NAR Settlement Impact on Title Agents & Real Estate | Ep 14

If you've got brokerages that are looking at that level of consolidation and having their resources taxed that much to support the agents, they all are looking to their affiliates, mortgage, title. But at the end of the day, at the brokerage level, the brokers have very little control over the agents. In a world where change is the only constant, Mo Shamil stands at the forefront, guiding title professionals to not just grow their businesses, but to master the art of innovation. With every episode, you're handed the keys to unlock unparalleled growth and stay ahead of the curve. Get ready for a transformative journey.

Hello, everyone, and welcome to another episode of the Title Agents podcast. I am your host, Mo Shamil, CEO of Alltech National Title. Today, we're joined by real estate industry veteran Mike Mann to dive into the latest on our last national lawsuit and explore its potential impact on title agents. Stay tuned for insights that could reshape the way we all do business. Welcome, Mike.

Thank you, Mo. Excited to be here today. Very glad to have you on the show. We have a lot of knowledge, a lot of wisdom to share with the audience in regards to the latest in NAR. Can you just give us like a little bio on yourself and your story?

No, absolutely. Thank you, Mo. I've had the good fortune being in the real estate industry for a little over 30 years and have literally led some of the largest brokerage organizations in the United States, as well as have owned a number of different title operations, mortgage operations in building together what has been the network that I've operated within and had a lot of fun doing. That's fantastic. How big was your largest real estate team that you ran?

The largest group that we had was a little over 3,000. Associates and employees and we were busy. A lot of things going on and that was also right in the middle of COVID. So we had a little drama going on as to how we were going to pilot our way through. And it's one of those things, Mo, that I've always referred to in my career.

Out of chaos comes opportunity. You just got to go out and find it. Well, welcome again. You and I met up a little about a year and a half ago and you're helping us with driving revenue and sales. So you consult with a company and it's a great ride so far, last 18 months.

What's impressed me about you, just your background, we wanted somebody from the real estate brokerage side, like an expert. And literally everything that happened, you called. From the verdicts of the Anar case to all the dynamic shifts, how different brokerages positioning themselves to take advantage of the real estate industry's heading. You really were right spot on. That's why I thought of you first.

I want to shed some light on Badnar and for those who do not know what it's about, can you give our listeners an overview of the Anar Plus actual lawsuit? Sure. As you said, Mo, I mean, that's kind of what I've become known as, is I'm known for being a growth leader and also a cultural leader. And from that and my experience and everything has led to, we have our own company, Titan Business Advisors, and we advise a number of different businesses, not only in the real estate area, but other manufacturing businesses and things along this line. But the particular specialty is in the real estate industry to where we're working with you and your team, other mortgage companies, other brokerages.

And as this whole thing has come about with Anar, it's something that we've been referring to. It's been a potboiling because it's not just the class action lawsuits that have really developed the issue around Anar. It was equally NAR's kind of lost identity as to who they are within the real estate industry. And there's been a ongoing battle between brokerages and the NAR as it relates to MLS data and things along this line. And when you're a real estate broker and a real estate agent, you pretty much rely 100% on MLS to be able to get your product out and your service out.

So that was the big stick that NAR held over everybody's head. Now, with the class action lawsuits that have come in, regardless of which side you're on, the facts are the lawsuit came out against real estate brokerages and the NAR. And it had everything to do with compensation and the fact that throughout the decades of how real estate has progressed, it has become what was once that going back into the 1970s, anybody that was involved in a real estate transaction, both parties represented the seller. And that's where the seller was put in responsibility and they paid, it's how the conduit was in terms of how the real estate agents got paid in the transaction. So as everything's progressed, and then you have the separation of the powers between selling, representing listings and representing buyers, and that being separate fiduciary responsibilities, everything was still left for the seller's responsibility to pay the real estate agents.

So this class action lawsuit that's spun up basically said, well, that's not fair for the seller to have to pay those real estate commissions against themselves in terms of a buyer representative real estate agent representing a buying party. And ultimately that was deemed true. And it's only in the residential real estate arena that that's really been the case of the seller paying those commissions. If you get out into the other side of the equation in terms of commercial real estate or one of the other facets that we represent is buying and selling businesses and dealing with business brokers, the buyer pays their representative, the seller pays their representative. And because this is a change and the real estate industry on the brokerage side is not very prone to changes, this has been a tough change for them to handle.

