Mark McLaughlin: Client trust is all that matters — all else is ‘noise’

During his more than three decades in the real estate industry, Mark McLaughlin has seen it all.

The former Pacific Union International CEO joined Compass in 2018, in tandem with the acquisition of his brokerage, as president of Compass California. In 2021, he decided to step away from Compass to focus on his real estate advisory company, McLaughlin Ventures.

But two years later, the brokerage reeled him back in — in July, McLaughlin rejoined Compass as chief real estate strategist.

In a recent conversation with Inman, McLaughlin shared some of the highlights of what he will discuss with Compass agents. What follows is a lightly edited and condensed version of that conversation.

Inman: Are Compass agents coming to you for advice or recommendations now, in the wake of this Sitzer | Burnett decision that recently came down? Are agents nervous? What have you been hearing?

So we brought our observations of not the legal and not the financial impact of the Halloween verdict, but the practical nature of it. Like, what does it mean to you as a real estate professional in a practical way? And we had been working on this for probably 10 weeks, and the day the verdict was out, 48 hours later, we scheduled two different webinars. And I think we had somewhere in the neighborhood of 9,000 people on the first one and 4,000 on the second one.

So half of our audience, half of our client base (our real estate professionals) were completely briefed on what behaviorally is going to change within 48 hours of the verdict. And the behavioral changes are really comforting once you understand them. And so I think what we delivered was a sense of calm and a sense of confidence that everything’s gonna be okay.

I’m sure that was appreciated.

Yeah. So the things that are going to [change] … it’s going to become far more obvious to the consumers who are in the market that commissions are negotiable. Now, they’ve always been negotiable, but it’s just going to become relatively more obvious. For the consumers who aren’t in the market, they don’t even know what’s going on, right? There are only 8 million people a year — 4,000 trades this year and a person on each side — maybe there are only 6 million people out of 120 million homeowners that are even in the market right now. So that’s going to be item No. 1, is that for those in the market, they’re going to know that their fees are negotiable.

The second thing that’s going to happen is that the transparency into who paid what is going to be much more pronounced on the closing statement. And what that means on a practical basis is — let’s say you hired me to sell your home. And my brother grew up with you and he’s a real estate professional, and he referred you to me.

Well, on the closing statement, there’s gonna be a fee paid to me at Compass and there’s going to be a fee paid to him at Coldwell Banker (or his own brokerage) and then what Compass got paid and what I got paid. But if Zillow generated a lead to me to sell your house, Zillow is going to be on the closing statement. And the consumer is going to turn around and say, “What does Zillow have to do with this?”

So all the lead gen companies that are in the business, and nobody really knows this, are going to be evident to the consumer now. Is the consumer going to get to object at that point? No. If I’m your real estate professional, and I got you as a lead today and my first call to you is, ‘Hey, I want to get to know you and help show you some property’ and things like that, am I gonna say to you at that point in time, “Oh, by the way, I got my lead from Zillow, and now I’m gonna pay them 35 percent after you closed the deal?”

No, that would be so awkward, right? Now, it might come to the time where, “Okay, we’re gonna make an offer and you just need to know that I was referred to you by Zillow, or by my brother, and if the deal does close, you’re going to see that he’s going to get paid.” That might be a little less awkward.

So when you think about 2024 and all of these things that agents have to face — and even more things that we haven’t discussed already — what do you think the biggest challenge will be for agents this year?

I think ’24 is going to be a year much like ’23, which are years like 2009 and 2010 in terms of units sold, and it’s been a tough year. I think next year will be tough as well. We might see some attrition in the ranks of real estate professionals in the United States. But, when I talk to agents and I say, “Are you having your best year ever or has it been one of your more challenging?” they say, “Oh, my God, this has been so challenging.” And I put up a graph of the number of homes sold in the United States, and it’s down to 2009. We’re back in 2009. And nobody really wants to go back there.

The difference is that housing prices have remained really strong. I don’t know what the national average is [right now], but I’ll bet it’s a 2 percent to 4 percent appreciation once we get through 2023.

This article was written by Lillian Dickerson from Inman News and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to [email protected].