Multiple Listing Service (MLS)
I’m truly amazed at the number of real estate agents that knowingly or ignorantly violate (break) laws aimed at protecting the consumer by not showing a home buyer a requested property.
This type of deception by the Buyer Agent frustrates the reputation of all real estate professionals. It’s a sobering breach of the Realtor’s Code of Ethics, a serious violation of Mass General Law 93A (Regulation of Business Practices for Consumers Protection), and potentially an abuse of ANTITRUST regulations.
The reluctance of a Buyer Agent not to show a home is generally because the home listing does not offer adequate compensation to the Buyer Agent. Translation the home sale is not putting enough money into the Buyer Agent’s pocket. Therefore the Buyer Agent is steering home buyers away from properties for their own personal financial gain. Consequently, the Buyer Agent is putting his/her needs in advance of the buyer to whom they serve.
For example, a real estate broker friend shared with me the following account. She recently listed a property in her Multiple Listing Service (MLS) and offered $2,500 to a Buyer Agent. She received two phone calls that were most reflective. The first phone call went accordingly once she filtered out the superlatives: “Good luck selling that house, no Buyer Agent will show it for that little co-broke amount.” The second phone call was a little different. The Buyer Agent agreed to show the home but not because her buyer may be interested (she would make sure they weren’t) but because in her words, “she wanted to waste the sellers time by removing them from their home so she could show it to a buyer that she would make certain would never be interested (just like the seller wasted her time by offering such a small co-broke amount).”
This type of damaging behavior is always for the betterment of the real estate Buyer Agent at the detriment of the home buyer that simply wants to be a home.
Take Control of your home buying process. Don’t be deceived by a greedy Buyer Agent. Think twice before committing to a greedy Buyer Agent.
Serendipitously the influence of Zillow may also help to reduce the transaction costs for both the home seller and buyer. Is paying a real estate commission really necessary? NO! But many real estate professionals feverishly protect the commission model suggesting it is in the only way to ensure sellers and buyers receive quality information and service. You can bet Zillow is delivering timely quality information and that there are real estate agents that deliver full service and do not charge a commission, but rather a fixed fee.
Zillow has cracked the dominance of real estate agents and brokers over the home buyer and seller. By devolving information and making home listing public facing Zillow has stripped real estate agents of a treasured commodity- the control of home listings. More importantly, Zillow does not operate like a Multiple Listing Service (MLS) – the real estate broker’s network. Zillow does not highlight the commission, also called the co/broke, a listing broker will pay a buyer agent. Often times a buyer agent using the MLS, will not show a home buyer a respected property if that listing does not offer a satisfactory commission to the buyer agent. Therefore the buyer agent under the MLS system is the gatekeeper of information. The buyer agent will serve his/her self-interest to make more money, rather than serving the needs of their client- the home buyer.
This point is confirmed by Inman News in a 2015 Special Report- “Why Real Estate Agents Don’t Compete on Commission Rates.” When asked what’s stopping the agent from charging a fixed fee or offering less in commission? The majority of respondents agreed that philosophically agents and brokers are opposed to commission discounts. Most noticeably because that means brokers/agents would make less money. More poignant is that agent and brokers said they fear if they represent a seller at a reduced commission, other brokers might not promote their listings to their buyers. This type of behavior is called steering and is in violation of laws that protect consumers and enforce competitive markets. A competitive real estate market based on reducing transaction costs is good for home sellers and buyers.
Fortuitously Zillow and the internet have leveled the playing field and empowered home seller and buyers. It is NOW up to home sellers and buyers to exercise this power and say, “NO to Paying a Real Estate Commissions”.
Save MONEY. Only list a home with a FIXED FEE Realtor.
This week I read an article about the struggling relationship between the National Automobile Dealers Association (NADA) and Tesla. In some ways this conflict parallels the most recent friction in Denver, Colorado between REcolorado (Multiple Listing Service) and Trelora, a Denver residential real estate sales company. Both Tesla and Trelora are trying to disrupt the existing sales model in their respected industry and challenge the status quo. In Trelora’s case, the company on their website highlighted REcolorado’s proprietary information and noted the tremendous cost savings achieved using Trelora’s flat fee model versus a commission sales model.
Since 1850 the real estate market in the United States has recognized only one model for the conveyance of residential real estate- the traditional broker commission sales model. The real estate broker has controlled the monumental scepter- the home listing- which chiefly empowers the real estate broker to decide when, how and who can sell or buy real estate. Some industry pundits have noted the internet and listing portals like Zillow Group- (Zillow and Trulia), and others are breaking the real estate broker’s stronghold over the consumer.
Really? Or is it just smoke and mirrors?
The reality is these sites make home listings available to the public, but still everything remains controlled by the commissioned real estate broker. In fact even Zillow bowed down to the commissioned real estate broker. What started as a consumer real estate disruption is proving to be a great disappointment. Recently Zillow shifted gears and their revenue model is now dependent upon the advertising of commissioned real estate agents/brokers that are called premier agents.
