Tom Ferry is real estate’s #1 educator, and he and his staff are coaching realtors around the world. He was gracious enough to allow me to run his latest video below, where he discusses the developing trends in the business:
Right off the bat, he mentions Commission Compression, and that he thinks 60% of the agents will soon be discounters.
I totally agree, and would like to expand on that point.
We’re not talking about the agent who shaves a half-point to bring a buyer and seller together. Instead, it’s those who are ‘buying the business’ – the agents who advertise their reduced commission rate to attract new clients.
In the internet age (where you can get pretty much any product you want with a couple of clicks), the consumer’s investigation time tends to be much quicker – and less thorough, especially in the house-selling business that is loaded down with pre-conceived ideas about how it works.
Will consumers be more thorough about investigating agents?
They haven’t been, and it’s doubtful that will change now.
Discounters could blame the consumers – people want a discounted rate! But regardless of the commission rate, agents have a fiduciary duty to the sellers to explain the whole picture.
We already saw last week that the NBER guys think there is a conspiracy by other agents about not showing homes with discounted commissions. Not mentioned was whether those listings agents who openly advertise their discounts are despised by others in the industry.
In the haste to hire an agent – or to get hired – the fiduciary duty to explain the benefits and burdens to the seller will likely get trampled.
Click below for more Tom Ferry videos and blog – which are fantastic for realtors (I’m not a TF client):
Using the term “discounting” is misleading. What these agents are doing is simply “meeting the market”. Do you consider Dell to be a discounter? Computers are a hell of lot cheaper (and more powerful) than they used to be. No. Dell is just pricing their computers to the new reality of the market. If they stuck with their old pricing, they’d be out of business because HP would eat their lunch. In the not too distant future, it would not surprise me if they were two types of agents: discount agents and unemployed agents.
Insert ‘lazy’ for discounting.
My beef is that sellers deserve to hear all options, and make a well-informed decision.
Yes, there are agents who claim to deliver full service for less, but they are oblivious to, or ignore the prejudice inflicted upon them by the rest of the industry – for which the seller pays.