Sounds like a fair compromise to me – if they can get around the construction-defect litigation that seems to come with every new complex. Two-story is preferred vs. three-story:
Owning a home has long been a core part of the American Dream. Today, however, there simply aren’t enough affordable options, and that ideal is increasingly out of reach. There’s a sensible way to address this shortfall, but it requires moving beyond the antiquated vision of a big house with a fenced yard in the suburbs.
The new American Dream should be a townhouse — a two- or three-story home that shares walls with a neighbor. Townhouses are the Goldilocks option between single-family homes in the suburbs and high-rise condos in cities.
Though townhouses have long been perceived as starter homes for young couples who hope to later move to a larger place, developers say that stereotype is changing. Today, townhouses are popular options for many kinds of households — couples with one child, single parents, people who live alone, couples in their 30s and 40s with no kids, and empty nesters in their 50s looking to downsize. People are drawn to the low-maintenance lifestyle and the sense of community. Many people don’t want to isolate themselves in suburban homes where they have minimal contact with neighbors and are fully dependent on a car.
“We absolutely love our next door neighbors,” said Katherine McKay, 40, who lives in a townhouse in Silver Spring, Md., with her wife. They met their neighbors — a retired couple — when they were all outside one evening on their back decks. They immediately bonded over the fact that they all enjoy having just enough space for a “postage stamp” garden. “Our townhome is 1,700 square feet. I don’t want more to clean.”
He is committed to changing or ending the Clear Cooperation Policy, which is a controversial stance.
The CCP makes in mandatory that every agent upload a listing onto the MLS within one business day after any public marketing of the property. Robert (and other brokerage leaders) say that nobody should have the right to dictate how a home is sold, and sellers should have the right to market their property however they choose.
Skeptics think that is a thinly-veiled excuse to hold more listings off the market, and sell them in-house instead – which would benefit the bigger brokerages, and possibly squeeze out the little guys.
But Robert said that the real problem is that we are sitting ducks waiting for another class-action lawsuit.
The last lawsuit was about the mandatory requirement that the listing agent include a buyer-agent’s commission rate in every MLS listing. NAR tried to hide behind the fact that the rate was negotiable, but got their clocks cleaned when the jury found otherwise. Even though Compass had never sold a home in Missouri, the forced NAR settlement cost Robert and Compass $52 million.
Because the submission of a listing to the MLS within 24 hours is also a mandatory requirement, it’s only a matter of time before the class-action attorneys start lining up for another big pay day. He is literally hoping to change the CCP before we get sued again!
NAR doesn’t get it. Their chief legal counsel quit last week after 17 years, which leaves them adrift, and they are sure to bungle the next wave of lawsuits which should be arriving any day now.
Robert is taking the high road and trying to negotiate a peaceful change, but I don’t get the feeling that the people in power are listening. This is where the biggest brokerages will probably have to sue NAR to get their attention before another class-action lawsuit is filed.
Why doesn’t NAR stand up for realtors? The main reason is because they have $750 million in the bank, and they are very comfortable. They had two presidents quit, the executive director retire just in the nick of time to avoid responsibility for the last lawsuit, and now the chief legal counsel quit too. They aren’t equipped to handle any controversy, let alone one that could put them out of business.
But that day is coming, it’s just a matter of when.
Abolishing the CCP is just the start.
Eventually, the biggest brokerages will quit NAR and the MLS, and go it alone, just like the commercial brokers. Zillow and Homes.com will scramble to make deals with us to keep our listings coming, because if they don’t, they will be out of business too.
I guarantee that this is the future of home sales.
In the week BEFORE the new rules went into effect, there were 29 NSDCC listings that were marked pending. In the first week AFTER the new rules went into effect, there were 38 new pendings.
Homes keep selling. Buyers and sellers keep moving, and Realtors keep helping.
It’s the other jokers who got in the way.