And you, for the audience, that might've heard of NIR lawsuit but have no idea what's that all about. Can you give us a little kind of background? What happened in the lawsuit? Who sued who? And obviously the verdicts.

So there was an attorney that was involved. His name's Michael Ketchmer, who was the attorney for a case known as the Morrell case. And this was based in the Missouri market. And it turned into a class action lawsuit to where you had three sellers who basically filed suit against the National Association of Realtors and the largest brokerages in the United States that were operating there in the Missouri marketplace, as well as the franchise brains in terms of Keller Williams, Coldwell Banker, you name it, and those names are involved in this class action lawsuit. So the class action lawsuit was filed and it's been almost a year ago, not quite, that everything went to trial and those real estate brokerages and the NIR lost the case.

The judge came back, it was a pretty quick verdict, and said, no, what you people are committing is antitrust. Okay, you can't dictate that the servicing of the buying clientele has to be paid by the seller. And what was even more is you had, and this goes back to the training of real estate agents by these brokerages, because we'll come back to the NIR in a second, but the training of the real estate brokerages was basically, hey, if you're not putting such and such cooperation percentage that the seller's willing to pay a buyer's agent, buyer's agents won't show your property. So there was that underlying threat to the sellers to, in height, in tants, whatever you want to call it, them to perform instead of protecting their own interests. And then the NIR was the conduit for what would make that happen in the marketplace because they dictated to all of the real estate agents and brokerages in the marketplace, you have to have a buyer representation commission put on every listing that is going to be on the MLS or you can't put a listing on the MLS.

So when you put all of that together, that was the antitrust basis of this. And that's what the courts have deemed legal. And now you've had a variety of different, NIR refers to them as copycat cases popping up all across the United States with other sellers that have duplicated this. But now you've also got buyers who are filing class action lawsuits against the NIR and these big brokerages saying, hey, you're artificially inflating the purchase price that I have to pay for this property because of your policies and your collusion with one another. Because the attorneys, I mean, they're doing what they get paid to do.

They're showing when it goes to the court that, hey, you have NIR, you have MLS and you have the associations that are involved in NIR. But who are those people? Well, those are the brokers and the agents who comprise the board of directors for those associations and MLSs that are dictating the rules. It's not an independent party. So that's where the collusion, it's hard for the NIR and these big brokerages to really defend themselves when it's their own participants who are in there making the rules and dictating what these regulations are.

What's the latest on, as you call them, copycat lawsuits, sellers and buyers? Do you know anything about those? Yeah, I mean, there's really a big one on the way. that are dictating the rules it's not an independent party so that's where the collusion it's hard for the in a are any big brokerages to really defend themselves. When it's their own participants who are in there making the rules and dictating what these regulations are.

What's the latest on because you call them copycat lawsuits sellers and buyers you know anything about those. Yeah i mean there's really a big one on the buying side it's called the time. What time one by time two and it was orchestrated out of chicago. And that one has gotten a lot of attention. Because that one is actually because of the class action status and the class action class that's associated with it that's bigger than morale.

That was just found so if the parties were to you know that goes all the way to court and if they were to lose you're talking billions probably three times the word if not four times the word of what was seen in the morale case and if that were the case. That could potentially put any are the largest trade association in the united states that could put them in financial jeopardy. As well as these other big brokerages and franchise groups because they don't have that much cash. The software that that was a no handful of brokerages settled the case prior to the verdicts and i think somebody maybe one of them after the verdicts and do jay's strike those elements what was the rationale behind. Do jay department justice of the kind of striking those out and what's their what's their intent i guess they seem to want to go deeper and put somebody out of business kind of.

Yeah it's interesting though everything that is on like the national trade media and what's being talked about is the any are seven the class action suits and. You know it's a drama lot of negativity but nobody has really been talking about the do jay. And the department of justice and their investigation into the any are is that's really. Blackberry at the trump card because any are in these brokerages can settle all they want on the class action basis but the department of justice holds the ultimate card in being able to say hey. This is how we want the real estate market to be regulated and administrated as we move forward and the department of justice over the past decade has had an ongoing battle.

With the national association of realtors over accusing them of practices that are not only antitrust but also discriminatory in nature in a number of cases and there was a settlement between the any are and the department of justice is a little over two years ago. And everybody thought the waters were gonna be calm and then all of this started with the class action suits and the other any are case and then the department of justice came back and said hey. Because of all this other things going on that settlement that we had is no longer valid we're putting you back under investigation and we really are looking to change in particular how the mls operates. And how real estate is administrated within the united states and they haven't come out and really said what they wanted to be. What they have said is hey we're not happy with this settlement we're not happy with that settlement that's being proposed in the class action lawsuits because we don't think it goes far enough.

