was like on my last leg of reprimands but I was not going to call people and say pay me or else. Instead I called people and I'm like, man, if they're behind on their Discover Card, they're probably behind on a lot of stuff. Something maybe happened in their life. 

And I would just listen to them and I would ask them, “Hey, what's going on? Why are you past due?” And I would take notes and take notes and take notes. And then every time I called them, I would read the notes and then I would go over those notes again. I'm like, “Hey, Mr. Smith, how's your leg doing? Is everything healed?” or, “Hey, have you found a job yet?” or “How's your grandma doing? Is everybody doing okay after the funeral?” or whatever. And I would just build relationships with these folks. 

Well, the next thing I know, my inbound phone line starts ringing off the hook. And I could not answer the calls quick enough. And because when people got money, the first person that they wanted to call back was me because I was not their only debt that they were past due on. But I was their only debt that they were past due on that they actually appreciated. I wasn't a jerk to them like everyone else was. 

Tim Chermak: Which is really quite impressive. Not just because you were 15, you know, and probably had a high voice and sang soprano in the choir still, right?

Grant Botma: Oh yeah. I got mistaken for ma'am all the time. Like I was and I'm 6’5” right now as a grown adult. At that time I was 5’3”, weighed about a hundred pounds. So I was like very much a little boy. 

Tim Chermak: You absolutely probably had the high voice and they're almost like, “Is this a prank call? Who is calling me?”, right? But I was going to say, obviously you were so young that that's a factor working against you in that job. But also obviously by definition, a credit card is a non-collateralized loan. There's not an asset backing that loan that if you don't pay Discover can't seize your car or your house or your 401k or something. So really if people are behind on multiple debts, whether it's auto loan, their mortgage, whatever, a credit card would be one of the last things you pay because you don't want to lose your house or your car or something. But a credit card company can't take anything from you other than just charging you more interest.

So it makes it even more remarkable that you were able to get these people to pay their debts, being that they didn't really have a downside if they didn't pay him other than just racking up some more interest. It wasn't like they were going to lose their house or their car if they get behind on two car payments, you know? 

Grant Botma: Yeah. I honestly think people just like talking to me on the phone too, because for some of them I would have payment plans and they would look forward to calling me once a month and making their payment over the phone and giving me their checking account information and just catching up and seeing how they're doing and what's going on in their new job and what's going on in life.

Yeah, it started working and I started breaking records at Discover Card, even though I was only a part time collector because I was still going to school. So I was having success doing that, and by the time I graduate high school, life gets weird for me during that time in my life. I moved out on my own before I graduated high school. 

So I'm living in an apartment with a couple of buddies and we're about to take one final like trip to California, ‘cause I live here in Arizona, to go to the beach with the youth group. So the way that kind of goes, if you've never done it is, you'd fit as many kids and their surfboards and boogie boards in a 15 passenger van and you drive to California and there isn't enough seats for everybody. So people always have to take a turn sitting up in the front on the hump on the van. And when it was your turn to do that, the volunteer youth leader, he would just grill you. And he would make fun of you and everybody would laugh and it would be hilarious. And it was great. 

Grant Botma: Well, when it was my turn to sit on the hump at the front, he's like, “Hey, Grant, you live on your own, you've got a car. How are you making money? What are you doing?” And I'm like, “Oh, I'm a credit card collector.” And he just thought that was hilarious. And he's like, “Okay, let's pretend we're going to do a credit card collecting.” And we did a couple of mock phone calls and eventually I got him to pay me. But it was hilarious. I mean, he was a really funny guy. The kids were laughing, it was awesome. But then by the time the trip is over, he pulls me aside and he says, “Hey, Grant, I need to talk to you.” And I'm like, “Okay.” And then the trip does end and he pulls me over and said, “Grant no, really want to talk to you. Can we have lunch tomorrow?” And I'm like, “Sure.” Well, it turns out he owned a mortgage company and he recruited me to come work for him. And that is how I got involved in the mortgage industry at basically right before I turned 19 or just after I turned 19 years old. And yeah, so that's how I got my start in finance and how I got my start into the mortgage industry.  

Tim Chermak: And so you've seen the ups and downs of obviously how the market has changed over basically the last  20 years. But one thing that hasn't changed since you've gotten in, is this subject of commissions, really like if you want to call it the business model of real estate. For as long as I've been alive, frankly, I think the modern commission system got its start the way we know it now in the early 1990s. So it's not the way it's always been done in America, but for sure, for the last basically 30 years plus, the way it works, is a seller list their house, the listing agent inputs it into the MLS. They really choose what they want to compensate the buyer's agent. That info is almost always included in the listing on the MLS.

Historically, although agents are trained from the day they're in diapers, they're trained to say it's always negotiable. “The listing commissions are always negotiable.” It's like it almost always was 6%, 3% and 3%, or sometimes it'd be 5%, 2.5%, 2.5%, something like that. We can say that out loud, right? That's not evidence of collusion or price fixing. If just that's what the market prices are. It is what it is, right? And what's changed, obviously, recently in the wake of this lawsuit and settlement is that sellers won't necessarily be setting the buyer's agent commission up front.

