Moving Towards Single Agency

It’s been obvious that the entire real-estate-selling business has been deteriorating towards single agency. I see it every day on the street, and I’ve posted evidence of the shift regularly.

The trend is moving quickly now on multiple fronts.

The DOJ is going to decouple commissions, which will prohibit sellers from offering to pay the buyer’s agent. The buyers can include it in their offer, but it likely won’t get that far. The buyer-agents who are left will want a written agreement to get paid by the buyer if the seller won’t pay. How many agents will be able to demonstrate why they are worth it? Not many, but maybe the buyers won’t ask too many questions.

Homes.com is spending millions and billions on advertising their website to compete with Zillow. Their twist? They funnel all the leads back to the listing agent, instead of farming them out to the highest bidders like Zillow does. I’ve been called by several phone jockeys from Homes.com to sign up for their enhanced listing packages, and I’ll sign up. Robert Reffkin responded positively to the Homes.com program, and you can see how Gary Keller feels about it above.

Agents are giving up on representing buyers because it’s too hard and doesn’t pay enough. Most of the unsold listings are grossly over-priced and the occasional deal gets multiple offers within minutes. Agents have to spend months or years working with their buyers before they get lucky, only to then get a reduced commission from the listing agent. Now I have to convince the buyer to pay the commission too? Great, thanks.

Listing agents are advertising for buyers to avoid paying the buyer’s-agent commission by coming directly to the listing agent instead. Realtor cannibalization is what we deserve. (link)

This house priced at $1,985,000 in Rancho Penasquitos received 15 offers and likely sold for 15% to 20% over list (an offer that was 12% over with free rentback wasn’t enough).

I remember when $2,000,000 got you a decent house in Carlsbad!

Self Destruction

We don’t need the DOJ or commission lawsuits to take down our business – realtors will self-destruct, beginning with the elimination of the buyer-agents as we’ve known them.

A few of the comments below. Click here to see the whole thread.

Zillow Meets Apple Vision Pro

 

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Zillow keeps feasting on lazy realtors!

Any agent could walk around their next listing with their phone’s camera running and comment on what people are seeing and why they should buy the house! The extra audio will be far more effective than any whiz-bang product that comes to market at any price.

Why don’t agents do that?

The AI Realtor

It’s inevitable that artificial intelligence will be utilized in the business of selling homes. Having AI assist with writing home descriptions or other advertising would seem to be a natural fit.

How about speaking with clients on the phone though? Listen to the brief conversation above.

Here are some of the results:

Here Comes Homes.com

Homes.com is making a run at Zillow and all other search portals. They are advertising 100 million users already, and they are displaying the listing agent’s phone number prominently on their properties for sale:

 

Zillow must have felt the pressure, and they are doing it too, although in a more subtle way because they still want you to contact their call center so they can control – and get paid from – the agent they desire:

This is will probably have more to do with the extinction of the buyer-agent than the lawsuits.

All anybody has to do is spend $100 million per year on advertisng to become a major player like like Zillow did, and homes.com is in a position to do it. Look for the homes.com ads during the Super Bowl!

https://www.homes.com/

Single Agency Coming Soon

The gradual phasing out of buyer-agents is underway, and it shouldn’t be long now.

Zillow’s new format features the listing agent’s phone number under the main photo!

The three-headed agent display was removed and now when a reader clicks on the right side for Request a tour or Contact agent, they are linked to the Zillow call center instead. There they get processed/qualified on the phone by Zillow employees, sent to Zillow Mortgage, and then get assigned to an agent who is paying big money to Zillow for the privledge.

Buyers will figure it out pretty quick. By clicking on the right side, you get a 3rd party agent who isn’t the listing agent and has never been to the home. With the listing agent’s phone number now prominently displayed, it is inevitable that buyers will call the listing agent next time.

If they need a prompt, they will get one when they start clicking on the photos – which every viewer does immediately. This is what they will see now:

Yep – the listing agent is in the upper-left corner of every photo!

https://www.zillow.com/homedetails/2533-Camulos-St-San-Diego-CA-92107/16966353_zpid/

With the threat of buyers having to pay a buyer-agent a hefty commission out of pocket, it will be irresistible for them to contact the listing agent to see what they have to offer – in hopes of avoiding a separate payment due to a buyer-agent. The listing agents will be happy to oblige because they will already have their full fee packed into the listing side.