Department of justice's role is to protect consumers do you think the current administration. Is one of the ways you're looking to kind of combat inflation and the cost of housing one of them was going to have insurance that's another subject next one is trying to drive down that hundred billion dollar a year commissions. I'm drive that down so i don't know they're thinking we can drive the cost down by one or two three percent of housing i'm not sure how that works had i met the works but is that one of their intense or what's definitely one of the things that's being talked about. When you have people that are outside the real estate industry and when i refer to real estate industry is title mortgage and brokerage together. The only thing they see is a big money pot they see how many dollars all this reflects and things along this line.

And the general feeling from consumers that go through a real estate transaction. Is there a very sensitive to all of the expenses now that are part of that traditional real estate transaction weather that come from the mortgage side and points origination fees when it comes from our side on the title, you know with regard to search fees put policy fees all these types of things and then the brokerage side of the commissions and then you got brokerages charging administrative commissions i mean all sorts of things like everybody has their hand out. And now you have these different regulators who are looking to rain again because they're hearing those complaints from consumers. And when you look at the current administration that's in office they've been pretty vocal that's driving the d.o.j currently. And that's where when you look at the bigger picture on the real estate brokerage side in particular as well.

There's rumor out there there's talk out there that the d.o.j could actually be looking to take the real estate brokerage and agents just to the same way that they did the mortgage industry when the rate economic decline hit previous and that is take real estate agents away from being independent contractors making employees. Wow that'd be massive yeah so that things can be regulated more in terms of control the purchase transaction but you had earlier what happens if they do that. Well that's a whole new level of employment taxes coming and things along this line making sure that real estate agents have appropriate insurance benefits. You name it and that's you know this current administration has basically said that mean they're not for an independent contractor status. So time will tell how that pans out but from a regulatory perspective on saying that's one of the pitches of consumer cost savings from the current administration as well was hey if you're doing a refinance.

Type of situation we can get rid of the mortgage title insurance premium it's not necessary it's duplicated and. My personal thoughts on that are you do that now you're going back to the wild wild west and i mean we in the title business i mean we've seen so much fraud. Popping up with a and all of this type of stuff that's going on in the marketplace if they get rid of those. Predicated searches and policies and things along this line i think that would do way more damage. Two consumers than having to pay that mortgage title insurance premium.

What are the key focuses of the lawsuit is buyers agents commission how could changes to how commissions are handled impact real estate agents brokers and agents if any. Well on the brokerage side first you gotta understand that yes it's gonna affect the individual agents which also affects going upstream to the brokerage. Most of the real estate brokerages and you know this is a real trend fact that's out there with all their analysis most real estate brokerages do good to operate on a two to three percent net profit. That's all real estate brokerages in the united states wow that low yeah i mean it's that skinny of a margin so. Now with the settlement and a change of process now you're looking at.

Sellers because they can't put it on the mls thing that was the settlement is you can't have any form of offer a buyer compensation being marketed on the mls or pretty much anything so. Buyers who are being represented by real estate agents the real estate agent has to go ahead and negotiate and put that buyer into a buyer representation agreement before they ever go out and look at a home. Sounds good sounds simple okay but then they go out and find the home. And they may have agreed in the buyer representation agreement to pay their buyer representative whatever x percentages. But then when they find the home and the seller is only willing to pay why percentage to a buyer representative.

And that why is less than x. Now the buyers representative is in a ponder. Because are you really gonna keep that buyer from buying the home only because you're getting compensated at why and the buyer can't afford to make up that difference because it would cut into their down payment. So left with getting nothing versus something. Most agents are conforming to and they pretty much have to because it's their future responsibility to represent the buyers best interest not necessarily what their own compensation interest are in terms of being the agent.

So they're gonna concede to do whatever it takes to get the buyer in the home. So that's where you look at the pundits out there with all of the different research firms and everything the anticipation is that this is gonna drive the buyer side. something. Most agents are conforming to and they pretty much have to because it's their fiduciary responsibility to represent the buyer's best interest, not necessarily what their own compensation interests are in terms of being the agent. So they're going to concede to do whatever it takes to get the buyer in the home.

