A Phil Hall Op-Ed: Here’s a question for the real estate brokers out there: What are the business challenges that will flummox you this year? Okay, that’s not an original question on my part – the folks at Delta Media Group asked that question of more than 130 brokerage leaders in their newly published 2024 Delta Real Estate Leadership Survey.
For the second year in a row, the number one challenge cited by the survey’s respondents was “recruiting new agents” (65% in the new survey, versus 63% in the 2023 survey), followed by “reduced profit margins” (60% versus 48% in 2023) and “agent adoption of brokerage provided technology” at 55% – last year, that challenge tied for fifth spot at 39%. This year’s fifth spot was taken by “cutting the right expenses” at 37%.
None of those answers should come as a surprise. After all, brokers have been facing challenges in human resources, profit margins and new tech usage for years. But the number four response is new to the list: the “impact of commission lawsuits,” which was cited by 52% of brokerage leaders in this survey.
This new anxiety among brokers is rooted in last October’s Sitzer/Burnett verdict and the double-edged fallout involving too many copycat lawsuits and the rush by some of the Sitzer/Burnett defendants to craft settlements rather than take their case to the appeals court. The National Association of Realtors (NAR) and Warren Buffett’s HomeServices of America have vowed to stay in litigation to overturn that verdict.
On one hand, it is easy to understand why brokers view “impact of commission lawsuits” as a challenge – after all, many observers didn’t expect the Sitzer/Burnett verdict and the tidal wave of copycat lawsuits to follow. Brokerages, multiple service listings and state and local realtor trade groups are now being sued all over the country. And even if all these cases are consolidated into a single case, there’s an excellent chance this issue will drag on for years until it reaches the U.S. Supreme Court for a final decision. The prospect of spending the next few years in a state of uncertainty is not therapeutic.
But on the other hand, that same argument can also be used to mollify concerns. After all, the question of commissions will not be settled for at least a few years. In the interim, there are still plenty of major concerns to stir anxiety. The bottom half of the Delta survey’s list of challenges facing brokers included sixth-ranked “recruiting top producers” (47%), seventh-ranked “retaining top producers” (44%) and a three-way tie for eighth with “recruiting younger agents,” “providing higher quality leads for agents” and “making sure you have the right technology” (all at 35%).
It also seemed that the brokers in the survey were not paying attention to what many in the mainstream media consider to be pressing challenges – only about one in 10 leaders considered managing the impact of AI to be a top business challenge this year while less than one in seven cited recruiting a more diverse workforce as a top concern for 2024.
Oddly, the continued absence of affordable homeownership opportunities in too many markets was not in the Delta survey top 10. Maybe the brokers polled by Delta did not believe the challenge facing buyers is something they should be concerned about? Go figure!
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].