NextHome CEO James Dwiggins on NAR settlement aftermath: ‘We’re in the first inning’

In a new episode of the Power House podcast, host Diego Sanchez chats with James Dwiggins, CEO and co-founder of NextHome and co-host of the “Real Estate Insiders Unfiltered” podcast.

During this conversation, the duo explore NextHome’s “humans over houses” philosophy and its referral-focused growth efforts. They also explore the National Association of Realtors‘ (NAR) commission lawsuit settlement, agent training deficiencies and more.

This interview has been edited for length and clarity. To start the conversation, Dwiggins explains what sets NextHome apart from other real estate franchises.

Sanchez: James, how do you differentiate NextHome from other national franchises?

Dwiggins: Since we started the company back in 2014, we were always looking to try and be a little bit different from the rest of the industry, in the sense of it wasn’t about having tons of agents. It was about the quality of the people who shared sort of the same vision for the industry. We have this saying in our company called “humans over houses.” That’s our sort of guiding principle.

Sanchez: Let’s talk about that growth trajectory. Typically, with franchise organizations, it’s all about the sales process and bringing on more franchises.

Dwiggins: Probably 40% of NextHome’s growth is from referrals. Somebody comes in, loves the culture, the company and how we operate. Then they mention other people that would be a great fit for the organization. We also don’t target large real estate offices. NextHome is one of the first to do virtual offices, not requiring people to have a brick-and-mortar location. Overall, there aren’t any requirements on the franchise, which allows us to tap into a different market than our competitors.

Sanchez: Could you give our audience kind of a “state of play” for real estate commissions and their impacts on the settlement?

Dwiggins: We’re in the first inning. I think that’s the most important thing for people to understand. Since Aug. 17, we’ve only had a few months to see how things have played out. There’s been multiple studies showing that compensation is starting to decrease — especially on the buyer’s agent side. We don’t know if agents are signing buyer representation agreements before they show property.

The lack of training and guidance by brokerages is horrible. They’re not teaching their people what the process is. As a result, if a seller is not offering compensation, the buyer and agent just move on.

Dwiggins also dives into industry issues surrounding the use of cooperative compensation in some of the forms.

Dwiggins: Those forms are created by a committee of competing brokerages, which is literally how we got into the lawsuit to begin with. Lawyers have even come out on two separate interviews and threatened to sue again. A lot of companies have banned that. But there’s still conflict happening against companies that do.

To close the conversation, Dwiggins explains his advocacy for keeping NAR’s Clear Cooperation Policy in place, with a slight change.

Dwiggins: I am a free market guy. But if you’re a member of an MLS, you have to follow the same rules as everybody else. You don’t get to pick and choose. If you have to put a property in the MLS within 24 to 48 hours, then you play by the same rules.