http://www.mitwa.org/about/index.cfm?fuseaction=rssinfo

Regarding your comment: “it is not clear to the buyer that they are subsidizing anything when we make our full 3% fee”. I am actively working on a business model that provides some sense of fairness in that regard. When speaking with agents, they have a reluctance to discount a buyer agent fee if the client doesn’t “ask” for that to be done. I personally offer the discount when warranted, and it is often most warranted when the client didn’t “ask”, rather than when the client “did” ask.

When I worked in Manhattan Beach, CA, I met an agent who handled the “subsidizing” issue, by clearly identifying that his services were not available under a sale price of $450,000. He set his minimum fee by defining his services in that manner, and did not waiver from his policy. While that may seem “harsh”, every agent defines their service area, albeit usually in a geographic vs. monetary manner. While I have not done that, I am keeping the idea in my “toolbox” for future reference

As to your question regarding buyer agency contracts, I have been actively involved in discussions regarding buyer agency contracts since they first appeared on the scene. There is a Buyer Agent Attorney in the Bay Area by the name of Leo Rodriguez, with whom I have in past years disected this issue ad nauseum, along with Tom Early the current President of NAEBA and Tom Hathaway, the owner of The Buyer Agent franchise and others on both sides of the fence.

While I was one of the first agents to use a Buyer Agency Agreement, I have only used them when it was clearly in the buyer client’s best interest for me to do so. I continue to operate on that basis, meaning I use them rarely. Maybe 5 times since they first appeared into my then sub-agency world back in hmmmm 1993 or so. In my experience the minute a buyer is willing to sign one we have a “meeting of the minds” and so I don’t need one. I need them to clarify agency relationships when dealing with an unrepresented seller, and a few other instances, but not as a means of “getting paid” and I object to them as a “means of getting paid”.

The yo-yo of NAR wanting to be a self governing body, and yet wanting the Courts to support the duplication of buyer agent fees in two separate contracts, has backfired on them. Case history to date, to the best of my knowledge, is that the Courts say “Don’t come crying to us when the PC panel does not award you the “co-op”, making the buyer agent agreement less than satisfactory as a means of getting paid. When CAR (CA)was not able to pass the “contract is a contract” legislation at the 11th hour due to interference from NAR (1999?), we started seeing a stronger placement of the Buyer Agency Contract in PC guidelines as an appeasement.

My “seller’s are dogs and buyers are cats” theory is somewhere here in this blog, and has been my position since 1998. Agents do not “get it” or agree with me, but consumers do. In fact buyer client’s have indicated that my representation of them as cats makes them feel better about their natural tendencies in that regard.

Having trained and mentored many new agents over the years, I tell them that the best way to insure that you will be paid is to be very, very good at what you do. You should not use a buyer agency agreement to lock people in to using you to compensate for your inadequacies.

“Withdrawal” of the co-op in exchange for the fee in the buyer agency contract is a misnomer and an ineffective means to secure payment, and this fact has been proven by the best EBAs in the country. They continue to be angry with that fact. I not only do not see that changing in the near future in the Seattle Area, I do not support that change.

“It takes a village” to educate and prepare a buyer. It is our duty to the industry, and to the consumer, to sometimes be a step in the right direction for the buyer consumer on their journey. It is part of our “giving back” and support of the “public interest” to let the “cats” roam and feed them a bit on their journey, without requiring that they “stay on a leash in our yard”.

There are ways to change this inequity– the most obvious being to lock a buyer into a buyer’s agency contract, to ensure that when they buy, their agent gets paid. Would love to hear your position, and whether you obligate your clients to sign them.

In the travel industry, the real winner was the consumer. The consumer won two ways. First the information asymmetry (the heart of any economic engine) was severely leveled. For example, offline travel agents can no longer get away with pushing American Airline flights all day to meet override levels (kickbacks) when lower priced flights exist on other airlines. Travel agents used to profit from people’s ignorance about travel pricing, but pricing transparency made the market competitive (efficient) and price dropped. The second way consumers benefited was that technology drove down the price of fulfilling and supporting a travel purchase by an order of magnitude ($70+ off the top of a pre-internet ticket).

The real-estate industry is facing the same two facts:
- A rapidly declining information asymmetry
- Technology enabled efficiencies that will get passed on to the consumer eventually

Spencer was right in that most travel agents were order takers. Are there less order takers overall? Not really, the jobs migrated to the call centers of Expedia, Orbitz, and the suppliers.

Real-estate agents have two sustainable competitive advantages as far as I can see and they should start figuring out how to work with the new world rather than fight it. Those advantages are that they are local and that these are still negotiated transactions.

Who cares if the z-estimates are wrong: two things are going to happen – they are going to improve and they are going to be close enough, often enough to create a fire hose of demand that will change the game. People will not stop looking because it cost nothing to look.

Guys, come on – I can’t think of any business where the whole industry believes it is entitled to a flat 6% of such a large and significant transaction. On a $1.5M home that is a 90K service fee! I know incredibly smart people with masters degrees in technology that do not make that much money for a whole year’s worth of hard work. If the industry can’t see that consumers are about to be empowered (see http://www.fsbomadison.com/) then it’s in for a rough ride. People just are not going to continue to subsidize the profitless sales.

Gordon played off the traditional broker well. I think now that he is involved with the Zillow guys, that he has a better understanding of the tech side than he lets on.

I laughed a few times at Nikesh’s HouseValues speech. It was such a sales speech and failed to address many of the questions asked, instead constantly referring to “local area experts”.

Overall it was a really interesting presentation, I liked Spencer’s poker face.