Obviously public facing real estate listing platforms underwritten by commissioned brokers are not what they appear to be- a (real) real estate disruption.
A (real) real estate disruption is a market model permeation in the form of increased COMPETITION. Competition that demands real estate brokers to reduce the cost to transact real estate e.g. commission or fee based, without sacrificing the quality or quantity of service delivered to the consumer. Real estate consumers do not want less service they want to pay less for the service. They want full service real estate brokers to compete on service delivery costs. Consumers want to put more money in their pocket and not in the pocket of the real estate broker.
COMPETITION is the (real) real estate market disruption and the traditional commissioned real estate broker can’t compete. Just ask REcolorado.
The polar difference between Trelora and REcolorado, the Denver area Multiple Listing Service, is unmistakable. Trelora is a consumer centric model and REcolorado is a broker centric model. Trelora serves the real estate seller and buyer and REcolorado serves the real estate broker. The discord is that Trelora and REcolorado fully serve different audiences but with a same end result- To Sell a Home. Nothing more, nothing less.
REcolorado is a broker network- an exclusive membership club for real estate brokers to advertise and share commissions and Trelora is a Denver area flat fee real estate broker. The issue is Trelora advertised on their website the MLS commission fees and the significant savings a seller and buyer will recognize using Trelora and not a commissioned broker. So what’s the big deal? Most every home seller and home buyer knows that when using a commissioned real estate broker they will pay the going market rate of 5% or 6% (commission), as their cost to transact real estate.
So was REcolorado and its member brokers justified in issuing a “cease and desist”?
The simple answer is “YES”.
According to REcolorado, Trelora is “ ………. breaking IDX rules that prohibit manipulating listing content in a way that “produces a deceptive or misleading result” and by making parts of the MLS database available to people who are “not authorized” to see it by MLS rules and regulations.”
There is no dispute that is exactly what Trelora did. Trelora is guilty of showboating their competitive market model advantage much to the embarrassment of REcolorado and its members. The big deal is that Trelora is also an active member of REcolorado.
So does that make Trelora a whistleblower or a market agitator?
This spring when you interview a prospective real estate broker, make sure to ask how much and how they charge to list and sell your home.
Don’t give your home equity away. Put more money in your pocket. Save 1000’s of dollars and never compromise service.
Use a FIXED FEE, FULL SERVICE real estate broker.
For now it seems REcolorado, the Denver area Multiple Listing Service (MLS), is either very persuasive with legal jargon or Trelora is satisfied with 48 hours of free marketing and exposure. The “cease and desist” order issued by REcolorado has forced the flat fee real estate broker, Trelora, to apparently succumb and abide by REcolorado’s demands.
No matter Trelora’s apparent hollow posturing continues the effort to frustrate the real estate broker commission model. Technology and the internet has devolved power to the real estate seller and buyer. It has unlocked the guarded “listing information” that real estate brokers, for the last 100 years, have treasured and aggressively protected.
The takeaway from reviewing the hundreds of comments from real estate sellers and buyers is that the real estate consumer recognizes the operational and market monopoly real estate brokers have reaped for so long.
Real estate sellers and buyers demand the following:
- REDUCED TRANSACTION COST without sacrificing quality and quantity of service
- COMPETITON based on “cost to sell”. Real estate brokers should advertise their service cost. Either fixed fee or a commission is okay, but paying a 5% or 6% commission will not be tolerated in a competitive market.
- To work with a LICENSED REAL ESTATE PROFESSIONAL.
Regardless if Trelora does nothing more to push reColorado, the real estate seller and buyer have taken notice and spoken. The real estate service market must be more COMPETITIVE.
Power to the Real Estate Consumer.
The typical commissioned real estate Broker implores a home Seller to list their home with them on the Multiple Listing Service (MLS), which in their opinion is the best way to market and sell a home. But what exactly is the MLS?
The MLS is a restricted website for real estate Brokers and Agents only. Chiefly it discloses the commission and compensation paid to Brokers to transact real estate on behalf of the Seller and Buyer.
According to the National Association of Realtors (NAR) its members have spent millions of dollars to develop more than 800 fractured Multiple Listing Services. Using the MLS, a commissioned listing real estate broker will post a Seller’s home in hopes that another real estate broker will collaborate. Collaboration means sharing a commission and how much money will be split between brokers. Therefore the most important MLS detail is how much of a commission is being offered. The greater the commission the greater the chance a Buyer Broker will cooperate and the home will sell.
MLS is a private listing catalog created by Brokers, for Brokers to transact third party real property to the exclusion of the Home Buyer and Home Seller. Further, the MLS is never accessible to the Seller that is unwilling to pay a real estate broker commission.
In the 21st century the power of the real estate broker to control listing information has been radically diluted by technology; mainly the internet e.g. Zillow. Accordingly, the home Buyer and Seller are beginning to search for an alternative transaction platform- one that further shifts the control to the consumer and allows the Seller and Buyer to put more money in their pocket.
The evolution of real estate is now.