By the time the realtor lawsuits get resolved, it will be too late – there won’t be any need for a buyer-agent.

Zillow is offering a full marketing package to listing agents too.

Package Includes:

    • Listing Placement Boost on Zillow
    • HD Photography
    • Aerial Photography
    • Social Media Reel
    • 3D Tour
    • “NEW” AI Generated Interactive Floor Plan
    • Listing Website
    • Enhanced Listing Agent Branding
    • Capture New Leads From Your Zillow Profile

The Listing Placement Boost on Zillow?

Listing agents who purchase a marketing package will have their new listings displayed first in the home’s area for seven days – a very nice feature for agents looking to capture buyers for their listings.

While the rest of the industry was grumbling about lawsuits over the last few months, Zillow created a new format that will solve everything. But nobody knows what fee the listing agent charges because it is never disclosed to anyone but the seller – the person who just wants to hurry up and get their money.

Modern Company Towns

Traditional real estate being manipulated by billionaires. Hat tip to Anna for sending this in!

The digital renderings of North Bayshore, a massive proposed development in Mountain View, California, are crowded with glistening buildings and cheerful, animated pedestrians. There’s a lot to show off, including 7,000 new homes, three distinct neighborhoods, and nearly 300,000 square feet of retail and community space. Notably, though, the gleaming images don’t bear any hints of the company behind the whole endeavor: Google.

Companies like Google and Facebook’s parent, Meta, conquered the digital realm a long time ago, setting the ground rules for how we search, interact, and shop online. Not content to stop there, however, these firms are now making huge bids to expand their reach. They want to be landlords, too.

(more…)

Appreciating Life

We are going through this now in our family, and it’s probably happening to you or someone you know. It’s a reminder that if you’re a senior and have one move left, it’s so much better to move sooner, rather than later (trying to put a real estate spin on this touching video).

“Mother of All Commission Lawsuits”

The copycat lawsuits are pouring in now, with attorneys from across the country looking to get their piece.  The latest, called Batton 2 (other versions were filed previously), is for buyers from the last 27 years:

“All persons who, since December 1, 1996 through the present, purchased in the Indirect Purchaser States residential real estate that was listed on an NAR MLS.” For this class, the plaintiffs are asking for damages under “antitrust, unfair competition, consumer protection, and unjust enrichment laws.”

The class will include millions of people! If NAR goes out of business (which is likely), it won’t change much because we’ll still have state and local associations. We’ll have less lobbying, but lower dues!

All plaintiffs have momentum now, and the lead attorney from the first lawsuit doesn’t just want money. “One of our goals in filing the case is to make sure any changes are brought nationwide,” said Ketchmark. “We’re extremely focused on making sure any change that comes from this is real change.”

But the NAR is taking it lightly, just like they have from the beginning:

“We are currently reviewing the new filing, and it appears to be a copycat lawsuit,” Mantill Williams, NAR’s vice president of communications. “We continue to assert that the practice of listing brokers making offers of compensation to buyer brokers is best for consumers. It gives the greatest number of buyers a chance to afford a home and professional representation, while also giving sellers access to the greatest number of buyers.”

Here’s our corporate viewpoint:

Compass spokesperson Devin Daly Huerta said the company doesn’t comment on pending litigation, but provided comments from the company’s earnings call on Monday, saying the company “will respond accordingly to the complaints filed against us at the appropriate time” and that the company feels “confident that Compass is well-positioned.”

Compass pointed to rule changes at Northwest MLS that made listing broker compensation to buyer brokers optional and didn’t result in any decrease of offers of compensation or the amounts offered. “So we have evidence in a major U.S. market of what this change might look like that gives us confidence,” the company said.

“Secondly, we believe we are positioned well because we have the combination of some of the most productive agents and the only end to end technology platform in our industry. Third, we currently have agents that successfully ask their buyers to sign buyer broker agreements in order to work with them. We are in the process of launching trainings to all of our agents to empower them to successfully get buyer broker agreements signed with their buyers.

