This is big. Today’s Department of Justice settlement with the National Association of Realtors now lets real estate websites show the fees paid to the brokers representing homebuyers.
At dozens of market-research sessions over the past fourteen years of my life, I’ve stood behind one-way glass watching homebuyers trying to understand commissions. The moderator explains that the buyer’s agent earns a fee sometimes worth tens of thousands of dollars paid by the seller of the home. She then asks how those buyers would feel about getting part of that commission refunded by Redfin.
At that point, the homebuyers look at each other confused. Some are suspicious. Inevitably, one says, “But… but… the buyer’s agent is free.” I’ve always wanted to throw a chair through that glass, jumping into the room and screaming “WE. ARE. TRYING. TO SAVE YOU. MONEY!” That’s the chair the Department of Justice threw today.
And it’s great news! I’ve stood slump-shouldered before our board and told them we’ve given away hundreds of millions of dollars to people who, even when the check is in their hands, had no idea why. I thought the board would be surprised we’d been that crazy, but instead they said we always knew you were. It’s hard for an agent to save homebuyers money when the fees paid to that agent are a secret.
When websites can tell the world how much money is being paid to an agent on every home her client sees, it’ll start a competitive free-for-all. Some agents will compete on price. Hopefully, everyone will do what we all should’ve done in the first place: explain to our customers how we get paid, and ask for more or less money depending on what the market will bear.
We already know what happens when sellers’ agents compete on price. In a living-room listing consultation, the fee is front and center. But when a buyer’s agent steps out of her car to meet a buyer for the first time, the topic of money is often waved off like it’s gauche: “Oh, don’t worry, the seller takes care of that.”
This is why anyone who has ever guided a shopping cart around the grocery store or paid attention to the billboards lining the freeways in every major North American city has seen the ads promising to sell homes for lower fees. Now fees for buyers’ agents are breaking out into the open too. Over the next few years that could save consumers billions of dollars.
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