Somehow, the National Association of Realtors conspired with ambulance-chasing attorneys to levy big fines against brokerages for crimes they didn’t commit. The alleged offenses were committed by independent contractors who had home sellers pay a bounty to buyer-agents for causing their home to sell. The seller only paid the bounty if the agents involved were able to make both the sellers and buyers happy enough that they found a way to close escrow. If the sellers weren’t happy enough, they paid nothing.
We called it a ‘buyer-agent’s commission’.
Now we call them ‘compensation paid from seller concessions’.
We put different words on it, and added a load of new paperwork. That’s it – and homes keep selling.
But the brokerages are tired of being pushed around, and the really big changes are still to come.
1. The Clear Cooperation Policy is going to go away.
In the coming months, all the big brokerages will be suing NAR to rescind the policy that requires an agent to input their new listing into the MLS within one business day after they promote it publicly. The policy was a continuance of the NAR paranoia about protecting smaller brokerages, but that ignores giving the seller a choice on how they want to market their property.
2. Brokerages are going to leave the MLS.
I’ll call it a rumor because I didn’t hear from Reffkin’s mouth myself, but it makes sense. Why be a member of a club that sells us out and fines us $50 million? The commercial brokerages get along just fine without an MLS, as does the residential brokerage business in NYC.
Zillow provides the same benefit, without the lawsuits. Let’s cut a deal with them to upload our listings there and we won’t need the MLS.
What about cooperating with agents in other brokerages?
The NAR Settlement has effectively cut off that benefit already. The main benefit of the MLS was publishing and guaranteeing the buyer-agent fees, but that’s gone now. Every buyer-agent has to call around to find out what the “seller concessions” might be, if any. Sounds just like the commercial brokers, doesn’t it? And they have never had an MLS.
Is defecting from the MLS what is best for buyers and sellers?
We will sell you on that, don’t worry. Besides, you will still have Zillow, and their manipulated zestimates!
Zillow will become the defacto MLS, just like they do it in New York City!
Now that NAR’s proposed settlement of the Sitzer/Burnett lawsuit has received preliminary approval, the industry is receiving numerous updates about the future of real estate practices.
One change, set to take place in July, is that home buyers will be required to have written agreements with real estate agents before touring properties.
Although Zillow is not required to offer consumer-facing agreements, it recognizes that this step can foster transparency, open communication and better alignment between agents and clients. It also understands that buyers may hesitate when it comes to signing a long-term contract with an agent they don’t know.
To help solve this problem, Zillow is offering a non-exclusive touring agreement for agents to use.
In the announcement, Errol Samuelson, Chief Industry Development Officer stated, “…insisting that a buyer sign an exclusive, long-term agreement with an agent, perhaps before even meeting the agent, feels premature. That’s why Zillow has created a non-exclusive touring agreement, and we’re making it available for use to the entire residential real estate industry.”
With this agreement, neither exclusivity nor compensation is required. Zillow suggests negotiating these aspects after the initial meetings when both the home buyer and real estate agent are comfortable moving forward.
“At the time when an additional agreement is signed, the buyer and the agent should be aligned on all terms and expectations, including compensation, with no surprises,” Samuelson said in Zillow’s post.
While this agreement benefits buyers who are not ready to fully commit to an agent before touring a property, Zillow also emphasized the value agents bring to transactions, noting that agents help ease the complexity and stress involved in buying a home.
Zillow is encouraging agents to embrace transparency and prioritize building trust with clients, and the group is offering its touring agreement to all agents.
“As we move forward, it’s important to remain focused on who the real estate industry serves: buyers and sellers,” Samuelson stated. “In this moment of evolution we’re extending an invitation: join us in putting consumers first.”
“Buying a home is complex and often comes with a lot of stress: half of buyers tell us they cried at some point during the process. Without an expert prioritizing their individual needs, buyers can miss out on making a competitive offer, leave money on the table in the negotiation, ignore potential pitfalls or waive important aspects such as inspections – which can end up costing them later. Most buyers want and need an expert on their side – we don’t see that changing. This makes finding the right agent that much more important and it’s why upfront conversations about expectations and compensation are critical. We strongly believe in the value of independent representation: buyers and sellers deserve to work with an agent who is committed to their best interests and only represents them.”
