Major Threat to Real Estate Agents
Appraisers, in case you are not aware, NINE law firms have begun the process to sue real estate agents and brokers across the US about how the commission process works to compensate the SELLING broker.
It is believed that three of the best known internet based property purchasing and selling web sites are behind this effort. It’s being done so that they can build their own businesses, while jeopardizing the livelihood of real estate agents and brokers.
The suits allege that there is collusion and racketeering among the real estate participants to ‘bake in’ a set commission for the selling agent in the LISTING agreement signed by the seller and listing agent. Yes, this is common across the US in just about every single market and MLS association. But in fact, commissions are fully negotiable across the country. And the process has been in effect for decades.
To learn more about this issue, which ultimately could affect what appraisers do, watch the video below. About 2/3 of the way into the video, appraising situations are discussed.
Another nail in the coffin of Real Estate Agents. Lots have happened in the last week that we need to get caught up on.
Posted by Brian Stevens on Tuesday, July 9, 2019
This link is to a petition you can sign, which will be presented to every agency and organization with involvement in real estate transactions.
Dave Towne on e-AppraisersDirectory.com
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In listening to the video good points are made, but he’s off base when he says appraisers are looking at Zillow and using their zestimate as a guideline or standard. A true gatekeeper (appraiser) should never look to support a number (sales price, zestimate, VA refinance number, etc.), but should instead always independently determine value. As an example, I’m working on a flip assignment right now where the investor purchased a home for $200,000, invested $75,000, is under contract for $482,000, and even after Tidewater market value is $445,000 (Zestimate $489,003). In part, the reason for the value variance is due to a false claim (agent / MLS / Zillow) relating to the subjects permitted GLA, and number of bedrooms, and bathrooms. So again, appraisers don’t tie current value to past purchase prices or conditions ($200,000), nor do they blindly hit purchase prices or zestimates, but rather filter the market to reach an independent opinion of value.
Now, if he really wanted to connect the evil dots post Zillow purchase, he wouldn’t focus on THEIR attempt to set their own resale value, but instead would focus on big brother government giving THEIR support to push home buying via sponsored appraisal waivers.
If appraisers are truly the gatekeepers, then please stop taking our keys away.
Seek the truth.
unlike appraisers, realtors lobby is $trong
Zillow sold 414 homes in the first quarter of 2019, but when costs like purchasing and marketing the homes were factored in, Zillow Offers lost $45.2 million.
It’s a ticking time bomb that will explode if the housing market cools and Zillow is left with a large inventory of unsold homes on its books.
Zillow is one of the most shorted stocks out there right now. Investors shorted $1.27 billion worth of Zillow stock as of late June, according to Nasdaq. That put Zillow in the top 30 short positions by dollar volume.
Short positions in Zillow accounted for 21.7 percent of the company’s “float” – or the total shares of the firm’s stock that are available to trade. That puts the Zillow in the same neighborhood as TESLA which has about 35 percent of its float shorted.
The reason so many are bearish on the company is because earnings from its main line of business have ground to a near-halt. Premier Agent, Zillow’s flagship program that charges agents a fee for advertising, accounted for 67 percent of its revenues last year – a level of concentration that makes the company extremely vulnerable to even small decreases in advertiser spending.
Premier Agent posted less than 2 percent year-over-year growth in the first quarter of 2019. And even by its best estimate, Zillow’s own guidance puts Premier Agent growth at less than one percent for the second quarter.
So the company is betting it can drive revenues through Zillow Offers, which it launched in April 2018. Zillow isn’t necessarily looking to make money on the values of homes that it purchases rising, but on the 6 to 13 percent fee it collects from sellers, as well as ancillary lines of business like mortgage origination and title insurance.
TERRIBLE Q2 2019 EARNINGS CALL FOR CORELOGIC. JUST ANOTHER CONFIRMATION OF CORELOGIC’S ON GOING
MANAGERIAL INCOMPETENCE.
NYSE: CLGX
41.53 USD -5.67 (12.01%)
Stock down 12%. At least the hedge funds know the truth.
Revenues of $460 million, DOWN $29 million, or 6%, Operating income of $15 million was DOWN $75 million, or 84%
In December 2018, the Company announced the “acceleration” of its AMC transformation program. SO MUCH FOR THAT BRILLIANT IDEA!!!
Only thing keeping CLGX stock from crashing are share buy backs.
The case is without merit. The commission is paid to the listing Realtor. IF the listing Realtor wants to co-broker then they can offer a commission split (varies) to a selling agent. If the listing Realtor sells the house then they get the whole commission.
The listing agent is still working two sides of the transaction, OR they pay x% to the selling agent to work the other side of the transaction.
There are numerous listing only companies that will list a house for a few hundred dollars, and the owner picks how much they want to pay in commission to a selling agent. Or an owner can sell the house themselves. There is no mandate to use a Realtor. Of course the owner’s then find out how much trouble and work it is to actually sell a house.
If this suit prevails then it could seriously damage home sales. Buyers would either have to pay the selling agent side, and they usually need all the money they can scrape up just to buy a house and/or the listing agent would no longer list a house as a co-broke. They will just work both sides.
Great explanation Tobby. One most folk simply can’t grasp. When I list with you, I have conditionally hired you and promised to pay you a set fee or percentage fee. Say 6% as is customary and reasonable or has been for decades. In some much higher-cost housing, we may negotiate it downward.
As I try to test the waters for a lower fee, you remind me that you can happily do so, BUT it will discourage many of the sub contractors you hope to also engage on my behalf, through the local mls service.
If I am in a big hurry and my property presents ‘marketing challenges’ you may even convince me to offer to pay a premium – either to be shared between listing agent & selling agents or intended. Your logic make sense to me. I know you can hire more people for 3% than you can at 2 1/2%.
I ask about just paying you the listing side of 3% and you say fine, but without anything to offer buyer agents WHY would they want to work on your listing? I counter that their buyer should pay them.
You remind me that sure, that’s possible but not very likely because buyers tend to max out purchases and with closing costs rarely have enough left to hire an attorney to draft a buyer’s contract AND pay their own broker. It sometimes happens in commercial work, but it’s completely irrational to think it can work on the residential side. I would again be left with ONLY you to sell my property. One person instead of hundreds or even thousands of agents.
I nod my head in understanding. THAT is why I pay you 6% for your in-person, professional advice based on my specific needs and not some one-size-fits-all corporate algorithm and blind marketing campaign by software services that still experience difficulty in locating their own derrieres with both hands. I consider myself lucky to have your 20+ years local agent experience and knowing where your office is located if there are difficulties in the transaction.
I also appreciate that you are not some johnny come lately fly by night investment syndicate with lots of money and zero real-world real estate experience.