Flat-fee Brokerage; Transparency as Subterfuge
In a recent “Inman” Oped piece by Johnnie Hanna, CEO of “Homie”, a Utah-based flat-fee brokerage entitled, “Agent commissions headed for a reckoning”, the author opines, “Agents and brokers who choose innovation over resistance will not only survive but will thrive and earn the trust of consumers.” Respectfully, as a now-retired, veteran 36-year real estate, land use and governmental affairs lawyer during which time in 1992 we built and sold, in 1996, the company “Virtual Realty”, the first “on-line” real estate program that has enabled companies like Redfin and Zillow to achieve their presence today, I can tell you, with more than a passing degree of familiarity with the subject matter, that the only ones who benefit from today’s methodology-Du-jour are companies like Redfin, Zillow and their brethren; not their agents. The ultimate loser was, is and will always be, the individual home buyer. Why? Because without competent counsel in matters that are, necessarily, wholly-foreign to them, the individual home buyer is blind to everything save for that which is provided them by the seller and/or the seller’s agent. Term this, “selective transparency”.
?While there can be no well-founded argument that the consumer fails to benefit from “transaction transparency”, be it in the “no-haggle” business model of car dealerships or home sales, “transparency” means nothing to the uneducated. To quote Desiderius Erasmus, “In regione caecorum rex est luscus.” or translated, “In the land of the blind, the one-eyed man in king”; and nowhere is this axiom more relevant than in today’s automation of the real estate sales industry. For a buyer to consider entering into the purchase of that which is likely to be their?life’s most-significant acquisition, relying solely and wholly on the advice and consent of the seller and or the seller’s agent who, by contract, ethic and ethos has only a fiduciary responsibility to him/herself or the seller, is sheer lunacy.
?Professional kudos to these new-world order companies for the envisioning, birthing, growing and launching of the business and marketing model that is custom-tailored to today’s generation of buyers who are either too lazy or too busy to see that the fox is not only in the hen house, but that he has built it. But while I recall, with mixed emotions now in retrospect, the MLS ‘s proverbial “brick wall” that we ran into back in the early to mid-1990s when we were extolling the virtues of public access to their records as they knew full-well the ramifications of opening their listings to ready, public accessibility via the then-emerging internet, there can be no competent argument today that buyers are benefited by the emerging business model of one-stop shopping. They have now been relegated to little more than sheep, enticed by the promises of increased protections via this transparency. Why? Because again, in the land of the blind, the one-eyed man in king. Thankfully, the seasoned real estate investor continues to understand that the acquisition or divestiture of real estate assets can never be an automated process; nor can it be conducted under myopic transparency as dictated by the seller. For in short, while I agree with the author’s statement that, “Requiring both buyers and sellers to hire and pay their own agents directly would bring real estate to parity with other industries”, respectfully, that’s simply not the design of the real estate industry’s new world order. Rather it is to convince the buyer that the “vending machine” approach to marketing properties, where the “transparent” view of the products that await within the machine are authentic and unadulterated, all-the-while being controlled in reality solely by the vendor, be it Zillow, Redfin or any other formulaic process, benefits both the buyer and seller under the auspices of “transparency”. This is, in a word, fallacy.?
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Take it from one who originally crafted the process; the design is, as it always has been since the early ‘90s, to control any and all aspects of the transaction process paying only that which amounts to a “minimum wage” to the brokers and their agents, the “mules” of the process as both a cost of doing business and a necessary evil. Convince the public that the agents and brokers are today somehow the “bad guys” engaged in nefarious actions cloaked in conspiracy and that “transparency” is the answer to this “corruption”, and the take-over is complete.?
No. No, Mr. Hanna; your closing statement that, “Agents and brokers who choose innovation over resistance will not only survive but will thrive and earn the trust of consumers” is as disingenuous and fragmentary as it is illusory. Capitalizing on the public’s propensity for taking the path of least resistance by focusing their perspective on the sellers’ idea of “transparency” may be financially expedient for the Ruling Lords of Properties, it is tantamount to the 1939 movie, “The Wizard of Oz” wherein Noel Langley wrote for the great Frank Morgan the immortal line, “Pay no attention to that man behind the curtain. The great Oz has spoken.” There is simply no way that a world in which a buyer willingly relinquishes his or her right to competent counsel, be that counsel in the form of lawyer, broker or agent, under the auspices of “transparency”, is somehow beneficial to the buyer. It is not. Elevated profit margins, cloaked in the veil of ethical integrity via “transparency, is not a replacement for ethical, fiduciary representation and true buyer protection. It is merely the New World Order’s reinterpretation of Apple’s Macintosh commercial.