Broker-owner suggests way forward in light of NAR settlement
The relationship between mortgage brokers and realtor partners has always been an important one, driving referrals and helping both keep business coming in through the door. But is that partnership set to fundamentally change in the months and years ahead?
While real estate agents typically provide a steady pipeline for brokers in a purchase-heavy environment, a potential thinning out of the realtor profession looking ahead means brokers may have to pivot away from that reliance, according to a California-based broker-owner.
Amir Nurani (pictured top), of Left Coast Leaders, told Mortgage Professional America that factors including a recent landmark National Association of Realtors (NAR) settlement – which abandons upfront offers dictating fees for buyers’ agents – could create “severe attrition” in the real estate sector and whittle down the number of realtors across the country.
When purchase activity is strong, brokerages often switch to focusing on that business type and developing relationships with real estate agents. “That has historically worked. It still works today. It’s not going to work tomorrow,” Nurani said. “Right now, we’re in a cycle where we’re going to see rates start coming down so we can experience a refinance market – so that’s great. It doesn’t involve real estate agents.
“When the market turns back the other way and rates start going up again, companies that have historically focused on a flagship approach of cultivating real estate agent business are going to run into hardship and the reason being is there’s going to be fewer realtors in the market – because they’re going to be making less money as a result of the NAR settlement.”
What impact will the NAR settlement have on broker-realtor ties?
NAR struck a highly publicized $418 million agreement in March to resolve litigation tied to real estate broker commissions, a deal that meant broker compensation offers could not be offered through the MLS but rather would be an option for consumers to negotiate directly with real estate professionals.
The prospect of a resulting exodus from the real estate sector, according to Nurani, means mortgage brokers can no longer afford not to build a consumer-direct model, one that bypasses real estate agents and focuses immediately on the borrower.
Part of the reason for that is the effort and care that need to be put into developing those structures. “It takes time. It takes mistakes,” he said. “You have to learn from those mistakes – and it’s not a light switch that you just hit overnight.
Mortgage applications fell for the week ending July 19, even as refinancing activity increased due to lower interest rates, according to the latest data from the Mortgage Bankers Association (MBA).
— Mortgage Professional America Magazine (@MPAMagazineUS) July 25, 2024
Read more: https://t.co/zmGBktVEHA
“You have an environment right now where rates come down, everybody makes a little bit more money and more revenue. It’s a great opportunity to start building out that infrastructure so the next time in about four years – about the average cycle – when we start seeing rates go up again, these brokers will be prepared and ready to attack the market without having to lean on real estate agents to generate business for them.”
Nurani immediately focused on the consumer-direct model upon launching Left Coast in 2022, tailoring the company’s marketing, systems, and infrastructure to get to the consumer first.
AIME to the fore in helping build business
Having spent a decade in the private lending ecosystem before returning to the broker side – where he had cut his teeth in the mortgage space – he found the Association of Independent Mortgage Experts (AIME) to be a key ally in helping grow and build his business.
With Left Coast having thrived since its foundation despite the down market, Nurani said AIME’s Brokers are Better page had proven an invaluable asset, with the association’s FUSE events also a huge hit.
AIME, he said, had been “pivotal” in his and his company’s growth. “One of the challenges about being a broker versus working inside of a large conglomerate is you’re almost feeling like you’re isolated,” he explained. “You’re not part of these huge corporate machines where you could just go into somebody’s office to ask a question.
“So oftentimes, AIME’s platforms have allowed me to get the education that I need in the areas where I have gaps, and it’s a seamless process because of how inclusive that environment is.”
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