The Dance in DC on Commissions in Residential Real Estate
Explicit content warning
06/13/18 • 46 min
1-2 cha-cha-cha. 3-4 cha-cha-cha. DOJ. NAR. FTC. MLS.
There was a dance of sorts held in DC on Tuesday, June 5, when the Department of Justice and the Federal Trade Commission hosted a ‘workshop’ to discuss competition in residential real estate. But while NAR and industry players prepared for the fox trot, bringing their best arguments for maintaining the status quo around data access, the DOJ put on a little salsa music and shifted the discussion to commission transparency and coupling.
Rob and Greg are reversing roles this week, as Greg spins conspiracy theories regarding the government’s intentions and the potential consequences of its intervention in the real estate industry. They speak to organized real estate’s nothing-to-see-here approach to the discussion and review the range of views shared in the Developments in Real Estate Fee and Service Models panel.
Greg explains why decoupling would effectively end the MLS, and Rob covers the paper prepared by the National Bureau of Economic Research suggesting conflicts of interest due to coupling. They address who would benefit if buy-side commissions went away, how such changes would impact portals like Zillow, and the surprising number of industry players who support decoupling. Listen in to understand why Rob and Greg are calling for NAR or CMLS to move on this and start leading the dance to develop solutions around commission transparency.
What’s Discussed:
Organized real estate’s nothing-to-see-here stance at the DOJ/FTC workshop
The Developments in Real Estate Fee and Service Models panel
- Reps from Realogy, Purplebricks, Glass House & TRELORA
Greg’s take that the industry was caught off guard
- Prepared for data access and transparency
- Discussion of commissions, decoupling
How decoupling cooperation and compensation would end the MLS
The NBER paperon realtor commissions and conflicts of interest
The theory that real estate commissions are high due to coupling
Rob’s concern that the DOJ has already made up its mind
Why the industry needs to move on commission transparency
Why real estate is the only industry in which the seller pays the buyer’s rep
How the potential changes might impact portals like Zillow
Who would benefit if buy-side commissions went away
The leadership opportunity for NAR, CMLS to address DOJ/FTC concerns
The surprising number of people in support of commission decoupling
Public response to the previous NAR budget transparency discussion
Resources:
DOJ Residential Real Estate Workshop
Rob’s Blog on the DOJ/FTC Workshop
Brian Boero’s Buzz Saw Blog Post
‘Conflicts of Interest and the Realtor Commission Puzzle’
Our Sponsors
Connect with Rob and Greg:
Email [email protected]
1-2 cha-cha-cha. 3-4 cha-cha-cha. DOJ. NAR. FTC. MLS.
There was a dance of sorts held in DC on Tuesday, June 5, when the Department of Justice and the Federal Trade Commission hosted a ‘workshop’ to discuss competition in residential real estate. But while NAR and industry players prepared for the fox trot, bringing their best arguments for maintaining the status quo around data access, the DOJ put on a little salsa music and shifted the discussion to commission transparency and coupling.
Rob and Greg are reversing roles this week, as Greg spins conspiracy theories regarding the government’s intentions and the potential consequences of its intervention in the real estate industry. They speak to organized real estate’s nothing-to-see-here approach to the discussion and review the range of views shared in the Developments in Real Estate Fee and Service Models panel.
Greg explains why decoupling would effectively end the MLS, and Rob covers the paper prepared by the National Bureau of Economic Research suggesting conflicts of interest due to coupling. They address who would benefit if buy-side commissions went away, how such changes would impact portals like Zillow, and the surprising number of industry players who support decoupling. Listen in to understand why Rob and Greg are calling for NAR or CMLS to move on this and start leading the dance to develop solutions around commission transparency.
What’s Discussed:
Organized real estate’s nothing-to-see-here stance at the DOJ/FTC workshop
The Developments in Real Estate Fee and Service Models panel
- Reps from Realogy, Purplebricks, Glass House & TRELORA
Greg’s take that the industry was caught off guard
- Prepared for data access and transparency
- Discussion of commissions, decoupling
How decoupling cooperation and compensation would end the MLS
The NBER paperon realtor commissions and conflicts of interest
The theory that real estate commissions are high due to coupling
Rob’s concern that the DOJ has already made up its mind
Why the industry needs to move on commission transparency
Why real estate is the only industry in which the seller pays the buyer’s rep
How the potential changes might impact portals like Zillow
Who would benefit if buy-side commissions went away
The leadership opportunity for NAR, CMLS to address DOJ/FTC concerns
The surprising number of people in support of commission decoupling
Public response to the previous NAR budget transparency discussion
Resources:
DOJ Residential Real Estate Workshop
Rob’s Blog on the DOJ/FTC Workshop
Brian Boero’s Buzz Saw Blog Post
‘Conflicts of Interest and the Realtor Commission Puzzle’
Our Sponsors
Connect with Rob and Greg:
Email [email protected]
Previous Episode
Backing Up the Zestimate with a Zillow Instant Offer Check
Critics of Zillow bash the accuracy of the Zestimate, but the fact is that a home’s worth hinges on what the market is willing to pay. And with the advent of Instant Offers, Zillow is backing up the Zestimate with a check. Consider the fact that Zillow has a platform to help themselves sell homes quickly and it is easy to see how Instant Offers is a game-changer with the potential to create a ‘market-maker system’ of real estate.
