BrokerageIndustry News

A peek ‘Behind the Curtain’ at real estate practices

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Image courtesy of Fuzzy Gerdes.

Real estate agents and brokers surveyed by Inman News say their colleagues often engage in practices that most agree are unacceptable, such as relisting a property to generate fresh interest or reset days on market.

But the survey also found that real estate professionals are divided on the acceptability of much of what goes on "behind the curtain" — such as agents "double ending" a transaction and representing both the buyer and seller.

The online survey of agents and brokers — "Real Estate: Behind the Curtain" — asked real estate professionals about not only the frequency of more than three dozen customs and practices, but whether they thought such behavior was acceptable or not.

More than 500 respondents rated the acceptability of those practices, while 367 reported on the frequency of those practices in their markets, based on their own experiences.

Some of the practices that agents and brokers found most troublesome — like sharing the seller’s minimum price with a buyer’s agent — seem to be infrequent or rare.

3 essential tools that will 10X your real estate marketing
Smart landing pages, a synchronized database and automation generate results READ MORE

Many brokers and agents were indifferent about some practices that appear to be fairly common, such as pricing properties at less than their market value in order to generate interest.

One telling statistic: Nearly 58 percent of those surveyed (see Chart 1) said it was common for major listing brokers in their market to charge the same rate or roughly the same rate for services — a sign that consumers have little power to negotiate commissions, and that there’s a lack of competition based on cost.

CHART 1. FREQUENCY: Major listing brokers in the same market area choose to charge the same rate or roughly the same rate for services.

CHART 2. ACCEPTABILITY: Major listing brokers in the same market area choose to charge the same rate or roughly the same rate for services.

"The majority of consumers feel 6 percent or 7 percent is the ‘rule or law.’ If we could publish our company policy on commissions, the consumer would be better informed to make a decision," said one survey respondent.

But most agents and brokers said they were not bothered by uniformity in commission rates, with 41 percent saying it was acceptable and nearly 13 percent calling it a "desirable" situation. Only 31 percent shared the view that it’s "unacceptable" for major brokers in the same listing area to charge the same or roughly the same rate.

Agents and brokers said the same was true of commission rates offered to cooperating brokers on the buy-side of a transaction. Among those surveyed, 58 percent said it was common for offers of compensation to be the same or roughly the same among major listing brokers. Attitudes about that practice were much the same — 30 percent of respondents said such a situation was unacceptable.

"My brokerage allows us to choose percentages offered to (the) other side of transaction," said one agent — implying that others do not. …CONTINUED