Be Your Own Agent
That’s the tagline of a new, do-it-yourself website for consumers called BuyerCurious.com. (Read the emotionally charged comments in this Inman News story.) The site claims that, by representing themselves, buyers can save thousands of dollars if the seller doesn’t have to pay a commission split to a buyer’s brokerage.
Make an offer on any home, any time. It’s free, easy, and you can save BIG! All you need is a property address.
Hmmm… sounds easy. Now I’m curious too!
According to BuyerCurious, buying a home involves just six simple steps:
STEP 1: Determine your budget
STEP 2: Find your dream home
STEP 3: See the home in person
STEP 4: Determine your desired offer price
STEP 5: Make your offer (using a “super-slick offer-making platform”)
STEP 6: Close the deal
As a long time real estate broker myself and an obvious fan of technology in real estate, I applaud all who attempt to improve the business. Besides, I’ve never had a client who didn’t want to save money!
So will it work? I think not. Here are my reasons why:
- Real estate is the anti-commodity: Every home and every transaction is unique. Technology makes many things possible, but there is just no way all of the personal, unique factors that go into buying a home can be dealt with using a do-it-yourself website. Something critical will be missed.
- Real estate is a relationship game. Technology is valuable to real estate consumers for such things as home search and tax records. But it requires skilled experts to close an actual transaction—the most important expert being the real estate agent.
- The commission agreement is a contract between the seller and the brokerage representing him. Most listing agreements specify a commission be paid by the seller to the listing agent who, in turn, splits it with the buyer’s agent. A good buyer’s agent makes the transaction much smoother and more likely to close by providing: logistics, advice and even therapy to their buyer. In my experience, unrepresented buyers are difficult, less likely to close and greatly increase my legal risk as the listing agent. I would far prefer to split the commission with a buyer’s agent than have an unrepresented buyer.
Since I can remember, people have been saying that technology would make real estate agents obsolete. While technology certainly has reduced the number of unskilled or unprofessional agents, experienced and skilled agents are in higher demand than ever.
Buyers going it alone are usually a pain-in-the- _ _ _. Except for grossly overpriced listings that can’t otherwise sell, most agents would not want to pass on the buy side commission to an unrepresented buyer. It kind of reminds me of this sign at an auto repair shop.
What do you think?
For a long time I tried to come up with a business model for online only real estate, but I determined then and still believe that something like that will never fly for all the reasons mentioned above combined with the dollar amounts involved.
I could see this model gaining SOME traction in the market (San Francisco Bay Area) we just came out of. In 2008 and 2009 when inventory was high, buyers were king, and even well priced homes were sitting on the market forever – sellers and listing agents would be open to just about anything.
Today, I cannot imagine the vast majority of listing agents, staring at 17 offers on their listing, thinking to themselves, “Wow – this is the offer I should recommend my sellers taking!”
In my opinion, it would be the rare buyer generated offer (yes, it is easy to make an offer – but tough to get one accepted) to even get into the conversation of “which of these 3 looks the best?”
Even on the off chance (and I think this would be pretty small since discount driven clients rarely decide to pay the most) it was the highest priced AND the rest of the offer was complete and well written (including pre-approval letter, proof of funds, non-Agency, etc) – why wouldn’t I suggest countering the next two or three highest offers and work with a professional on the other side?
So, more transactions will end up in lawsuits, and attorneys will be charging more than real estate agents in the first place!
Commission is set at the time the listing agreement is signed, which may include an agreement that Seller will pay a reduced commission to listing agent if representing both sides.
From past experience, Seller wants top dollar regardless who is representing the Buyer. So, maybe a negligible advantage.
Ultimately listing agent will be representing both sides, as per current Calif contract, to make certain all necessary forms, disclosures and reports are completed properly, and explained to the Buyer.
In the past I have completed two deals in representing both sides, I was completely stressed out and I promised myself never again.
As listing agents our primary fiduciary duty is to the Seller.
There’s been some talk about passing laws making double ending illegal, than this new site will become irrelevant.
I love the observation that real estate is an anti-commodity. It is one of those things that I’ve never been able to put my thumb on, but that is exactly right.