The Real Threat to Real Estate Agents Is W2 Designation 

As the CEO of, I have been following the discussions around the future of the US real estate industry with great interest. There is no doubt that changes are coming, but I believe that the real threat to the industry is not technology, as some may suggest. Instead, the biggest challenge will be the legal battle surrounding the classification of real estate agents.

Currently, most agents are classified as independent contractors, but this exemption is based on the lobbying power of the National Association of Realtors. If the government forces agents to become W2 employees, they will be entitled to a minimum wage of $7.25 per hour or $15,000 per year. However, given the current trend towards a living wage, this minimum is likely to increase significantly.

If agents are paid a livable wage, brokers will struggle to keep them on as 1099 contractors. They will need to sell at least five transaction sides per year to pass break-even for the cost of the base and around 12 transaction sides per year to remain employed. With a hovering recession, this will be difficult for many agents, especially those who lack the necessary skills.

The result will be massive layoffs of low producing agents who entered the market during the boom, as well as producers who are content selling six homes a year. This will leave the industry struggling to staff desks and phones and complete repetitive tasks that were previously taken care of by entry-level 1099 agents.

This is where technology comes in. Real estate brands, teams, and brokers will have to reduce costs and will inevitably turn to technology to do more of the tedious, monotonous work.

However, there are risks involved with using technology, and it's important to be cautious when choosing the right tools. It's vital to choose providers that has been thoroughly tested and proven to be reliable. Some of the large industry trade shows may be jammed with new and untested tools that promise to be the all-in-one, but failure is always an option.

The legal battle surrounding the classification of real estate agents is arguably the biggest challenge facing the industry in the coming years. Brokers will need to find ways to reduce costs, and technology will undoubtedly play a significant role in this process. It's therefore crucial to choose tools carefully to ensure they are reliable and trustworthy.


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