The part that disrupters overlook is that the people doing the work need to be really good at advising and transacting real estate sales. It’s not as easy as it looks!
Real estate brokerage REX Homes became famous in recent years for spearheading an anti-trust lawsuit against Zillow and the National Association of Realtors, accusing them of being a ‘cartel’ to edge out non-MLS participants. But it appears that as of today, the company may no longer be in existence.
Numerous staff reached out to us directly to indicate the company’s last day was Tuesday and that a companywide call on Friday outlined the end of REX Homes.
Staff at the Austin and The Woodlands offices (both in Texas) have confirmed that as of today, the doors are literally closed. It is unclear what REX’s plans are for wrapping up any current contracts that haven’t closed.
The company’s website remains live with no notification of any service interruptions and there have been no changes to the faces that appear on the staffing page.
Many Glassdoor users have begun leaving reviews asserting that operations have ceased. To thicken the mystery, we’ve already seen several recent reviews disappear, but it is unclear if that is Glassdoor or REX’s doing.
Several LinkedIn users formerly employed at REX Homes are putting their #OpenToNetwork signs up, stating the company has closed – some indicate departments dissolving, others that the entire company has collapsed.
More people continue to get their real estate license.
It looks like there have been around 8,000 new licensees in each of the last 2-3 quarters! There are somewhere between 15,000 and 20,000 dues-paying realtors already in San Diego County, and last month there were 3,198 residential sales on the MLS…..for the whole county!
I think that their doomy author has been misreading the market for years, but if you are thinking about becoming a realtor, believe their nonsense and don’t bother – there is not enough business to go around.
A remarkable achievement considering that Compass has only been a nationwide company for 3-4 years.
It will matter more later too.
CoStar is going to change the search-portal landscape, and if they spend enough advertising money to get all the eyeballs, the buyer-agents will be cooked. Unlike Zillow and Redfin who encourage viewers to contact their own set of agents, CoStar will direct people back to the listing agent of each property.
You can imagine the advertising that could change everything:
“Would you rather be represented by a third-party who doesn’t know a thing about the house in question, or do you want to speak to the listing agent who knows everything about the property – including how to get you the best deal?”
CoStar got a head start when they boughthomes.com, and are rolling out their first version this summer in New York City.
Buyer-agents will be forced to join realtor teams who have the listings, or just fade away.
Who has Compass been recruiting for the last four years? That’s right, the realtor teams.
This week, the Wall Street Journal ran a story entitled, ‘How Should Realtors Get Paid’.
The author is a general freelance writer who describes herself as ‘a versatile writer with experience covering a wide range of topics. As a freelancer I contribute regularly to the Wall Street Journal, writing about personal finance, healthcare, aging and technological innovation’. Because she isn’t a real estate expert, she relied on three college professors for content:
They went off on some crazy tangents and no realistic conclusions were found, other than to note that there are discount brokers if you want to pay less.
Would you do your job for the same pay if these were part of your job description:
You invest your own time and money along the way.
You don’t know when/if you will get paid, and….
You don’t control the final decisions – the clients do.
There should be a hefty bonus for those factors.
That being said, I would agree that the majority of realtors are grossly overpaid, relative to the services provided.
I see it every day, and if you go to open houses, you’ll see it too. The standard agent knows how to identify each room (this is the kitchen, this is the family room, etc.) and then ask you if you have any questions. Most can complete the fill-in-the-blank contracts too.
But they aren’t professional salespeople who can deliver expert advice on the fly, recognize good and bad features and assign costs/values on the fly, and put the correct price on a home based on the complete package of home’s condition and location, market conditions, and buyer pool….on the fly. Those are the realtors that deserve full compensation because the piece of mind delivered is worth extra. It is a service that is more than just taking an order.
Unfortunately, the order-takers are prevailing though, because consumers don’t know the difference and we all get paid the same. The industry isn’t motivated to disclose this to consumers because they get paid more on the lousy/inexperienced agents, so it will be up to consumers to seek out the experts in a quickie, push-button world.
Eventually, companies like Zillow will determine the values, and consumers will decide if they can live with that. Most will – it is what they are being fed by the new-age disrupters who are advertising the most. It should be just a matter of time before they prevail, and the old guard packs it up.
There will be lower costs eventually, and virtually no good help.
One more thought about the extinction of buyer-agents.
There are many variables that point to the demise of the two-agent system that has prevailed for 100+ years. The coming changes should roll out over the next 12 months too – how exciting!
What’s already happened:
Buyer-agents can no longer tell buyers that they work for free, when paid by the seller.
Buyer-agent commissions are advertised on the search portals.
The DOJ/FTC directs realtors to ‘de-couple’ commissions, and buyers pay their agents, instead of sellers.
Buyers will think they won’t have to pay a commission by going direct to the listing agents.
CoStar develops and advertises the Broker Public Portal, whose stated goal is to advertise listings and send all buyer inquiries back to the listing agent, instead of a third-party.
Realtors will sell their listings directly to those inquiring buyers.
The traditional buyer-agents get cut out of the loop, which then also means the MLS isn’t needed either. Then today’s search portals break down because they aren’t getting the listing feeds from the 600+ MLS companies around the country.
Because it is dual agency when buyers go direct to the listing agent, there will be a semblance of buyer representation, so commission rates won’t change much – even though buyers will mostly be on their own. Whether the consumers recognize the benefits of having their own representation won’t matter. They just want to buy a house, so the companies that spend the most money on advertising with win their business.
Any disrupter could win the game if they spend enough money. Zillow was spending more than $100 million per year in advertising to become #1, and it worked.
In the link below, Joe says that CoStar is going to spend a couple of hundred million dollars on consumer advertising to compete with Zillow. You can imagine their advertising:
Want to know about a property? Click here to contact the listing agent directly!
Joe lays it all out here, starting at the 17-minute mark:
I screwed up the national rankings the other day. Donna sent me that clip but it was the 2020 list, not from last year. Anyway, who cares about the national – real estate is local!
In just 3+ years, Compass has become the dominant real estate brokerage in San Diego County, and it’s not close. Even if you add the two CBs together, our volume last year was almost double any other brokerage.
How will this affect consumers in the future?
As buyer-agents are phased out over the next 1-2 years (and it could happen sooner), there won’t be a need for the MLS. Inputting our listings onto Zillow will become voluntary, and only used if the homes can’t be sold in-house.
It will be just like the commercial side of real estate, where all the good deals are kept in-house, and only when they don’t sell, are the listings inputted onto LoopNet.