The “Right” of Information
MLS information is ubiquitous , we’ve talked about it frequently. It’s no longer in a book under the desk, it’s no longer just in MLS, it’s spread across countless aggregators. The information is so spread out that many practitioners and certainly their Brokers have no idea where all their listing information is. The information is so readily available that consumers consider unfettered access to it an enumerated right. Evidence of this is exampled in the comments on this post at VARBuzz.com and this post, here on AgentGenius.com .
The existence of IDX , started with the concept of bringing a consumer back to a practitioners site, now it’s one of necessity and fulfillment of expectation. If you read the comments carefully, you’ll see that the consumer is not thankful for the information, you haven’t gained their loyalty; it’s simply anticipated. The thought is that website MLS access is now a utility, and not a service. The perception is therefore, that the buyer’s feel deserving of the material and are offended if it’s not openly available.
To an extent I agree – but not on behalf of the buyer. I think the Seller has a right to have their information in as many places as possible and with as little barrier as possible. The Seller has hired the agent to sell the home – not use it as Buyer Bait (or lead generation).
Apparently in an effort to serve the consumer, by adding this information to almost all agent sites we’ve negated a primary reason that Seller’s hire their agent. Yes, I know it isn’t the sole reason for the agent, and typically it’s the smallest part of the marketing and client representation; but it’s the most tangible to the Seller when looking to hire an agent.
Unintended Consequence
“What does your pontification of IDX / MLS information, have to do with Agency?”, you might ask. I feel it’s leading us to a evolution of the industry that leads to sole buyer-agency in the future. With proliferation of the MLS data to IDX websites, the next evolution was to spread it out to Zillow, Trulia and others. But now, using Postlets.com and other such services, I can enter (for free) information into all the most popular sites, in minutes. Here’s a secret….so can the Unrepresented Seller. Let that sink in for a minute.
Agents are looking for ways to cut costs. With all the MLS Aggregators out there, how long do you think that it will take for an opensource MLS to actually work. They exist, it’s just that there are some barriers to change and lack of practical application to overcome – such as the mutual agreement to compensate a coop broker for their service. Well, if the commission is divorced from the Seller and the Buyer has to pay their own fees, why would one need to share commissions? I’ll leave explanation of the commission divorce to folks like Jim Duncan and Greg Swan who are far smarter about this topic, than I am.
Next Evolution of Agency
I am a huge fan of the abolishment of single agent dual agency. I have NEVER heard an argument FOR dual agency that I could buy into. Let me give you three sources of comments from those who are influential in Virginia Real Estate:
Realizing that cooperation with other real estate professionals promotes the best interests of those who utilize their services, REALTORS® urge exclusive representation of clients; do not attempt to gain any unfair advantage over their competitors; and they refrain from making unsolicited comments about other practitioners.
Paragraph 5 of the Preamble to the REALTOR® Code of Ethics (emphasis mine)
Don’t forget the problems caused by being a Dual Agent. The difficulties associated with this perfectly legal agency relationship seem to be on the increase. Be very careful to communicate and explain dual agency to prospects and clients and avoid dual representation if at all possible.”
Schafer Oglesby, Virginia Real Estate Board Chairman – 2006 Newsletter
Virginia law merely permits you to engage in it with the informed consent of the parties provided you act accordingly. Their informed consent, once obtained, does not mean the conflict ceases to exist, merely that the clients consent to your acting as a dual agent notwithstanding the existence of the conflict. This is an important point to remember: the conflict does not go away just because you get the requisite consent. You still must act in a manner consistent with the conflicting interests of your clients.
Lem Marshall, VAR Legal Counsel “Commonwealth Magazine 2004”
If you’re an agent practicing Dual Agency and get sued, how long do you think it’ll take an attorney to pull up these documents and the large number of posts warning against Dual Agency? A jury is going to have a hard time understanding why agents still pursue this archaic practice, while everyone is warning against it.
Do Not Fear
This is not the end of the industry as we know it, but a positive consumer-centric evolution. Practitioners that are looking at making Real Estate a Career, as opposed to a “job,” should be looking forward and learning how to evolve with the industry. People, for the most part will always need a highly trained and knowledgeable consultant; especially when times are tough. It is human nature to seek help, when needed and to pay for service, at times for conceiager service, if the value is seen.