Rob and Greg are back to discuss the recent GeekWirepieceon Zillow’s first home purchase in Chandler, AZ. They comment on the irony of the agent’s intention to lean on Zillow for branding as well as the company’s original business model as an auction site. Rob explains the concept of an insta-flip and how it benefits Premier Agents, and Greg offers his take on the one thing that is still missing from the Instant Offers model.
Rob and Greg speak to Zillow’s data around the number of shoppers in a particular zip code and the target market for the Instant Offers model. They address the potential profit Zillow might generate from Instant Offers, the listing lead flow the program will generate, and the possibility of discounted as-is purchases on the platform. Listen in to understand how Instant Offers is likely to foster competition in the space and learn how Zillow continues to change the game of real estate.
What’s Discussed:
Zillow’s first home purchase in Chandler, AZ
The agent’s intention to lean on Zillow for branding
Greg’s questions around double-ending and fees
How Zillow is creating a ‘market-maker system’ of real estate
- Provides mechanism to help sell fast
- Every home could have bid, ask price
Zillow’s original business model as an auction site
The concept of an insta-flip and how it benefits Premier Agents
Greg’s take on what’s still missing from the Instant Offers model
How Zillow’s Instant Offers further validates Opendoor
The target seller for Zillow’s Instant Offers model
How Instant Offers differs from We Buy Ugly Houses
The listing lead flow Zillow will generate through the program
What traditional brokers should do in light of Instant Offers
The potential for a discounted as-is purchase through Zillow
Rob’s insight on the possibility of Zillow offering seller financing
How Instant Offers is likely to foster competition in the space
Resources:
‘An Inside Look at Zillow’s First Home Purchase’ on GeekWire
‘Opendoor is a Bigger Deal Than Zillow’ in Inman Our Sponsors:
Connect with Rob and Greg:
Next Episode
Reframing the iBuyer Phenomenon
Today’s consumer is used to pushing a button and having magic happen. (Thank you for the insight Jeremy Waxman.) And more often than not, we are willing to pay an extra fee for things like convenience and certainty. For this reason alone, the iBuyer phenomenon is here to stay, and the real estate industry would do well to consider how traditional agents might participate in the changing market.
Rob and Greg are back to offer a different perspective on the iBuyer movement, discussing how the industry is misunderstanding the phenomenon. Greg explains how organized real estate might address the consumer experience by partnering with a large financial institution to ‘be the bank’ and Rob shares his take on FSBOs and iBuyers as opposite ends of a spectrum—with the traditional REALTOR experience in the middle.
Rob and Greg address fiduciary duty, describing the conflict of interest that occurs when agents have the capacity to make on offer on a prospect’s home. They cover the difference between iBuyers and traditional house flippers, describing the considerable capital behind companies like Offerpad and Opendoor and the significance of Zillow’s recent acquisition of a mortgage lender. Listen in for insight around iBuyers moving into high-dollar markets and learn how agents fit into a future world where iBuyers are the default.
What’s Discussed:
How the industry is misunderstanding the iBuyer phenomenon
- Intention to change process of buying/selling home
- Company to figure out user experience wins
How MLS and association execs might consider the agent experience
Greg’s proposal around NAR partnering with a financial institution
Rob’s prediction that the iBuyer movement is here to stay
The conflict of interest agents face in offering to buy a client’s home
Rob’s take on FSBOs and iBuyers as opposite ends of a spectrum
- Working with REALTOR = middle ground
The potential ‘buyification’ of the brokerage business
Why iBuyers are not as vulnerable as traditional house flippers
The significance of Zillow’s acquisition of Mortgage Lenders of America
The tipping point when iBuyers become the default for consumers
The significance of iBuyers moving into high-dollar markets
The value in agents learning to pitch investor offers to sellers
Sponsors:
Resources:
Inman News: Agents can show sellers iBuyer offers with new Cloud CMA feature
Brad Inman: In real estate’s tech platform race, I’m betting on an underdog
Connect with Rob and Greg:
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