A wide variety of highly impactful changes could be coming to the real estate industry this year. Here are at least seven significant changes real estate business owners, entrepreneurs, and investors should be watching…

Realtor Commissions

Recent lawsuits have found that NAR has illegally colluded to artificially keep Realtor commissions high.

This will not only cause consumers to lose faith in Realtors, but also to put more downward pressure on their commissions.

TikTok to Tinder

This may be the year when advertisers finally realize that no one is really buying things on Tiktok. Marketing is everything, but ROI on marketing and labor is more important than ever. Some may find that they get better results on in person marketing offline or Tinder than wasting time on TikTok.

Employees Vs. Contractors

Strict new criteria is being rolled out for classifying employees versus independent contractors. Many real estate businesses may have to restructure how they hire and what they have team members do.

This comes right on the brink of the world’s largest freelancer platform Upwork looking like it will implode after a string of terrible decisions that have burned their best customers.

New rules around employees and contractors mean that few will want to or can afford to risk even hiring remote workers in places like California or New York.

The Real Jump In Inflation May Be Coming

Consumer prices are still astronomically high, and growing. Though, recent and current events from new regulations to conflicts in the Middle East, and interruptions of shipping paths could create a new round of hyper inflation that is even more significant than post-COVID. If shipping and import costs are quadrupling right now, what will that mean for consumer prices in the next couple months?

The Next Phase Of Migration

We recently experienced huge shifts in companies and residents from places like NY to NJ and FL. That is now triggering a new round of migration from these states to new destinations like AL, SC, and OH. Some media outlets have also posed that the new American Dream is now to leave America for better lifestyles elsewhere abroad.

We’ve also recently seen more than one proposal to open up the use and sale of public lands to foreign entities and migrants.

Property Prices

While some see inflation continuing to lift property prices, other investment industry veterans expect $1T in debt defaults, and prices to fall by 50% or more over the next year or two.

Small price cuts are no longer cutting it. It has to be a complete no brainer with an existing exit at a steal of a deal price to attract solid offers and buyers.

The Middle Class Is Gone

Inflation and a weakening job market leave only room for the highly paid tech elite or the welfare class on food stamps to survive. Consider how you can serve these groups in order to keep business flowing this year.

The bottom line is that real estate investors, entrepreneurs, and business owners will have to do things differently, find new groups to serve with new proposals, and price deals differently this year. Yet, this all means immense opportunity for those who are flexible and get ahead of the curve.

A new court ruling has found that the National Association of Realtors has illegally kept real estate commissions inflated.

This verdict could dramatically alter the US real estate industry, in far more ways than many imagine.

Are Realtor commissions too high? How will this change the model of how properties are bought and sold in America? What does it mean for property investors?

Are Realtor Commissions Worth It?

This particular case in Missouri resulted in $1.8B in damages being awarded. This follows on from other lawsuits and settlements against individual brokerages, and several years of Justice Department investigations.

The main issue publicly centers around NAR having illegally colluded to keep commissions up at 5-6%.

An issue made extra ironic as it is supposed to be the organization that upholds ethics in the industry, and add credibility to agent members. Not detract from them.

Of course, when you really do the math on what Realtors net in a transaction, and how hard they work, many may be barely scraping in a minimum wage income.

Between privacy, efficiency, and negotiation benefits, the best real estate agents do offer great value. They certainly aren’t overpaid. Yet, gross commissions can be expensive, and eat away at your net as an investor.

Changing The Way The Industry Works

This is much bigger than just making NAR irrelevant or slashing Realtor commissions.

Coverage by Bloomberg cites a push towards the UK and Australian models, where commissions are much lower. Of course, this may come with many unintended consequences.

Often overseas there are no agent licensing requirements. Agents get their own listings, and do not cooperate or share commissions with buyer agents.

In turn, consumers have no one protecting their interests. Living and housing costs are dramatically higher. Homeownership is prohibitive in terms of access and expense. Investors abroad prize the current US model, as their local options are normally wealth preservation with very low yields or negative cash flow rentals. This model would erode our national advantage, and would hurt individuals far more than most imagine.

For Real Estate Investors

First, if you’ve been debating becoming a real estate agent before investing, don’t. Skip the costs, time, and going into a contracting industry.

You may still find great value in using real estate agents. You may also find the ability to negotiate better deals on commissions going forward.

This, in addition to end investors having to get used to lower yields, and negative cash flow, can mean a lot more profit for real estate wholesalers.

Now is the time to make your push, as those who control the inventory, will control the market.

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