Technology has impacted the way people find homes, research neighborhoods, and compare prices; in essence, buyers are able to get much of the initial legwork done by sitting at their computer or scrolling on their smart phone. Nevertheless, when it comes to actually buying a home, about 90% of buyers still use a hired real estate agent to help them with the actual offer and contract negotiations according to a report released by the National Association of Realtors.
In an article published by Forbes, its noted that “… buyers and sellers can get to the “one yard line” without much help. But deals rarely get done unless an agent is acting as middleman.” Real estate agents, without a doubt, add value with their professional expertise and negotiating experience. However, the sticking point for many is the large piece of the sale that the agents get for their commission. In many cases, the seller pays a total of 6%, with the buying and selling agent getting 3% each.
The concept of direct sales, hasn’t yet taken over the real estate market and certainly hasn’t made real estate agents obsolete; in fact, realtors may skip showing homes whose sellers aren’t willing to pay the 3% commission. Yet, technologically based real estate companies are still searching for ways to compete with the current real estate agent.
Case in point, companies such as Opendoor, you simply “type your address into Opendoor’s website, submit a few photos, and it will make you an offer within a couple of days. No open houses, negotiation, or waiting months for the buyer to come up with the money. In fact, the average closing time from the first offer is less than 20 days,” according to the article written by Stephen McBride. Some experts believe this type of business could change the way people buy and sell houses and the agent’s role in the transaction.
Read the entire article.
At the start of September 2019, real estate firm Redfin made a change to the way they communicate with their customers and potential customers. They have made the decision to provide more information on the homes they have listed for sale, specifically detailing how much the buyer’s agent will make upon the sale of the listed home.
According to an article published by Forbes, “…nearly 40% of recent home buyers don’t understand how their real estate agent was paid,” while 13% indicated they had “no idea” how much or how the agent was paid upon closing. With the recent announcement of the Northwest Multiple Listing Service, allowing brokers to share details of the commission deals, Redfin decided to get out in front of the trend sure to spread to other regional areas.
Perhaps buyers have become more interested in the ways commissions are negotiated after a few law suits alleging “….collusion, inflated commissions, and price-fixing, among other things.” To head off any concerns and to satisfy buyer’s desire for transparency, some agents feel that this up-front approach helps ease the minds of their customers. As one Redfin broker, Paul Reid of Boise, ID, stated, “Showing consumers the commission a seller is offering a buyer’s agent is a great win for making real estate more transparent. When a buyer has a better understanding of how his agent is being paid and the costs the seller is incurring, he can make a more informed decision on what to offer.”
Read the entire article.