At Inman Connect Las Vegas, July 30-Aug. 1 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
Ben Belack has been in real estate for more than a decade and is a seasoned team leader of one of the top teams in Beverly Hills, the Ben Belack Group. The director of residential estates at The Agency also has a background in marketing and hospitality, which has spurred him to put service always at the forefront of his real estate business.
Some may see Belack as just another big personality on Netflix’s Buying Beverly Hills, which stars founder Mauricio Umansky and other agents from The Agency, but he is also passionate about helping agents learn the ins and outs of the industry, he told Inman, which is one reason he decided to form a team.
In an off-the-cuff conversation fueled by Belack’s current energy drink of choice, Celsius (“I’m fired up,” he said, pausing briefly after a rapid-fire market analysis), Belack shared his thoughts on topics like crime and home insurance in LA’s market, Gwyneth Paltrow’s “fantastic” house for sale and his big plans for Las Vegas in July, in addition to speaking at Inman Connect.
Here’s what he had to say, edited for brevity and clarity.
Inman: What’s the most pressing thing you’re dealing with in LA’s luxury market right now?
Ben Belack: The founder of Oakley just sold his property for $210 million in Malibu. The $200 million purchase that Jay-Z and Beyoncé made in Malibu was our record before that. So, pedigree properties are still trading. Aspirational pricing is not working. In a way, it’s like a tale of two markets: The homes that aren’t priced well are languishing on the market, but the stuff that is priced well, they are finding their way to closing.
We still don’t have inventory. On a nationwide scale, including Los Angeles, people have healthy mortgages. We’re at an extremely low level of mortgage delinquency, so it’s not going to create an influx of inventory. With interest rates getting a little bit of relief, I have a feeling it’s probably going to get crazy again, sooner than people want. I think the people who have been waiting on the sidelines, hoping for a correction, they’re now faced with, ‘OK, I continue to put my life change on hold and not buy a house … How long am I going to keep waiting to spend more money for less house?’
We definitely have an inventory shortage in LA. We’re not like other metropolitan cities that have vertical inventory. We’re a city of houses mostly. So inherently, we have fewer homes. [The city is] doing lot of things to try to unlock affordable housing — it’s just in small, little pieces and I don’t know that it’s moving the needle.
In addition to these market factors, you and your team are also, I’m sure, dealing with transitions in the industry that everyone is dealing with right now, including signing buyer-broker agreements. As a team leader, what are you telling agents on your team right now to get through this time of transition?
The market within that has not taken shape yet because the new rules have not been established. What I can say is, we’re mostly hearing questions for clarification from the sellers. I’ll go into a listing appointment, and they’re like, ‘So we don’t have to pay a buyer’s commission anymore, right?’ because of what they’re pulling from clickbait headlines. ‘The 6 percent commission is over.’ So I had someone ask me that, and shortly thereafter, he signed a standard 5 percent agreement.
Because the rules haven’t taken effect and they’re not going to take effect until August, it’s been business as usual for us. I have heard for a few listings that are very, very, very high up in price that the business manager said, ‘If you want this listing, there is no buyer [agent] commission.’
Wow.
So the thing is, while that may be kind of clickbait-y as a headline, that’s not going to last. I think the problem, in general, is that consumers think we just open up houses. I think what they forgot was, when a property is in multiple offers and all these buyers are considering spending a lot of money over the asking price, which is something we don’t do in any other place except buying our most expensive asset … It’s the buyer’s agent that gets the buyer over the finish line, and the reason for that is because the seller’s agent is always going to be [considered] less reliable in a buyer’s eyes because they know that that’s an advocate for the seller …
It’s the buyer’s agent who turns to [the buyer] and says, ‘This is worth $50,000 over the asking price.’ I was pulling comps yesterday for a $1.5 million listing. Someone priced the property for $999,000 and it sold for $1.5 million. That’s a buyer’s agent saying, ‘Hey, this is OK.’
So if we take the buyer’s agent out, and we will be taking them out if they can’t finance agents’ fees, we’re getting into a very sticky place.
I mean, we can’t just have attorneys who aren’t in the field doing paperwork. We have to be able to navigate through mileage and experience, what the condition of the roof means from the roof inspector who also gets paid to build new roofs. It’s just really crazy.
Another thing I will say about the settlement is, they didn’t want us steering … but we had an industry standard. Everyone was either making, generally speaking, 2 [percent] to 2.5 [percent] to 3 percent on the buy-side. So when you’re searching for properties, you never look at cooperating broker compensation because it’s an industry standard. Why look? But now, if someone’s driving [a client] around here, not only are they forced to look, but since it’s not advertised on the MLS, they’re forced to call the agent and say, ‘How much is the compensation?’ And that person who gets no benefits, no leads, is actually paying the firm (many firms have affiliation costs, especially the high-end brands) …
And now almost 50 percent of real estate agents across the country did one deal or less last year. They’ve got to feed their family and kids. We can’t work for free. So if we can’t finance it, and everything’s super expensive by nature of low inventory, having to pay a broker cash puts pressure on your reserves, and that broker commission may be the difference between you getting the house or not. You know what I mean? Because you won’t have enough money at the closing table for the required reserves.