So that's where you look at the pundits out there with all of the different research firms and everything. The anticipation is that this is going to drive the buyer side of the commissions down. It's no longer going to be even split evenly between list agent and buying agent and that the buy side of the transaction will probably decline over the course of these next few months. And I can tell you, we represent a lot of clients who are already seeing that you're seeing a decrease in that buyer side commission of 20 to 30 percent. So now let's take it back to our side on the title side.

OK, if the individual agents are seeing a 20 to 30 percent decrease in their gross revenues coming in in terms of commissions, that means above them, the people who are responsible for them, the brokerages are seeing that same level of decline, 20 to 30 percent. OK. I just shared most brokerages are running at a two to three percent profit margin. OK, it's not good. Yeah, it's not sustainable.

So you're talking a lot of brokerages over the course of this. What we're looking at is probably 12, 24 months. You're looking at a number of these brokerages that are going to be forced to do mergers to try to cut back expenses and get a little bit more margin in the equation. You'll have a lot of them out. We're just going to look in to close the doors and you can't make a profit.

There's no point. The sad part is that we have conversations with agents all the time and it's amazing how the bottom tier, the bottom half, they're in denial. They really think nothing's going to change. It's going to end up being a set of concession. And then there are the top teams we talk to as well who are very proactive.

Some of the guys you and I talked to back in December, January, February, they were so ahead of the curve in training their clients, having those bar agreements signed and creating training videos. They were so ahead of it. Instead of fighting the title wave, it's here. It's not even coming, it's here. No, it is.

And on the title side, it changes how we need to focus on who our clients are in terms of the real estate agents and brokerages. Because if you've got brokerages that are looking at that level of consolidation and having their resources taxed that much to support the agents, they all are looking to their affiliates, mortgage, title, well, you know, hey, can you sponsor this for us? Hey, can you do that for us? But at the end of the day, at the brokerage level, the brokers have very little control over the agents in terms of supporting what could be a title relationship or mortgage relationship. And is that relationship the best thing for the client?

So there's a lot to that. And equally for title agents, they got to also understand that with everything that's going on, just because somebody is affiliated with a particular brokerage and that brokerage is doing a good bit of business and things along this line doesn't mean that individual is productive. And you see brokerages wanting title mortgage to come in, do lunch and learns and things along this line, you know, and you're utilizing other resources in terms of supporting the relationship. Well, you really got to look at what do you support? And pay attention to the production of what's going on in terms of whether that can potentially lead to a successful business relationship for everybody.

Because the NAR statistics going into last year was over, I think it was over 53% of the National Associations of Realtors members membership. That's the individual agents did less than one transaction over the course of the year. And most of them did zero. So if your audience in a particular sales call that you're making as a title representative, if your audience is 50% of them aren't doing any business, is that an efficient use of your own time and resources? It's changing the game because the agents who are out there producing, they want assistance, they want coaching, they want to be part of panel discussions.

And that's what's really prompting a lot of growth out there, to where you see these teams, just as you referred, Mo, teams are just growing and growing and growing. And they've actually become their own concept to where you hear the term expansion teams, to where you have a team that's doing very well in one market. And they see, you know, well, hey, I'm getting business from this other market or this other market is a higher sales price than the market I'm in. And I'd like to increase my sales price. So I go and hire a couple of agents in that marketplace and have my team in both markets in terms of generating, because I've got a great lead system and support system.

We're seeing that time and time again. And now the brokerage models that are adopting that philosophy, you're just seeing them flourish. The EXPs of the world, EPICs of the world are just really expanding greater and a greater pace than the traditional brokerages. Yeah, we keep focusing on brokerages. From our conversations in the past, I think CoStar was one of the biggest drivers of that lawsuit, because it seems like they're the biggest winner and they're homes.com.

And can you expand more on that and why they're the biggest winner versus Zillow? Sure. With CoStar, CoStar is a big company. They used to focus on commercial. They became very hard and strong to residential.

Yeah. CoStar, to get everybody acquainted, they were, just as Mo said, I mean, they were the largest commercial portal in the United States for buying, selling commercial properties. But then also in the business world, they own BizBuySell, which is the largest portal for supporting the listing and sales of businesses. And on the residential real estate side, they acquired homes.com. And homes.com was a regional portal that they have really restructured, invested a lot of money with the whole intent of competing against Zillow and Realtor.com.