And that really becomes negotiable between buyer and buyer's agent. There's obviously a lot more going on with this lawsuit. But that's kind of the most important fact that a lot of agents seem to be freaking out about. Do you think that fear and anxiety is justified? Do you think the market really is going to change a lot? Do you think people are overreacting? What's your immediate take on what went down in the last couple of weeks with the lawsuit?  

Grant Botma: Well, I think what's most important for us to do is to look at truth because so much of fear is oftentimes because there's a lack of truth. There's lies or things that you're believing, maybe internally or even that's being fed to you. So what's most important for us is to start with what's the truth, what's the reality of what's happening. And this is not just something, this NAR settlement, and this lawsuit isn't something I just started following with over the last couple of years, like some people in the industry. I've been looking at this for years and years and years.

I'm talking about when the Department of Justice many years ago talked about adjusting or putting oversight onto real estate agent commissions. And this was, man, that was over six years ago when that was going to be happening. So I've been looking at this for a very long time now and have been watching it for a very long time. And there was three issues that were being attacked. Okay?

One of them was it's a monopoly. The other one is that there is collusion. And then the third one is that there's price fixing. And those three issues are all very separate issues. And here's what we need to really understand: the monopoly issue, that one did not ever, NAR or all the other agencies, they never lost that one, right? So they were unable to prove that there was a monopoly, because there isn't. 

Tim Chermak: Yeah. And that's in almost any antitrust type of lawsuit. 

Grant Botma: Correct.

Tim Chermak: That's almost impossible to prove because if there's any semblance of competition elsewhere, you really can't make a monopoly case.

Grant Botma: Correct. Correct. Now, what did they win? They did win the collusion and the price fixing and a lot of that has to do with this one word, and this is very important - “disclosure.” There was a reason why they started losing some of these lawsuits was because people involved in the transactions, the plaintiffs, they did not know and they never knew how much agents were getting paid prior to the transaction closing. And that was some of the sticking points into why they started losing some of these suits in various states. Disclosure was the issue. 

And when I talk about this with real estate agents, there's some in different states that say, “What are you talking about? Our clients always know,” whatever. On the buyer's side, they were proving over and over again in these court cases that the buyers had no idea how much the buyer's agent was getting paid, at least early enough. They had no idea how it worked, and they had no idea who was paying it, right?

Tim Chermak: Well, we know this because how often have you heard agents say, even in their marketing, I'm not just saying like they say it verbally, but in their marketing, they'll say, “Make sure you always work with an agent,” for example, when you're buying new construction, “because it doesn't cost you anything,” right?

Grant Botma: Yup.

Tim Chermak: It doesn't cost you anything. I'm paid by the seller. I'm paid by the listing broker. It doesn't cost you anything to work with me. We all know if you've taken an eighth grade economics class that that was never true. Of course the buyer's paying for it in the form of the price of the home. 

Grant Botma: Correct. Yeah. In the form of the price, and that's the primary point that the buyer is purchasing the price of the home. It's in there. 

Tim Chermak: Right. 

Grant Botma: So it absolutely was costing them. 

Tim Chermak: Yeah. For the last 30 years, of course, the buyer was paying the buyer's agent commission, but it was rolled into the expected home price because the sellers knew that in that old system they had to pay for it. First off, let's just admit that as an industry, maybe there's some exceptions. There's not probably many agents who didn't say this, right? So I'm not saying we're all guilty, but many agents would say things like, “Don't even worry about it. You don't have to pay me. The seller pays me.” We have to admit that that was factually incorrect. 

The buyer was paying for it in the form of the home prices probably being elevated because the seller had to factor in, “Hey, if I'm a middle-class family and we live somewhere in the Midwest, and I'm a police officer and my wife is a teacher and our household income is $100,000 total and we own a $300,000 house,” well at 6%, obviously that's $18,000 they had to come up with to sell their house. That's a pretty large transaction cost. So of course, they're going to factor that into what they need to get out of the house if they realize that on top of other closing costs there's $18,000 that they have to come up with. So like one of the first things is let's just admit. Anyone who said that, like that really wasn't truthful.

Grant Botma: No. And not only was it not true, folks who were saying that the idea that buyers paying their buyer's agent through the sales price of the home was never attacked ever in this lawsuit. That's very important to note that the NAR lawsuits, the settlement, all of that, nothing anywhere says that the buyer's agent is not allowed to, should not be allowed to, or cannot get paid through the sales price of the home even from the seller. 

So the way that things are being paid right now to date, they can continue to happen, but what needs to change is the disclosure. What needs to change is the amount of information and where that information is being put out.

That's what's super important to note. That you're going to have all kinds of fear of all kinds of different things about, “Oh, what's going to happen? Am I not going to be able to get paid anymore? What's going on with this? What's going on with that?” You have to look at the truth of what happened. Disclosure was really the number one thing that's being attacked. And that is what has to change. 

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