Jessie says we are in the top 3% of local realtors, which means she is counting 16,000+ agents in the county. She doesn’t include out-of-area or off-market sales, and because we made it into the Compass Top 50, we’re hoping it might mean we’re a little higher. Stay tuned.
In the discussion today, it quickly became obvious how important it is for agents to be able to discuss scenarios and solutions. These days, a buyer-agent will just email an offer to the listing agent, and hope it gets accepted or an easy counter-offer comes back. Any tougher than that and the buyer-agents just turn to their clients and say, ‘what do you think?’ and because no other solution is presented, everyone gives up.
The wicked seller’s market during the last 10-12 years has caused everybody to expect that buyers will just pay the sellers’ price – and if they don’t, then they are called names and declared not serious. Being able to craft these scenarios into sales is where this market will benefit greatly.
It may sound simple to expect agents to discuss offer terms, but don’t underestimate how limited that opportunity is. Not only do people who are used to texting and emailing all day find it a struggle to stitch together a sentence or two in person, they usually have little or no experience with actually discussing offers and how to find a win-win solution. It’s too easy to give up instead.
We’ve covered the ways that buyers and buyer-agents are getting battered by listing agents.
Making homes tough to show, no transparency about offers and bidding-war process (if any), below-market commissions, sandbagging listings in-house for days or weeks before exposing to general public, etc.
Some can be chalked up to inexperience or clerical errors, but most are a deliberate attempt by the listing agents to box out other agents, and limit the number of offers.
Agents input their listings onto this website only, which gets the property onto Zillow and Realtor.com where waiting buyers might see it. Typically, the buyer-agents are using their local MLS to track the new listings, so they’re not watching Zillow or Realtor.com (and certainly not some unknown MLS website).
It has to be a deliberate attempt by the listing agents to limit the exposure to fellow agents, with the intent to reach buyers directly and double-end the commission.
Last week, we lost a big agent to a start-up brokerage, and I hate to see people go. I’m not sure what happened in their case, but typically agents don’t try to re-negotiate with their current brokerage, instead they just leave for the greener grass without notice.
What should be considered is how likely it will be that single agency and off-market sales will grow as the market constricts further. The count today is probably under 10% of the total sales, but once it catches fire, those non-traditional sales could rise to 20% or 30% quickly.
Don’t underestimate how desperate it could get for agents, and how management will play a key role in pushing for in-house sales. It will be the same as with commercial real estate; where properties get sold in-house and public exposure to new listings is an afterthought.
This threat is the main reason why I work at Compass (of many). It’s not here yet, but it’s coming – and every agent will want to be with #1 as this evolves. We want to hire more agents on our team. If you would consider joining us, contact Donna the sales manager!
Won’t somebody just produce an all-encompassing (pardon the pun) website to facilitate homes sales? There is a new disruptor every month with their unique solution, and it’s ALWAYS born out of their frustration with buying a home recently so they are happy to bash agents and the current process.
But consumers have become more adept at searching online, and because there are so few quality homes for sale in 2023, their standards will probably relax further as their frustration mounts. Pretty soon, they will accept just about any risk, just to get their home search over with.
If a bigger company with some brand recognition put together the right website at the perfect moment when the consumers’ frustration is mounting and agents are flailing, it might catch fire. Something like this:
I’d prefer an auction company because it would be more effective at selling homes fairly, and for top dollar. But the winner will be the company that advertises the most.
I spoke to a few agents on the broker preview yesterday about business this year, and the common theme was that agents are have big trouble finding people who want to sell their home. It suggests that the inventory of quality homes will be extremely low this year.
What happens, when that happens?
It means that when listing agents get a hot new property to sell, they will be tempted to find their own buyer first, and/or spoon it to a select few of their agent friends, and then maybe expose it to their office mates before putting it on the MLS/open market.
The extinction of buyer-agents is well underway.
As the market tightens further, more listing agents will be tempted to sandbag their listing and not put it on the open market. Look what happened to the agent this week who received 20+ offers (they told me the final count was 30 offers). After the listing was put on the open market, the flood of offers caused regrets about the workload, so they just grabbed one and shut it down.
Last night I popped off in the comment section about how the business gets shadier every year.
Here’s proof – not every listing with zero days on market was sandbagged, but let’s face it. If you mark your listing pending within a few hours of it going live on the MLS, you didn’t get full exposure.