And what makes them unique is their philosophy is to the real estate community, you're listing your lead. Whereas you look at Realtor.com and Zillow, the way that they've built their programs has been, we'll put your listings on our sites, which get a lot of consumer traffic and things along this line, but we're taking the leads that are generated off of your listings and repackaging them and reselling them to other agents as a revenue source for Realtor.com and Zillow. And then Zillow has taken that even one step further and taken that to where they take those leads and they charge somewhat of a membership interest to be part of the Zillow team. But then they're also charging those agents referral fees back because the majority of the leads are buyer leads who are buying the properties. So that became a huge thing for Zillow in terms of that philosophy.

Zillow became a brokerage in a number of markets so that they could generate and provide those referral fees. Well, now with everything that we covered before, and this is why Zillow's stock is being affected and everything else, is because of that reliance on the buyer side commissions. And now we know buyer side commissions are likely to drop 20 to 30 percent. There's a huge chunk of revenue out of Zillow. So you're saying that's what's short Zillow?

That's probably a good bet. We're not giving the financial advice, but that could be a good bet. But the other piece of this now goes back to what we were saying about the NAR and the MLS. So one of the big frustrations in the brokerage world is you have all of these MLSs, way too many MLSs, who've been out there because they're all regional, they're all protecting their turf, they're added cost for real estate agents and brokerages. Now, if none of those MLSs can provide compensation, because that was the big value proposition of the MLS, is providing protections because of the code of ethics and everything of the NAR.

If the property is listed, you will get compensated on that. Now they can't get into the compensation. So the big question, what's the value of the MLS? If you've lost that, what makes the MLS any different than Zillow, CoStar, in terms of Homes.com or Realtor.com? It's just another fancy portal and there's going to be the challenge.

And that's why you've seen in the class action lawsuit settlements, the big brokerages and the franchise groups are saying that our members no longer pursuant to the relationship with us in terms of the brokerage and the franchise group have to be members of the NAR because they're trying to say and disassociate themselves from the rules and regulations that were perpetuated by the NAR and the MLS that got them into that antitrust trouble and collusion that they were all alleged to have behaved in. So it's one of those times in the industry, Mo, where the people who are willing to go out and do the business and engage in business, they're going to do very well. People like you alluded to earlier in the conversation who want to sit back and I'm going to just keep doing my business the way I've done it over the past years. Those people are going to find more and more challenges as this moves forward. How do you think a change of commission rules will influence buyer and seller behaviors and how will that affect our agencies, if any?

The people who are willing to go out and do the business and engage in business you're gonna do very well. People like you had alluded to earlier in the conversation you wanna sit back and i'm gonna just keep doing my business the way i've done it over the past years. Those people are gonna find more and more challenges as this news story. How do you think a change of commission rules will influence buyer and seller behaviors and how will that affect our agency if any. You're seeing the unfortunate byproduct of it is.

A lot of buyers are questioning the need of maintaining representation. The homes that they wanna look at and things along this line they're not really reliant on the agent to find the homes they go to. I'm stuck on zillow dot com they have the ability to see what's on the market in many cases and so if they have the ability to see what's on the market. And make an appointment to see that property if you like the property put it in contract. They're not jumping up and down to pay somebody another commission in terms of the buyer side of the commission.

And the sellers are recognizing this as a negotiable part of the transaction now as well and so what you're seeing is often times the buyers coming in on represented. And they're going over to legal zoom dot com or some other online platform and writing a purchase contract up and boom turning it back into the seller and it's not a good thing. Yeah you can get into some very questionable situations that way and but it's happened and in the title world that's something we gotta be prepared for is. Hey you gotta know how each side of the equations being compensated in terms of the list agent by agent because the likelihood is it's gonna change the negotiation. So can't just be one and done putting the information and at the front end of the transaction and the quality and other things you gotta have mechanisms and processes to make sure you're keeping up with the transaction.

Because we're also seeing that as properties go through like the inspection phase and things along this line that's even being treated as a whole renegotiation phase in a lot of these transactions and they're coming right back to if I gotta pay for a new furnace well then I'm gonna decrease what I'm gonna pay the real estate agents so it's become the wild wild west. How can tell agents work more closely with real estate agents to navigate these changes ensuring both industries continue to serve clients effectively. Well real estate is about people it's about relationships whether you're in the title side mortgage side or brokered side and for folks in the title. Associate side it's about how do you. Provide services that make a difference to your real estate clientele while still maintaining the compliance because with all the regulatory stuff that's going on out there i mean regulators are paying big time attention that people gonna do this right.

