Ramblings on Real Estate Disruption and Re-framing the Agent

The way we go about facilitating real estate transactions sucks.1 It’s riddled with conflicts of interest, inefficiencies, and hidden gatekeeping.

On top of that, there’s this weird part requiring home sellers to pay the buyer’s commission costs.

That weird part is being contested in a major lawsuit against the NAR.

Jason Oppenheim (the broker from the Netflix show, Selling Sunset), recently sat down with Yahoo Finance to discuss the future of the real estate industry and the potential of de-coupling those real estate commissions.

Because if the NAR loses, sellers would no longer be required to pay a buyer’s agent fee.  

Speaking of this possibility, Jason says,

“I think the problem is that if we remove the buyer’s agent’s commission, you’ll see the listing agent representing the buyer in 90% of transactions. It’s called dual agency,”

Dual agency occurs when one real estate agent represents both the buyer, and the seller.

He continues,

“I don’t think that’s healthy for the consumer, because I think that the buyer should have their own representation. It would be no different than going into a courtroom and you have one lawyer, representing both sides.”

Hmm.

I’ve been thinking about this ever since.

First, to my limited knowledge, nobody is arguing that buyer agent commissions should be removed.

Instead, it’s that sellers shouldn’t have to pay for the buyer’s commission cost.

Using the same lawyer analogy that Jason used, the current model is akin to going into a courtroom and making one party pay for their own lawyer and the lawyer working against them. Which is mindbogglingly ridiculous.

That said, let’s say Jason is right and buyers and sellers use the same agent (dual agency) more frequently.

Would it really be so bad?

Here’s the thing. I’ve been buying and selling homes for over ten years now.

I’ve purchased homes and sold homes using both methods; traditional single-agency representation and dual agency representation (and FSBO for that matter).

My smoothest and least stressful transactions all occurred while using dual agency representation.

Here are the benefits I personally experienced with dual agency:

  • Less “middle-men” led to clearer and easier communication throughout the whole process
  • Using one agent saved a lot of time because there was less back and forth (and again, less lost in translation)
  • No agent-to-agent drama to worry about (I suspect this may have affected me in the past)
  • For the first time, an agent agreed to negotiate their commission
  • The listing agent knows more about the home and its history (than an agent who didn’t list the home)
  • Dual agents better understand the needs of both parties
  • As a whole, the experience was just… friendlier and less stressful

Jason Oppenheim is correct that there could be issues with representation.

But that is a fear-based perspective.

Do we really need to go into real estate transactions as if we are going into battle?

Instead, what if there was one agent acting as a mediator?

With that mindset in the back of my mind, I’ve been thinking about how I, the seller, would best like to sell my house.

Here’s my fantasy home-selling experience (Are you there Zilliow? It’s me, HouseRat):

I log into my favorite real estate platform’s account where I toggle to the seller section.

I am first taken through an easy process where I list all the information about my house. As soon as I enter my address, it’s mostly auto-filled (pulled from the county assessor site). I check it over for mistakes or needed updates. It’s quick and easy.

I save and review that information before I take any other steps. 

When I’m ready to continue, the platform gives me a list of comparable sold homes and a list of active listings that are similar to mine. I briefly study how my home fits in among other listings and I can visually compare them. This doesn’t take very long.

Next, I am prompted to fill out a property disclosure form. After I input the information, it’s applied to an improved estimating software which gives me a range for what my house could be worth.

At this point, I have two choices.

  1. I am able to connect with an agent for consultation about my home’s potential list price and about our current real estate market in general. They can also act as second eyes for accuracy and answer any questions I may have.
  2. I can choose to skip a consultation and set my own list price.

I choose option 2, set a price for my home and save my progress.

Now, I can opt to connect to a freelance photographer/virtual stager or I can upload my own photos.

(here’s one of the places where the platform can monetize a connection-service , kind of like fiverr).

Additionally, if I don’t have a keycode lock on my door, I am able to rent a lockbox.

Lucky for me I can create a keycode lock used specially for agent-viewing and I can save myself the lockbox fee.

After these steps are complete, I have the option to “post” my home for sale.

The total cost to list my home is the cost of my consultation and whatever I paid for professional photos or staging (If I chose to do those things).

Now, I turn on message notification so that when somebody wants to see my home, I am notified so I can leave while their agent walks them through. (It is very unprofessional to be present for showings. Don’t do that).

If they want to put in an offer, the buyer’s agent initiates the next steps and sees us through the rest of the process. And if I get multiple offers, great! I’ll hire that consultant to help me navigate those…

 That’s basically it!