“Lastly, we operate largely in the luxury segment, where we think buyers will always want the help of an advisor through their home-buying journey.”

Similar statements from other brokerages are downplaying the impact. Yes, we will probably have better presentations of what realtors do and why we are worth the money, but anyone who thinks that will fix everything will be sorely disappointed. Consumers will be empowered to consider other options.

The only people who think that buyer-agents are needed are the agents. Buyers find homes for sale online, and they are proud about finding them before their agent does. They wonder why they need their own agent, when they can just contact the listing agent. The listing agents will be enouraging those thoughts!

Here’s a paragraph from the red team – the first to publicly mimic my prediction:

But if buyers’ agents become less common, Redfin will prosper in that world too. We run the largest brokerage website in America. We’ve built self-service technology for buyers to set up their own tours and to make offers. We’ll use that technology to market the properties listed by our agents directly to consumers, taking market share from other brokerages. We may open that platform to other listing agents who work with us as partners.

This is an opportunity for major changes to be implemented on how homes are sold, and these lawsuits are the disruption device. Realtors will roll out fancier graphics that tout the status quo, leaving it wide open for new ideas. Zillow and Homes.com have surged ahead of what should have been the dominant search portal, realtor.com, which NAR also screwed up when they sold it to an outside company.

Zillow has been amassing the pieces to build a super app, and create one-stop shopping for homes. If they add an auction component, it will be O-V-E-R for realtors.

0% Commissions

Currently, every listing agent is required to offer some sort of buyer-agent compensation on the MLS. Zillow and Redfin publish those commission amounts on every listing now, so they are all out in the open.

Today, there are 79 homes for sale between La Jolla and Carlsbad in the $2,000,000-$3,000,000 price range. Thirty percent of those listing agents are offering less than 2.5% commissions to the buyer-agents.

Outsiders who see that will assume that commissions are finally starting to drop, after all these years.

But the vast majority of those listing agents are probably still taking 5% to 6% commissions, and offering 2% or less to the buyer-agent (and more for themselves).

If the listing agent is supremely talented and brings special skills to the transaction, then it would be understandable. But I’ve been a buyer-agent on listings that are offering less than 2.5%, and they’re not different. Virtually every listing agent still practices the Three-P marketing plan: Put a sign out front, Put it in the MLS, and Pray.

There are hundreds of multiple listing services in America. So far, only a few have removed the requirement of offering a buyer-agent commission.  But the NAR lawsuits are going to change that, and soon every MLS will permit 0% commissions to be offered to the buyer-agents (hoping buyers will pay their own agent).

The listing agents who have little or no repsect for the buyer-agents will keep offering them lower and lower commissions. Eventually, their rate will get down to zero or close.

Will sellers figure it out?

Sellers focus on the total commission. They don’t do enough transactions to know that the amount the listing agent pays to the buyer-agent will impact the sale. It is a bounty offered to encourage the sale of the house, and when market conditions are soggy, it is better to pay buyer-agents more commission, not less.

In the lawsuits, they will discuss agents steering their buyers to homes that pay higher commissions. It’s why the search portals publish the commission rates now so buyers can track whether their agent shows any bias based on the commission rate being offered.

It’s why the industry will be racing towards 0% commissions offered to the buyer-agents.

Eventually, the DOJ will probably step in and insist that ALL sellers pay 0% commission to the buyer-agents to insure there is no chance of steering. Instead, listing agents will just offer them spiffs under the table in a softer market or when the house is ‘unique’.

Until then, the listing-agent teams are going to keep offering lower and lower commissions (if any) to the buyer-agents – who will then try to get their buyers to pay them something….anything!

At the same time, the listing agents will be encouraging buyers to avoid paying a buyer-agent commission altogether by coming direct to the listing agent instead. Their in-house assistant-agents will attempt a faux representation of the buyer but it will just be a novice clerk who processes their paperwork.

Boom! The seller didn’t have to pay a buyer-agent commission – making these lawsuits worth it – and instead the listing agent keeps the whole commission. If buyer-agents can somehow wedge themselves into the deal, then great, but will the buyer pay them too, when it doesn’t seem necessary?

Mark my words – this will be standard fare in the next year or two.

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