So that's often time boils down to bringing your title representatives and agents together who are the productive agents and talking about what's going on in the marketplace collaborating going through coaching together as to what can be done to get in front of more active clients. And then once we're in front of active clients how do we scale that in terms of producing other opportunities and make sure that that client appreciates everything that goes on in the real estate transaction then drive more reference type of situation. The best title companies in the united states are seeing what's working in certain markets because they represent a network. Of title representatives and working with their title associates their affiliated network of talking through and then taking those opportunities that they're seeing working in other markets and expanding those out to opportunities to become utilized and leverage in the other markets so that everybody sharing and winning together. Those are where you're seeing the real winners.

What do you think the real estate and telling this is what look like if significant changes arise from this lawsuit. Obviously are there a glass half full how is there any opportunities that tell you to capitalize on. From the title agent perspective i think you're gonna see more and more just leveraging of technology. Of paying attention to who you can assist and support in the best fashion utilizing technology in terms of watching and seeing what's going on in the marketplace you represent. And being focused on those agents who are productive into what you can do to make a difference for them those title agents are proactive in doing that will be extremely successful.

The ones who think that bringing in a box of cookies or whatever into a brokerage office. Not so much but so i think what you're gonna see is i think you're gonna see expansion. In the title agency group with people and you know i put you right there with this type of people know that are more entrepreneurial who are looking to go out and get engaged and make a difference with that level of clientele. And i think you'll see some regional title agency expansion i think the underwriter is gonna keep doing what they do. You type of thing so there's not gonna be much much change their type of thing but on the brokerage side of the business i think you can see in terms of those customers to the title agencies you can see a lot of difference.

That you gonna see services more predicated down below the brokerage level directly to agents and teams. What can we do to support you and things along this line because one thing that's happened throughout this and this is been in the past few years is most of the agents. Are out there wanting to make sure that they're protecting their own interests and most of the brokerages that are out there they're afraid of their own agents because of that skinny margin that they don't wanna lose anybody so i think you can see a lot of consolidation. In the brokerage world and i think you're gonna see a pretty mass exodus of agents to the tune of it we were to look out of in the next couple years i mean i think you can lose four hundred five hundred thousand. This is real estate agents.

You know how the customers are very different from state to state and sometimes county to county and who drives the closing the seller or buyer with the seller is being more in control do you think that in buyer driven markets the sellers may take that control over or is it still gonna be the dynamics. Yeah i think in markets where the buyer has been predicating title and things along that nature i think you're gonna. I'm likely see that way in a way to where sellers are gonna take control now that being said there is a wild card to that whole philosophy. And that is the mortgage companies that are out there when mortgage companies are providing the funding. To close a transaction and things along this line they have a vested interest.

And making sure how that transaction is closed making sure that their money is protected in terms of the mortgage and things along this line so i think they're still gonna be that battle in the marketplace over the next few years. In terms of buyers being able to control but if the buyers were to win that control more so than the sellers it's gonna be because the mortgage companies are weighing in on their side. But it's still not the buyers choosing title direction will be the mortgage company. As a veteran in the real estate space what key lessons have you learned that title agents should keep in mind as the industry faces this potentially monumental change. I think it's that you gotta listen to learn not listen to react.

That is probably the biggest thing is a lot of people enter into new relationships are there servicing their current clientele and they listen to react as to something is said well i can do this i can do that. As opposed to listening to learn because what we're talking about with the regulatory influence in today's purchase market especially. It's not the same old business there's tons of changes that are occurring and you gotta be able to listen to learn as to what are the pain points are what are the opportunity points that that potential customer is looking to take advantage of. Have you support them and the people that listen to learn and then formulate a strategy and solution around that will win every time. The ones who listen to react will tend to not be as effective.

What advice do you have for title agents and real estate professionals to stay resilient and proactive. Well you gotta realize that even though there's a lot of negativity that's out there in the marketplace this isn't doom and gloom. This is the result of having little to no change in an industry for decades having way too many people involved in the industry. Without any real restrictions or benchmarks for entry into the marketplace as a real estate agent so there's gonna be a thinning of the herd. But you can't let that affect you because when you look at the overall.

This isn't doom and gloom. This is the result of having little to no change in an industry for decades, having way too many people involved in the industry without any real restrictions or benchmarks for entry into the marketplace as a real estate agent. So there's going to be a thinning of the herd. But you can't let that affect you, because when you look at the overall mechanisms, whether it be title or the brokerage side of the equation, there's huge opportunity out there. There's a lot of people in terms of pent-up demand who are looking to buy and sell properties and things along this line.