Yeah, I see what you mean.
We’ll see though — it may just be the way that we advertise, the market may not change. We have to see what happens. I think there’s going to be some commission compression, but there may not be … When the market was slow, or like when they were desperate to sell before Measure ULA took effect, they were like giving away cars. Or [saying], ‘We’re going to pay 5 percent or 5.5 percent to the buyers as a bonus for ULA.’
So if market conditions are such that they’re having trouble because interest rates are higher or the house has been on the market for a while, I think we’ll still see normal compensation requirements to incentivize people to usher their clients to finish.
What kinds of trends are you seeing in LA homebuyers and sellers this summer?
We are very understaffed by our police, and because of that, crime has really ticked up in Los Angeles. There were a lot of people, particularly those looking for a more family-driven format of a house, that would have never moved above Sunset Boulevard. [Now,] they are retreating north of Sunset. Not that there isn’t crime up here, because there is, but it’s much harder to do a smash-and-grab here. And that’s where I live, up in the Hollywood Hills.
It’s a little tougher to do a smash-and-grab up here than it is in, like, the Flats, where you can quickly go to different roadways and things. So I think we are seeing people really want to get away from, even like my old neighborhood [of Beverly Grove], which I would argue was the best walkable neighborhood in Los Angeles, but I couldn’t wait to get out of there because of, sadly, the crime and homelessness. I was burglarized there, which was really sad and extremely jarring.
I also think that as the Earth continues to heat up and we have these crazy heat waves and crazy weather, there are a couple of things that are happening. People are more wary of the costs of and capability of insurability. We’ve had big people, like State Farm, leave California. That’s a big deal. And they’re making it tough on car insurance and everything here.
When you go out and look, it’s not that they’re being the evil insurance companies that you read about in Instagram posts … it’s because we have such a bad response to it from a municipal level that the insurance companies don’t want to lose everything.
So everyone thinks, ‘Oh they took all our money and they’re out of here.’ With insurance companies, part of their model is saying, ‘What is the infrastructure? So if something bad does happen, how exposed are we because of how much support [the government gives]’ — I just think they feel like they’re not getting support from our municipalities.
What I would also say is, as the Earth continues to heat up, I feel like people are moving to the west side of Los Angeles, which is why we’re seeing these giant records. Before, the big spenders were really spending in Bel Air and Beverly Hills. The Flats of Beverly Hills is incredibly exposed. These houses that trade for $15 million to $30 million, you can walk right up to the front door. So I think people are trying to get some separation.
It’s also getting so high [priced] now — we just saw a $210 million sale in Malibu — if you’re an Angelino, and you commit to Malibu, it’s very far away from the rest of civilization. It’s almost like, if you’re there, you’re staying there because while it may be about 20 miles from my house in the Hollywood Hills, it takes me an hour and 10 minutes to get to Malibu. That’s crazy.
But I think because our coastal cities are cooler from a temperature standpoint, I think we’re getting more people going big on the west side, and what I mean by that is Brentwood, the Palisades, the $210 million sale [in Malibu], Kendrick Lamar just spent $40 million on a house in Mandeville, which is on the border of Brentwood and the Palisades. And Gwyneth Paltrow is selling her house [in Brentwood] for $30 million.
I actually went and saw it — it was fantastic.
The photos I saw looked nice — I’m glad it’s actually nice in person, too.
I actually showed it to a client. It was fantastic. I almost brought my girlfriend to be like, ‘She’s my assistant,’ but I’m happy I didn’t because the expectations on me would have just become too high.
Haha!
I’m telling you, this place was like perfection, but also a little bit of — what’s the word — like OCD. There wasn’t a thing out of place. So it was fantastic.
Good to know. This is all super interesting. In closing, is there anything in particular you’re excited about for Inman Connect Las Vegas in July?
Inman-related or Vegas-related?
Either.
Well, I’m pumped because I’m staying an extra day; we’re going to go see Dead & Company at The Sphere.
OK, nice.
I’ll probably eat some mushrooms [laughs].
So, the truth is, I really, really like helping agents and I generally have an opinion and am not afraid to voice a prediction or my feelings from the trenches. I am predominantly a listing agent, I personally only work with a few buyers, even though my team works with buyers, and I built my business from scratch because I’m not from [LA]. So with that, I prospect a lot, so I hear what people are saying. So I’m excited to share my perspective in whatever I’m tasked to do [at ICLV].
And I think probably part of the reason why I’ve been invited to come to Inman [Connect], aside from [my role on] Buying Beverly Hills, is I’ve been putting out so much educational content for a while just to help agents. I think creating a team probably wasn’t the most lucrative choice of my career, but I do get a lot of personal fulfillment from helping agents navigate things, because there really is no curriculum.
So I’m excited to be a part of that piece of Inman, whatever that means. If there’s one agent there who takes away something from me and then goes and gets a listing from it, or they get a price reduction, that’s what’s exciting to me.
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