With the changing landscape of the MLS, coupled with the push toward a more wholesome type of agency relationship, the real estate world is changing. Adaptation by the practitioner and removal of the mentality that says “the agent dictates how business is done” is going to be one of the most important focuses we can have. I don’t know about you, but I find it fascinating to be on the cusp of evolution.
Jim Whatley
October 11, 2008 at 8:56 am
If you were selling a home, when you hired someone (signed a contract) don’t you want them to be representing you. Here in FL were are all Transaction brokers unless other wise stated. If you Hired a Lawyer would you want a duel agent lawyer? If some ask me to represent them that way I will but advise against it.
To me it is just a way to abdicate responsibility.
Susie Blackmon
October 11, 2008 at 9:08 am
Learning to evolve is going to blow the lazy agents out of the water which is a good thing. I’d love to know how many GOOD agents you think there are say out of each 100 agents.
Sharon Simms
October 11, 2008 at 9:33 am
Transitions always generate fear and opposition. It doesn’t seem that long ago that all agents represented the seller through agency or sub-agency. Now it’s rare to see sub-agency.
It only makes sense for each side of the transaction to pay for their own representation – or not, as they choose. For this to gain momentum, though, I think the lenders need to recognize that both sides of commission are part of the “price” of the home, as long as they’re openly documented. For many buyers, having to pay additional cash if they choose to pay their buyer representative directly can be a huge obstacle.
Mark Eckenrode
October 11, 2008 at 9:36 am
@matt: i’m not sure what direction to take my comments, you’ve covered a lot of ground quickly in this post and opened up several fascinating conversations. thanks.
it’s unfortunate but so many agents view MLS as their most marketable “service” or as their primary method of lead-generation online. these same agents wonder why they struggle against being perceived as a commodity (while everyone markets the same MLS/IDX) and rely on “we’re your home team” taglines for differentiation.
online is the land of quick-cut attention spans. if you want more people, then you’ve gotta figure out how to give more – a lot more – first (and not something everyone else has.)
let’s face it, we all know MLS/IDX is not consumer-centric. there’s not a lot of control of how they get their results. my dream home is not limited to checkboxes for bedrooms and baths. this is why google owns the online search market – they figured out how to provide more of what the searcher actually wanted. they cared about serving the end-user more than the webmasters of the sites being listed.
someone will figure this out (Zillow? Trulia? Roost?) and i guarantee it won’t be designed as a tool for agents but for the consumer. where does that leave those realtors we discussed above? struggling for an identity and a business.
two things this quote provoked:
one: you probably view “consultant” the same way i do – as someone who takes a client under their wing and protects and guides them through choices. if that’s the case, then where is their room for dual agency?
two: there are still those realtors out there trained and conducting business as order-takers (fries? soda? jumbo-sized?), not as consultants.
hells yeah.
Matt Wilkins
October 11, 2008 at 9:57 am
I think this is an industry that the indsutry has tried ti keep a lid on but unfortunately is going to be pushed into the spotlight VERY soon. In my practice I find that most of my clients DO use a variety of websites to do research but they still contact me in a timely manner as a source of filtering and verifying the infromation they are bombarded with. That tells me that this shift in the industry will not make us extinct just shift the focus of how we work with clients/customers.
Mark, kudos for bringing up the term consultant in your comment. I maybe ahead of hte curve by running a real estate consulting firm and being a real estate consultant (I still get blank stares from local colleagues) but I see the future and hopefully I will be ahead of the curve in my local market.
Steve Simon
October 11, 2008 at 10:45 am
The main portion of my real estate income for over twenty years has been and still is consulting income, either by the hour or by the job (by prior agreement).
I have worked on a commission basis (rarely) over the years; but for the most part I have always had one direction, operate in the best interest of my client.
I believe that the interests of the buyer and seller, while on the surface can seem to be overlapping, are actually counter to one another regrdless of how one would like to couch their positions.
The seller wants the highest and best price. The buyer wants to pay the lowest and most financially beneficial price (terms). Each may or may not yield in certain areas to certain degrees, but their goals are counter to one another.
Attempting to serve both guarnatees that neither receives the optimal respresentation.