Owning a home is a staple in this marketplace and in the culture of the United States. And it's something people take a lot of pride in. And so a lot of these markets, even though there's been talk of them being down and things along this line, if you're to really look at a schematic over the past 10 years, the market has only maybe changed two or three points in a lot of markets. It's still there. But the people who are in the market representing those consumers has changed dramatically.

So it's there if you want to go get it. So you can't let the negativity and the BS wage you. And what you got to be focused on is you in terms of the value you provide to the client. And then being willing to go out there and make it happen and definitely learning new processes and things along this line on leveraging technology to get your consistency and reach out in the marketplace. I just forgot to address one of the shifts that are underlying shifts.

I'm pretty confident most people in our audience are not paying attention to, which is like it's almost a third of transactions that go in off-market like in the last year or a couple of years. Can you just talk a little bit about that and what are the dynamics pushing that and what's the future of off-market properties? Yeah, it's a big number. Yeah, it's almost in a lot of markets, Mo. I mean, it's almost a third of the market is occurring off-market and it's being done through these.

What does that mean exactly? If we do this, I may not understand what off-market mean. So off-market is reference to it's not listed by a real estate agent. It's not out there in terms of the numbers that are being recorded by the local MLS multiple listing service or the local real estate groups. So it's investors a lot of time.

And when I say investors, there's a different classes of investors that have popped up. And this all started back in, again, almost 10 years ago to the economic decline of Fannie Mae, Freddie Mac and all that when big hedge funds got into the residential real estate business on buying the portfolios of Fannie Mae in particular and taking back those properties through foreclosure in terms of capitalizing on all of these different portfolios and then keeping those homes and renting them out. It wasn't really done that much by Wall Street prior to that single occurrence. That's very lucrative. All those properties probably tripled in value in the last 10 years.

And there it is. They learned really quick, Mo, that it wasn't only could they make some money in charging rents and things along this line, but when you had properties in a particular community – let's break it down to a subdivision. If you've got particular properties that you own within a subdivision that is 100-unit subdivision and you control 10, 12 properties, well, now you control 10 or 12 percent of the property values in that marketplace. So if you keep manipulating the marketplace, you're protecting your investment. You're raising purchase prices of properties.

I hear a lot all the time of, well, interest rates are going to come down. It's going to drive the market even that much higher. The market's going to boom and things along this line. And I'm not sold on that. If interest rates continue to come down, I mean, that's great.

You'll get a few more people in the marketplace, a few more buyers and things along this line. But those buyers, they're competing against these guys. This whole big investment class that's almost a third of the marketplace who has cash. And it's a tough way to go because you've got the big hedge fund investors. They're buying up residential real estate properties.

You have the mom and pop investors who are doing that as well. But now you've got this whole other class that has become developed called wholesalers who are inserting themselves in, offering cash deals to home sellers to buy their home. But they're looking at taking the purchase contracts, packaging them up, and then trying to sell the purchase contract to other investors and tying up the property over the course of the 30 to 60 years. Well, adding no value. Yep, exactly.

But you combine all of that together in terms of that activity. And now that's roughly a third of the market, like I said, in many markets. So that's what your real estate agents are competing against. That is what your home sellers are hearing. Let's say they put their home up as a for sale by owner on Zillow.

I just had a friend do this in another market. And within the first day, he was contacted by, I want to say it was about 15 or 16 wholesalers who wanted to buy his property. I get those calls on a weekly basis, Mike, on my cell phone. I don't know how to get my cell phone number. And there it is, Mo.

I mean, they're actually going out and soliciting and prospecting, whereas then you have the traditional real estate agents over here. They don't want to do that. So these wholesalers have stepped in, making those contacts, and they're getting more and more business because real estate agents aren't willing to prospect. So from the title company side, we've got to be able to service the market. So even though dealing with wholesalers are, I mean, it could be challenging with the changes of the purchase contract or negotiation and things along this line.

It's still a big segment of the market that's out there that you have to pay attention to. Let's step into your expertise in the real estate space. Last year was probably one of the worst years in real estate out of, is that 4 million transactions resale last year? I don't know what the numbers are this year. So can you just give us a little how bad last year was and what do you see coming in the forecast as far as the home resales?