It’s just a matter of time before a big player brings the auction format to the residential resale market. These guys are in position – they are auctioning commercial properties, and with their sister company Homes.com wanting to be the #1 search portal, it would be a natural transition:
When Sotheby’s sells paintings at auction, no one thinks of them as being distressed.
So why does real estate sold at auction get a bad rap?
Ten-X, the world’s largest online commercial real estate exchange, makes a positive case for auctions as the fastest and most accurate way of finding a property’s true value. By combining 21st Century online sales tech with industry-leading data from CoStar, Ten-X cuts through the inefficiencies of the traditional sales process, finding sellers the right buyer in an average of 100 days from marketing to close.
TRD sat down with Ten-X President Steven Jacobs and Vice President Victor Gutierrez to learn how their platform is perfect for sellers feeling stress in the current market, who need to get assets off their books before they become distressed.
Ten-X’s sales platform is built to establish a property’s value from the start and then find the right buyer in a timely fashion with as little back and forth as possible. But what may seem like an obvious way of doing business is actually the reverse of how most real estate deals are done.
“The way traditional sales are done is fundamentally backwards,” says Gutierrez, who describes the inefficiencies of the normal process: “I give you a bit of information, and then you give me the price you’re willing to pay, and then I give you the rest of the information, and then you adjust your price, and now we’ve been going back and forth for months.”
“When you’re selling a property, by the time you get through the first and second round of offers, then the best and final round and pick an investor, it’s taken five or six months,” adds Jacobs. Only then does the due diligence begin, after which, “a majority of the time you get a retrade.”
In the end, months after going to market, the result is a deal for a lower price than the initial offer. “It becomes a negative experience,” says Jacobs.
With Ten-X, this order of operations is turned on its head. “The buyer does the due diligence before making an offer,” explains Jacobs. “As a buyer, by the time you come to the auction, you’ve read the rent roll, you’ve toured the asset, you’ve looked at the financials, you’ve seen the property condition report. You’ve had access to best-in-class CoStar data and documents. All the stuff that you typically have to do post-contract, you’ve already done beforehand.”
This transparency benefits both sellers and buyers. For sellers, they can complete a sale in a fraction of the time as a traditional deal while retaining a similar degree of control over the price thanks to their ability to set a reserve price under which they can choose not to accept an offer. For buyers, not only do they have all the information before making a bid, but the process is transparent and fair, what Jacobs describes as “an even playing field.”
Buyers, like sellers, access the Ten-X platform through a robust digital platform that puts all the information they need to make an informed bid at their fingertips. Ten-X has also brought Stripe technology to the platform, which has streamlined the buying process further by giving bidders the ability to securely link their bank accounts for instantaneous approvals and real-time proof of funds updates.
They are only three months into their mega-launch of Homes.com, and CoStar founder and president Andy Florance is already taking victory laps. He is also the #1 cheerleader for buyers going directly to the listing agent, which will be the end result of all the changes underway. Here’s Andy talking in front of a group of realtors:
Florance said Homes.com’s “Your Listing, Your Lead” model was the antidote to agent and consumer frustrations, as evidenced by triple-digit traffic growth during Q3 2023 that gave them a contested lead on Realtor.com as the second-most-trafficked residential portal.
“In the rest of the world, when an agent has a listing, their name is on the listing, their phone number is on the listing, and there’s branding happening,” he said to riotous applause. “Only in the United States is it the portals’ brand goes on the listing rather than the agents’ brand. That’s bizarre.”
Although CoStar didn’t reveal its exact plans for Matterport, Florance did outline a plan to capitalize on digital twinning, a term used to describe hyper-realistic 3D listing experiences.
Florance said digital twinning could enable homebuyers to visualize what their current home furnishings would look like in a new home, play with renovation options for a fixer-upper, or walk with a virtual agent through a virtual listing.