Here’s the surprising discovery-

I realized; we don’t really need listing agents anymore, at all.

As it is, listing agents outsource much of their work. Now they’re touting the benefits of AI saving them time by writing property descriptions, creating/filling in forms and contracts, etc. (Be careful, … sellers already question those commission fees.)

Meanwhile, buyer agents are out there on the ground, shuffling buyers through home-after-home and answering their never-ending stream of questions (all while “holding their hand” and making them feel better).

Based on market temperature, I’d argue that listing agents are the least needed of the two agents.

Pretend you’re a seller.

When the market is “hot”, you’ve got buyers lined up begging to buy your house. Why do you need a listing agent? Currently, the most efficient option would be to list it FSBO and advertise “buyer’s agent welcome”. Or tell an agent, “Hey, I’m considering selling my house but I don’t want to list it. If you have a buyer for me, I’ll give you 4 percent”.

Now, let’s shift perspectives to a “freezing cold” market.

If it’s really bad, paying a 6 percent commission could leave you underwater on your house. Fuck that! You can’t afford it!

You’re financially hurting, and most likely, so is everybody else. This is a situation where you need to cut as many costs as you can. But you still need a buyer.

If it was me, here’s what I would do in that situation. I’d take a long, hard look at my comps, and I’d list my house (like above) for the exact same amount that my neighbor recently sold their house for, minus 2 or 3k.

Here’s why it will work.

The other homes (listed by agents) will be priced with “room for negotiation”. This will immediately make my home stand out as a great deal.

And no, I’m not leaving money on the table. Because those other folks will sell their homes for about the same price anyway. AND, they’ll be paying the double agent commission, leaving them with less money at the end.

The human element for home transactions is still necessary.  

The buyer’s agent fulfills that element.

Because let’s be honest.  

Buyer agents do most of the work anyway… ask any real estate agent which job they’d rather do.

In Jason’s view of dual agency, the transaction process is completed by the listing agent.

In my view of dual agency, the transaction process is completed by the buyer’s agent (essentially the agent helps buyers find homes they like, and then they facilitate the buying process as a mediator to both parties).

Really they’re the same thing, it’s just framed differently.

I have tons more ideas how a system like this could work.

Let’s say you have someone you trust and you want them to do the listing stuff for you and help navigate offers-

Great, have them do that. But the cost should be the cost of a consultation (unless they’re bringing you a buyer). Because in that case, they’re a consultant, not a salesperson.

Yes, dual agency might not work for every situation.

Obviously, if you’re selling something for 10 million dollars like Jason Oppenheim, it might be different.

But the net positives outweigh the potential negatives.

And let’s stop framing it as a battle. You don’t want buying/selling to be a shitty experience, do you? It shouldn’t have to be.

A single-agent model works when the agent’s job is to act as counsel and help parties come to an agreement.

If the agent was a “mediator” rather than a “representative”, maybe both parties could split the single agent’s fee at closing (similar to now, except with the option for the buyer’s portion to be added to their financing if so desired).

Why might a single-agent system be a better way?

Because it’s lower stress, it lowers transaction costs, and it’s easier to communicate with less middlepeople.

Our current home-transacting model sucks. There is a better way (even if I’m an idiot and I’m wrong).

I know I probably sound like I have it out for listing agents, but I don’t. It’s emotionally complex for me to call this stuff out. I’m not a fan of people losing their jobs. And besides, if you still wanted to hire an agent to list your home, of course you still could! But no matter how it comes, change is coming.

I’m curious; what do you think?

Have you ever used dual agency? If you have, was your experience good or bad?

I want to hear all about it.

Thanks as always,

HouseRat Zero

  1. If our current real estate transacting model was great, there wouldn’t be so many trying to “disrupt” it. There also wouldn’t be so many lawsuits. For example, there’s the lawsuit REX filed against Zillow and the NAR (over segregating real estate listings of non-NAR members to a “hidden” listings tab). Then there’s corporate ownership and the rent-algorithm mess, which I briefly discussed here. Really, the problems with our current model all come down to the industry-wide issue of gatekeeping…

2 thoughts on “Ramblings on Real Estate Disruption and Re-framing the Agent”

    1. Thanks for commenting. I think I wrote this post about a year ago. With all the recent changes happening now, I’m curious if dual agency will become more prevalent or less… I hope more but we’ll see!
      If you don’t mind sharing, how do you think brokers will shift their fee structures moving forward? Feel free to message me at houserat.blog@gmail.com if you don’t want to share publicly. Thanks again.

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