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Anyone who has been to an Inman Connect event knows Katie Kossev at this point.
The managing broker of Texas at Side, Kossev is an industry fixture who has moderated more panel discussions than anyone can count. In addition, she has years of experience both closing deals and leading other pros.
Katie Kossev
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Next month, Kossev will take the stage at Inman Connect Austin. In advance of her appearance at the event, she sat down with Inman to talk luxury, new rules and the state of the industry. The takeaway from this conversation was that consumers at the higher end of the income spectrum seem to be adapting to the new normal. They understand the value of paying agents and are even doing so a la carte in some cases.
However, Kossev also said that more broadly, there is “mass confusion” in the industry as agents grapple with the National Association of Realtors’ new, commission lawsuit-prompted rules. And she urged real estate professionals to come together to find solutions.
What follows is a version of Inman’s conversation with Kossev that has been edited for length and clarity.
Inman: You’re going to be moderating discussions on luxury at Connect Austin. Talk to me about what we’re seeing in that segment of the market.
Katie Kossev: I would say there are two ways we could answer that question. First, the expectation of a luxury buyer has increased so much with different finishes and technology and things that can be placed inside of a home. So it’s not necessarily a large footprint of a house; it’s more so what are these types of finishes that are being installed in the house.
Something that I also see trending, in regards to [the National Association of Realtors] and the new normal of what we’re all dealing with, is less pushback from [luxury] buyers and sellers regarding these changes, as opposed to a first-time buyer or someone of a medium income. Because a lot of them are entrepreneurs, business owners, and they have a great understanding of what buyers’ agents are doing and the fact that they should be compensated for that work.
That’s a lovely thing to see from a buyer, which is not the conversation that is happening with a lot of first-time buyers.
I’m curious if these higher-end buyers, are they paying for their buyer’s agents out of pocket or are they tending to find listings where the sellers are still offering commissions?
Each state association and some MLSs and some brokerages have created their forms and there’s still a ton of confusion around what’s what. But for the most part, it seems a lot of these new buyer agreements are stating, “Hey, you can pay me for services to just show you. And then if you decide you would like to actually purchase with me, we can evolve this relationship by you signing a full-service buyer agreement with me.”
I see that happening or being most relevant in second-home markets. Like they’re buying in Aspen. Or they’re going to Florida to buy a second home. And they’re maybe not ready yet, so for now they understand that they want to compensate this human being who’s picking them up from the airport and showing them houses.
So are they using an a la carte type of model here?
Yeah. A lot of states have that option on the buyer agreements now. So it’s basically, I guess the most general term would be, showing services.
I do not like this, by the way. I am not a fan of this idea whatsoever. It opens up a ton of liability. But there are a lot of brokerages that are huge fans of it because people are like, “Hey, there are too many situations that I find myself in where I have shown someone for a year and I haven’t been compensated at all.”
Talk to me specifically about luxury foreign buyers. Are we seeing more or fewer than we have in the past?
I definitely think that we are seeing more, depending on what part of the country that you live in. Texas is appreciating like crazy because so many people want to be here.
Any advice to folks who might want to work more with foreign buyers?
My advice is to understand the culture. Become more involved in organizations where they can meet these foreign buyers. And above all else, rubbing shoulders, networking, things that we’ve done in the past.
Really dive in. How can you bring value to people? What do they need when they move to the United States? What are they looking for as a culture from where they came from? And that could be increased privacy, security and so on. Or, you know, just increase the level of service that you’re providing and really understand what they’re looking for.
So it’s beyond just, “Oh, let me get into the groups and into the clubs that they’re in.” It’s really understanding what they need. And that’s when they will continue to come to you and refer business to you.
I know we’ve been talking about luxury, but I want to pivot a little bit. Talk to me about what you’re seeing in the wake of the new NAR rules, not just with luxury but with the broader industry.
I’ve had the opportunity as a broker to dive a hundred percent into these changes and how to mentor and guide our agents. With that being said, there is mass confusion across the industry from a brokerage standpoint on compensation agreements [and] on how to complete them correctly.
Different brokerages are giving different advice. So we are living in a time where any broker or mentor at a brokerage needs to really dive in on teaching their agents to work together right now. Work together across brokerage lines to say, “Hey, let’s work together because both of us or one of us doesn’t have a really great understanding of what this looks like. And I understand what you’re trying to accomplish, but maybe these forms are not completed correctly.”
We’re here to work on behalf of our client in their best interest. But right now people are so confused. The verbiage used in a lot of our forms is incredibly confusing. And then you have some brokerages saying no more sharing of compensation. We’re not doing it anymore. Which by the way, I love. I think that is a fantastic idea.
A seller has a lot of different options. They should know their options, but the way these forms are written, it’s just causing immense confusion. So I’m interested to see what happens by next year.
Right now the biggest challenge is for real estate agents to discuss these changes with buyers and sellers in a way that they can understand without overcomplicating it. Because the whole point was more transparency. And right now I think that we are living in a world where we are confusing people more than anything else. And that is not what we’re here to do.
Do you think this gets resolved via brokerages and MLSs rolling out guidance? Or is there a bigger, broader solution?
I think we are all rolling out guidance individually. I mean, it’s like the Super Bowl of brokers right now. Honestly, we’re getting calls all day long because of the mass confusion. So unless brokers get together and huddle in some huge arena and discuss what’s going on, it’s just not going to happen. So it’s going to need to come from a higher level than all of us.
I feel like Aug. 17 came and everybody was trained up pretty well. But we’ll see another wave of dilemma in about 30, 60, 90 days as deals start to close post-Aug. 17 because there’s been some confusion with these compensation agreements.
I just had my first one. I won’t get into details, but the buyer’s broker didn’t get a compensation agreement, period. And there is a closing and the buyer agency agreement is none of my business because we’re the listing broker. But I’m fairly certain he wasn’t compensated for his work because he neglected to have that agreement signed.
So as we move through these waves of trying to figure out this new normal, we will all kind of get into a groove where we have a better understanding. But for now, like the next month or so, it’s really about working together as an industry to make sure everybody understands and comes together so we can represent the clients to the best of our ability.
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