And we all know Nubill are doing very great. They're doing awesome, but we're more interested in the resale. I think inflation is definitely an effect that is the wild card to the housing industry. As to can we get some looseness, regardless of who wins this election coming up in November, is inflation really going to start to have some correction? Because to your point, Mo, we had on the title side and brokerage side, we came through the pandemic.

Surprisingly enough, there was a big peak of business there through the pandemic that was had by a lot of foes. But then there was a massive crash in 2022. And then 2023 went down even further. And really, when you look at the national scale and things along this line, you've also got to pay attention to what the real numbers are telling you. Because we discovered a big fact that's not reported a lot of times.

A lot of times you'll have media and things report what's going on in a local community based upon what they're getting from the real estate association of that community. Not looking at the overall marketplace when you consider the investors that are also in the marketplace. And so what the anticipation is, this year is pretty flat, quite frankly, to what it was last year. So it's still not great. So fairly similar to last year?

Still not great. The one nice highlight of this year's market is you are seeing more listings coming on the market. Inventory is slowly but surely increasing. You're seeing an inventory comeback, which is providing buyers with more choices and things along this line. And you're seeing those sellers, they want to take advantage of the appreciation of how their property is appreciated.

In some markets, you've seen properties appreciate even though the overall sales volumes have been down. The properties are still appreciated 20, 30, 40 percent in a lot of marketplaces. So you've got, in particular, some empty nesters that are concerned, could this be the height of the marketplace and the property values are going to start to go down? And that's what's really driving some of this inventory to increase. But it's also, you're seeing an increase in some foreclosures coming back on the market.

That's the effect of employment and inflation. So what's the anticipation going into next year? I actually think it's going to be better. I mean, I think you are going to see interest rates start to come down because that's been a bad policy. And that will loosen it up some to where we will see some more people coming into the marketplace.

Do I think it's going to be up double digits, 10 percent in terms of overall close volume and things along this line? No. I mean, I think you'll probably see maybe in the neighborhood of a three to four percent range increase. It's not going to be anything dramatic, but it's going to be definitely a little bit more positive. As we're coming to a close here, do you have a favorite quote?

I'll give you one of them. Listen to learn. He says, listen to learn. That's probably the best one. But it's really understanding that no matter what's going on in the marketplace, it's people make a difference.

And as long as you are working with, treating people the way you want to be treating people. But it's gonna be definitely a little bit more positive. As we're coming to a close here, do you have a favorite quote? I'll give you one of them, listen to learn. That's probably the best one, but it's really understanding that no matter what's going on in the marketplace, it's people make a difference.

And as long as you're working with treating people the way you want to be treated, you're always gonna win. Because if you're willing, it comes back to that go-giver mentality. You give to others of your time, your resources, to help them make a difference, it'll eventually come back to you. The last question is, do you have a favorite book, or maybe a most recent book you read that you want to share with us? My probably biggest favorite book is Go-Giver.

That was one that I really identified with. It's been my philosophy in business of all the different businesses I've been involved in. That's probably the favorite book. In terms of reading a book here as of late, I've been listening to podcasts more. You've been listening to my podcast.

That's it, that's it. I listen to you all the time, and I love some of the guests you've had on here, and I'm honored that you asked me to be on here today with you. Because I think, as I said, everything you've got going on with Alltech National Title is about making a difference, not only for the customer, but what I really admire about how you've structured your business is it's about making a difference for the people who are part of that Alltech National team. You don't see that with a lot of leaders. I can't thank you enough.

That was tons and tons of nuggets and wisdom you shared with us. Well, thank you for tuning in to the Title Agents podcast. I hope our discussion with Mike Mann provided valuable insights into the NAR class action lawsuit and its potential impact on Title Agents. If you found this episode helpful, be sure to subscribe, leave a review, and share it with your network. Stay tuned for more expert interviews and industry updates.

Until next time, keep adapting, stay informed, and continue thriving in the title industry. Thank you, Mike. And that's a wrap on today's journey with Mo Shamil from the Title Agents podcast, reminding you that mastering the art of innovation is key in the title industry's fast-paced world. If you're finding it tough to keep up with the changes and challenges, remember, you're not alone. Our calendar is open for you.

Find the link in the show notes and let's connect. Make sure to hit subscribe to not miss out on strategies that elevate and insights that empower. Together, we'll navigate the future of the industry. I look forward to our next meeting in the upcoming episode. Keep pushing, keep innovating, and see you in the next episode.

Thank you.