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.
What’s coming:
- 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:
https://www.rismedia.com/2022/01/03/be-ready-when-music-stops-how-focus-today-but-prep-for-tomorrow/
Throw in an auction platform somewhere along the way, and homes sales will be transformed forever.
How about no brokerage firms Just an auctioneer and you pay a real estate advisor for fiduciary advice.
Compass has the market cornered if homes are only sold internally. Nice move to Compass JTR.
Buyer’s agents are often cut out of the loop anyway. On the house we are in now our agent called the listing agent and was told it was in escrow. We called 10 min later saying we saw the sign and did not have an agent. The response was much different. “The house is in escrow but should fall out at 5pm, would you like to see it?” So we bought it with the listing agent.
How prevalent are written buyer agency agreements these days? It used to be next to impossible to get a buyer to sign an exclusive, written agreement which specified a “protected” period of time as well as the guarantee of commission payment in situations like the one Paul Anthony mentioned, where the buyer goes to the seller directly despite having an established relationship with an agent (who likely put a lot of time into helping and educating them).
I wonder if Paul Anthony then made sure the agent they had been working with was compensated. Or if they just moved forward with their purchase and didn’t give the fact their agent was trying making a living any further concern…
I don’t know of anyone who uses the buyer-broker agreement, though it is certainly available.
Or if they just moved forward with their purchase and didn’t give the fact their agent was trying making a living any further concern…
Nobody gives it much of a thought, especially when the grift seems to be part of the system.
I think that it is horrible when someone works with a realtor to buy a home, and then put
in an offer with the listing agent. These people are out there and think nothing of it. Based on my experience it is usually greedy baby boomers who were raised on the east coast, usually NY. They call themselves “good business people.” No. You are just an A-hole. What goes around comes around.
Jim-
You’ve likely heard of Citysnap in New York City, a listing portal which will drive leads directly to the listing agent. Another nail in the coffin of buyer agency.
Here’s the link to a Forbes article describing it, while still saying “buyers free to retain the agent of their choice to represent them in any negotiation”
https://www.forbes.com/sites/fredpeters/2022/01/18/a-new-consumer-facing-listing-portal-to-add-transparency-to-new-york-citys-real-estate-market/?sh=48daf905425c