The uncoupling of buyer agent and listing agent commissions

“The report suggests that the one measure which could spur rate competition is uncoupling buyer and listing agent commissions so that buyers can negotiate compensation with their agents. Buyer agent commissions, now baked into listed prices, would instead be negotiated by buyers.”

Steve Brobeck of Consumer Federation of America (CFA) is dead wrong. In 40 US states and Washington, D.C., buyer agents are able to compete for buyers with lower commissions by means of offering rebates.

However, as of 2021, the list of ten states where buyer rebates are prohibited includes Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon, and Tennessee. Within the borders of these ten US states, where home buyer rebates are presently banned, coupled commissions structures, by default, are anticompetitive.

Real estate commissions are decoupled, if advertised correctly. Refusing to acknowledge legitimacy of buyer rebates stands to punish a number of highly competitive real estate companies that deliberately offer rebates to consumers, including a number of tech-enabled brokers such as Door.com, Flyhomes, Jovio, Home Bay, Homie, Prevu, Reali, Savvy Lane, SimpleShowing, Trelora Real Estate, Yoreevo, Faira, Houwzer, Unlocked, etc. that all operate in states where rebates are allowed by state laws.

Lastly, the coupled commissions structure is not, by itself, uncompetitive. The process is merely prone to abuse with false advertising notions and broker-to-broker collusion scams, such as Zillow.com Flex Program, Realtor.com (Opcity.com), Redfin.com Partner Agent Program, Opendoor.com Partner Agent Program, RocketHomes.com, mellohome.com, HomeLight.com, UpNest.com, Clever Real Estate (listwithclever.com), SOLD.com, Landed.com, LemonBrew.com, OJO.com, Xome.com, Better.com Real Estate, Tomo Brokerage (hellotomo.com), Blend.com Realty, RadiusAgent.com, ReferralExchange.com, RamseySolutions.com, EffectiveAgents.com, TopAgentsRanked.com, HomeCaptain.com, MyAgentFinder.com, FastExpert.com, HomeGain.com, AgentPronto.com, AbodeHQ.com, goMILLIE.com (AgentHeroRealty.com), HouseCanary.com (ComeHome.com), NestReady.com, IdealAgent.com and similarly situated “shell” real estate brokerages.

Price-competitive marketplace requires the use of #MLS

Without it, highly competitive agents will be systematically (be that as it may, unlawfully) by-passed by the mainstream industry and unable to compete for consumers, brokers will hoard “pocket” listings, first time buyers will be unable to purchase buyer agent services out-of-pocket, and the transparent listing marketplace will fall apart entirely.

Be careful what you wish for, you might just get it.

#realestate

Author: Litesand

Antitrust, real estate, e-commerce, fintech, proptech, bigtech View all posts by Litesand