“In residential focus groups, homebuyers are telling us that they prefer listings that offer 3D digital twins so that they can best understand the property,” he said. “Adding virtual reality to Matterport, you can take a virtual tour of the property with your virtual agent who will walk into the space with you.
Florance spent a few moments of the call focusing on buyer-broker commissions and reiterated Homes.com’s potential value when NAR’s settlement terms go into effect this summer. Florance said Homes.com will give buyers an avenue to directly connect with listing agents to view a home, bypassing the potential pressure to sign a representation agreement before they’re ready.
“Currently only 30 percent of buyer agents ever get a written agreement at any point in the transaction process,” he said. “Homes.com connects homebuyers directly with the listing agent, so they can arrange to see the house with no paperwork or commitments.”
“We are increasingly confident in our ability to build out the number one residential marketplace in terms of traffic revenue and profitability in the years ahead,” he added.
CoStar owns LoopNet, the website for commerical listings, as well asten-x.com/which is an online auction house for commercial properties. It won’t be long before they bring auctions to the residential market, will it?
This is the #1 reason I went to Compass, and I didn’t really feel like I had a choice.
When realtors get disrupted, this is the way the big brokerages can survive while the little guys die.
Hoard the listings in-house as ‘private exclusives’, like they do in the commercial real estate. The practice is legal (per the Clear Cooperation Policy) and is a choice for home sellers to make.
The big benefit for sellers is that they don’t get penalized by the days-on-market statistic, which buyers normally consider as the best way to know if the price is wrong after the first week on the market.
Compass has this option available for sellers, as do all the other brokerages, but nobody in management is pushing it around here. It’s used more like a Coming-Soon feature while homes are being prepared for open-market exposure. But there are deals being made.
If there was an organized, committed effort to use it as a survival tool, then I could see 30% of our sales happening off-market. But we’re not there yet.
The conspiring events – softer market, fewer and less-experienced agents, and lower commissions – are all leading us to the same place:
The destruction of the traditional model of residential real estate sales will be triumphed by the unknowing, but it will be the worst thing to ever happen for consumers because agents will be so tempted to tilt the table.
The only savior will be the company that brings home auctions to the masses.
It’s been obvious that the entire real-estate-selling business has been deteriorating towards single agency. I see it every day on the street, and I’ve posted evidence of the shift regularly.
The trend is moving quickly now on multiple fronts.
The DOJ is going to decouple commissions, which will prohibit sellers from offering to pay the buyer’s agent. The buyers can include it in their offer, but it likely won’t get that far. The buyer-agents who are left will want a written agreement to get paid by the buyer if the seller won’t pay. How many agents will be able to demonstrate why they are worth it? Not many, but maybe the buyers won’t ask too many questions.
Homes.com is spending millions and billions on advertising their website to compete with Zillow. Their twist? They funnel all the leads back to the listing agent, instead of farming them out to the highest bidders like Zillow does. I’ve been called by several phone jockeys from Homes.com to sign up for their enhanced listing packages, and I’ll sign up. Robert Reffkin responded positively to the Homes.com program, and you can see how Gary Keller feels about it above.
Agents are giving up on representing buyers because it’s too hard and doesn’t pay enough. Most of the unsold listings are grossly over-priced and the occasional deal gets multiple offers within minutes. Agents have to spend months or years working with their buyers before they get lucky, only to then get a reduced commission from the listing agent. Now I have to convince the buyer to pay the commission too? Great, thanks.
Listing agents are advertising for buyers to avoid paying the buyer’s-agent commission by coming directly to the listing agent instead. Realtor cannibalization is what we deserve. (link)
This house priced at $1,985,000 in Rancho Penasquitos received 15 offers and likely sold for 15% to 20% over list (an offer that was 12% over with free rentback wasn’t enough).
I remember when $2,000,000 got you a decent house in Carlsbad!
We don’t need the DOJ or commission lawsuits to take down our business – realtors will self-destruct, beginning with the elimination of the buyer-agents as we’ve known them.
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