NSDCC Annual Closed Sales With Zero Days On Market
Year
Annual Detached-Home Sales, Total
# With Zero Days on Market
Percentage
2016
3,107
84
2.6%
2017
3,084
99
3.2%
2018
2,799
84
3.0%
2019
2,834
100
3.5%
2020
3,190
116
3.6%
2021
3,184
173
5.4%
2022
1,939
124
6.4%
When agents see other agents touting their off-market business, they think it must be ok, so they do it too. It feeds on itself, especially when the allure of double-ending the commission is so strong in a tight-inventory environment.
This disease among agents is everywhere. You will notice it at every open house you attend – the agents conducting the open house can’t wait to tell you about their off-market opportunities to get you to sign up. You’ll see it mentioned on social media daily – agents don’t think there is anything wrong with promoting off-market deals. Heck, everyone is doing it!
I regularly ask the agents who have a quality home for sale how they will handle multiple offers, and the answer is always the same: “I don’t know”, before they stumble and mumble something about the seller will decide (oh, thanks for that!) so the agents don’t get blamed for the end result. It’s embarrassing that they don’t have any strategy, and want to leave the door open for shenanigans later. No wonder they want to do an off-market deal, with no scrutiny.
Because no one is doing anything to intervene, the off-market deals will continue to be an accepted practice, and exacerbate the trend towards single agency (and the extinction of buyer-agents). Within the next year or two, every buyer will just go to the listing agent and take their beating.
I don’t think anyone in the realtor industry recognizes the harm being done to the consumers by squeezing out the buyer-agents. The good ones offer a valuable service by assisting homebuyers with the complexities of purchasing a home; a challenge that is tougher than ever in 2023.
For example, let’s say you come across a good buy – what do you do with this?
This weekend, the listing agent got 20+ offers and shut it down. Then he just accepted one. Game over.
None of the other buyers got a chance to win. But at least they had a chance to offer.
If buyers were directed to the listing agent, do you think the realtor teams would have 20+ buyer-agents ready to serve everyone who wants to make an offer? Or would they just write offers with the first couple of buyers and shut it down?
I can’t tell you how many times we see in the confidential remarks, “PLEASE NO MORE SHOWINGS”. We already have an environment where listing agents believe there is no incentive to keep taking offers – especially if/when they already wrote an offer with their own buyer and will double-end the commission.
It’s only going to get worse. Forces within the industry are conspiring to eliminate buyer-agents altogether, and are conspiring to create a system that makes it even harder for buyers to get a fair chance. The local MLS companies are launching a new search portal that directs all inquiries back to the listing agent.
Do you think an outside buyer-agent will have any chance of selling that listing now? If multiple buyers contact the listing agent, then what happens?
With the goal to “promote a more competitive marketplace,” three of the largest multiple listing services announced plans to launch a new consumer home search portal this spring.
Called Nestfully, the website will be owned and operated by California Regional MLS (CRMLS) and Bright MLS, under a joint venture, and REColorado has signed on as a participant. The founding MLSs designed the site and its features, and real estate tech company Constellation1 is providing technology services.
Key points:
Nestfully is expected to debut by April 1 with listings from a pool of 240,000 agents and brokerages that are MLS subscribers.
Agents will get leads at no cost, and consumers will have direct access to the property’s listing agent.
“With Nestfully, we believe we are in the best position to deliver what agents want and need in this changing market,” said Brian Donnellan, CEO and president of Bright MLS.
With the goal to “promote a more competitive marketplace,” three of the largest multiple listing services announced plans to launch a new consumer home search portal this spring.
Called Nestfully, the website will be owned and operated by California Regional MLS (CRMLS) and Bright MLS, under a joint venture, and REColorado has signed on as a participant. The founding MLSs designed the site and its features, and real estate tech company Constellation1 is providing technology services.
“Nestfully is run by MLSs whose primary goal is to promote an open, clear, and competitive marketplace,” Art Carter, CEO at CRMLS, told Real Estate News. “We are a neutral source working in the best interests of consumers, brokers and their agents.”
For agents, Nestfully offers a financial advantage over advertising-powered portals. The site will not have ads, and leads will be delivered directly to agents and their brokerages at no cost, “taking a significantly escalating cost out of the existing system,” Carter said.
Agents and brokerages companies will also have access to a lead management platform on Nestfully with lead tracking, analytics and metrics that gauge success.
“We believe we are in the best position to deliver what agents want and need in this changing market,” said Brian Donnellan, CEO and president of Bright MLS, adding that the new search engine will “serve as an extension of the agents’ marketing initiatives to promote listings, attract qualified lead prospects and forward these opportunities directly to the agent at no cost.”