Florida has been rewriting agency laws and rules for the entire time I have been teaching their courses. I have seen major overhauls no less than five times. All the while suspecting that only the NAR lobby is preventing the absolute single agency only environment.
I think you will see yet another push towards complete single agency in the twilight of my time in the industry.
A buyer paying for representation is not a new concept. Commericially it has been around for fifty years.
The reduction of seller side fees overall but with compensation going only to the seller’s agent is the logical progression.
The buyer’s choices (as they are now):
1) Go without full representation (only for the well experienced and the brave);
2) Trust in limited form of representation (which I believe results in a blurred result at best);
3) Hire a buyer’s agent (the source of compensation left for other discussions or to defend my comments here);
4) Opt for a complete level of overkill 🙂 use the attorney;
I think that if the real estate industry would like to create a new proper foundation for the future they will move towards absolute single agency. If they don’t, you will see the public starting to move towards #4. You can get a very savvy attorney to write the contractual offer and counter-offers, handle the negotiation, and even attend the closing for under a couple of thousand dollars.
The industry will either change or you will see order clerks with real estate licenses and lawyers for both the seller and buyer (as you already do in a lot of places).
Just my thoughts:)
Russell Shaw
October 11, 2008 at 12:25 pm
I am totally opposed to divorcing commissions and can think of few ideas that would be as destructive to the industry. I do not believe that complete availability of IDX searches changes much of anything for listing agents. Factually – so far – the actual impact of all of the various websites has been to reduce the number of FSBO’s, not the other way around. Even in the hottest market ever, 2005, FSBO’s were less than 13%. 25 years ago, that number stood at over 20%. See: https://www.bloodhoundrealty.com/BloodhoundBlog/?p=1681
Matthew Rathbun
October 11, 2008 at 1:53 pm
@Jim: My best example of dual agency is that of the divorce attorney representing both individuals at once – makes no sense. There are always other options. There are no shortages of agents out there! I am not sure of my feeling about “Transaction Agency” I haven’t worked in it enough to fully understand it, but at times there are situations, where I need to stand up for the client and not the transaction, per se. Sometimes the “transaction” is not in the best interest of the consumer. Thanks for reading and sharing!
@Susie: You’re question about how many “good” agents out of 100, is a short answer. It depends. We know that 20% of agents make 80% of the money. However, most of the “difficult agents” that I’ve encountered have been the high producing agents. I don’t think personal income is a good indicator of being a “good agent.” Using my definition (concentrating on personal knowledge and putting their clients first) I would that there are only about 15% of those who are licensed; that I would allow to work with me. However, I think that closer to 80% of those licensed could be worth working with, IF they make education a higher priority, treat it like a full time career and worked for the right broker (or were the right broker.)
@Mark: We agree – MLS is no longer a notebook under the desk. It is NOT (and never should have been) the most marketable skillset, but yet here we are. So, geez…now we’ll need to use knowledge and make it the most valuable skill set.
@Matt: I am indifferent as of yet, about what an agent calls themselves. I think some of the funny looks from other agents is that there is no legally definable representation as consultant, in our state. To me it would make you a limited service represented, but definition in Virginia, if you aren’t an “agent”. You’re right about why the consumer would look for you… to decipher information. Unfortunately not all agents spend as much time as you do learning about these things and being prepared to decipher.
@Steve: Thanks for laying out the options, that may be available to consumers.
@Russell: The reason I left the discussion to others, is that I haven’t figured out all the angles. I have represented buyers, who paid my company directly, as the Unrepresented Seller refused. It was not difficult to illustrate why nor to do the transaction. I have encountered several Sellers who wanted to know why they have to pay the buyer’s agent as well. It’s a tough call, but I have a hard time seeing most buyers having sufficient income to pay the agent, and the down payment and the closing costs, etc… However, I do see a day where we’re all doing fee-for-service and only for one consumer at one time. It’s impossible to see the future – but I think that following the current early trends, we can see these changes evolving, unless someone comes up with better options.
Jonathan Dalton
October 14, 2008 at 12:00 am
The kink as I see it is as a buyers’ agent, I’m still looking in the MLS first and foremost for a multitude as reasons. As long as that’s the case, and as long as that’s the case for the majority of real estate agents (and buyers using agents), access to the MLS still will be the best sales tool there is.