Never a dull moment in the Real Estate business! Just when an agent feels she’s hit her stride, knows a thing or two with some experience under her belt, the universe throws us another curve ball! This time its something called “the ibuyer.” *shudder*
If you are tech savvy even a little bit, you might infer that ibuyer has something to do with an Apple product. Not in this case. But as consumers of real estate info, you should know about platforms that are on line, like Zillow or Opendoor that deal in featuring homes for sale or rent. They are now referred to as ibuying platforms – places where buyers and sellers can find/feature homes for sale.
What’s new is that these platforms are trying to transition into the marketplace and cut out the real estate agent and broker and sell or list directly to/from a consumer. They are trying to disrupt the real estate industry by attacking real estate agents, brokers, Multiple Listing Services and the National Association of Realtors with law suits claiming these entities keep commissions artificially high with an average of 6%. Nothing can be further from the truth.
In every state in the union, commissions are negotiable. But buyers and sellers need to understand that whatever the commission rate is – this is divided four times. Once between buyer and seller brokers and then again between the brokers and the agents. Agents and brokers guide clients through the contracting process, inspections, lending and make sure deadlines are not missed which can put a client in a dire financial or legal situation. How much is this guidance worth to a client who is unfamiliar with the real estate process? One percent? Two?
Secondly, the MLS does not regulate commissions because as I have discussed in this blog before, they allow the discount brokers access and do not censor their listings at all. Nationally commissions vary depending on state and also price point and many are below 6%.
The dirty little secret is that these ibuyer platforms are trying to appeal to the consumer by saying they don’t charge commissions (unlike traditional realtors). However in many cases they charge more per transaction than most real estate brokers – they just don’t call it a commission. Zillow’s fees are as much as 7% and both Offerpad and Opendoor charge fees of 7.5%! So BEWARE! While giving buyers and sellers some supposed autonomy in their real estate transaction may sound good, in the end is it really? If fees are higher what are you getting for your money?
The other fact that Missouri consumers need to know is that Zillow doesn’t have access to all of our tax information and sales info. Therefore, they are not operating with full knowledge of our market so if you go onto Zillow be aware that they don’t have (by law) all the info realtors have at their disposal to price and market your home.
With an agent, you get a live human being who can guide you through the process, give you some good professional advice on pricing, offers, negotiating inspections and everything in between. Agents are usually available 24/7 for their clients. And hopefully, they keep you from very costly pitfalls that will make your commission costs pale in comparison! As I have written before, what is the purchase or sale of your largest asset worth to you, the consumer?
Do you think Zillow will answer your phone calls at 10PM? I seriously doubt it.