The goal is not to monetize the consumer search, he said, but to help answer consumer questions about properties for sale and connect potential buyers with property listing agents or with a local agent or broker in their communities.
Asked in an interview if MLSs will be compensated for the initiative, a company spokesperson said that “financial arrangements are not being disclosed.”
Will they advertise enough to compete with the established search portals? They will need to promote some new whiz-bang feature…..which will be that buyers should go direct to the listing agent, and use their fancy new portal to do so.
I don’t think they have a clue – or they are flat out ignoring – how they will be putting buyers at a bigger disadvantage, and destroying our business as we’ve known it for the last 100 years.
KCM is a fine group of people who supply realtors with content for them to publish in their newsletters, social media, etc. They provide an invaluable service for the agents who’d rather just pay for content than create it themselves. It tends to be a softer version of what I do here at bubbleinfo.com because most realtors aren’t interested in a deep dive – they are fine with the lightweight stuff.
But because I said last week that “price it right” is code for listing your home for the realtor’s price, I thought I should comment on the above.
UNDERPRICED – The fear of underpricing your home and leaving money on the table is real….if you list with an agent who just wants to take the first offer and go back to sleep. When you list your home with an agent like me and the market responds favorably, I will let EVERY buyer compete for your home and then pit them against one another to drive the price up.
OVERPRICED – Realtors want to be the hero and are just as likely to overprice a home as a seller. This is especially true when several agents are competing for the listing – it is irresistible for sellers to strongly consider, and end up hiring, the agent who quotes the highest price.
The worst part about overpricing is not reacting quick enough. Once a home is on the open market, both the sellers and the listing agent wants to believe that if they just wait a little longer, the magical perfect couple with 2.2 kids will come along. But today’s buyers are watching the market time of each listing very closely, and making up things in their head about what it means – and none of that is good for sellers.
MARKET VALUE – It would be a miracle if a seller or agent could guess the market value. The conditions are changing every day in every area – and NOBODY knows what a buyer will pay until a home is on the open market. Besides, there is a slush factor of 5% on every house, based on it’s unique location, upgrades and condition, ease of showing, and the competence of the listing agent.
The best thing any seller could do is to hire a listing agent who is an expert in handling what to do if the market conditions cause the home to be underpriced OR overpriced – because every agent can handle a listing that gets lucky and miraculously happens to be perfectly priced.
As you may know, there are multiple lawsuits pending that accuse realtors of price fixing, and it ain’t looking good for us. Here is evidence provided in court – thanks Rob:
The Franchisor Defendants provided training to brokers which directed them to offer a 6% commission rate, to be split equally among the Seller-Broker and the Buyer-Broker. The Franchisor Defendants used this 6% commission rate split in educational transaction models.
For example, Re/Max training documents instructed brokers to develop their “Economic Model” and “define the ‘average’ commission that will come from each of their closings,” including an example of a 6% commission rate per transaction, split 50/50 between the Seller-Broker and Buyer-Broker.
Similarly, Keller Williams trained its brokers to develop an “economic model” which provided a “standard 6% commission” rate per transaction, split 50/50 between the Seller-Broker and Buyer-Broker.
Additionally, the HomeServices Defendants circulated training materials from Intero, a California subsidiary, that instructed brokers to “always have 6% written in on ALL listing agreements” and, if they “have to give something,” to “remember they always have to pay [the Buyer-Broker] a minimum of 2.5%.”
Further, the Franchisor Defendants trained brokers to never lower their rates. For example, Re/Max trained brokers to “have the commission typed into the listing agreement” before speaking to Sellers, and to tell Sellers “‘This is what my company charges.’”
Re/Max franchises must “maintain . . . quality,” including avoiding “discounting rates,” or the franchise may be sold.
Keller Williams provided brokers with scripted responses to requests to lower commissions, stating that brokers “require a full 6 percent” to “do the advertising that they do” and that a “discount rate will not provide you with enough exposure to get you top dollar.”
Realogy acknowledged that its franchisees compete with one another, and instructs franchisees to “avoid any action or discussion intended to eliminate or restrict competition” including discussions of “commission structures.” However, Realogy provided training to its franchisees and subsidiaries regarding commissions and trains its agent to tell clients they cannot cut commissions. [Citations removed, and edited for legibility and clarity.]
This probably didn’t help much:
The next court date isn’t until October, and undoubtedly there will be an appeal, so it will be a year or two before the case is done. The likely results will be that sellers won’t be obligated to pay the buyer-agent commissions. Not sure if that will reduce them, or eliminate them, but this will likely be the big commission disruption that has been expected by outsiders.
