Keller Williams Realty is advising its agents to charge nothing to clients who sell to the iBuyer Offerpad and instead to only accept payment from Offerpad in the form of a 1 percent fee.
The franchisor is recommending — not dictating, it emphasizes — that this compensation arrangement be part of deals executed under its new iBuying partnership with Offerpad. Keller Williams announced the partnership as a way to finance and scale its iBuying service, Keller Offers, in mid-August.
An agent who helps a client sell to Offerpad may also have the opportunity to re-list that client’s former home — now owned by Offerpad — for a 1 percent commission from Offerpad. But the agent’s broker could decide to not allow that agent to re-list that home out of legal considerations, Keller Williams said.
Keller Williams recently shared these pricing details after Inman reached out to clarify the mechanics of the Offerpad partnership.
The new disclosures about the program make clear that selling to Offerpad with representation by a Keller Williams agent would be cheaper than what many initially assumed. The program’s fee model also illustrates how iBuyers could be a source of commission compression for agents in the years ahead, according to real estate tech analyst Mike DelPrete.
“What’s being proposed would reduce an agent’s commission from 6 percent to 2 percent across two transactions,” he said.
But Keller Williams President Josh Team told Inman that, far from putting downward pressure on commissions, the program is designed to “guarantee [Keller Williams] agents made the most amount of money possible on iBuyer transactions.”
Some critics believe that Offerpad program creates financial incentives that could spur Keller Williams agents to steer sellers against their best interests towards Offerpad offers.
But Gayln Ziegler, who is overseeing the program as director of operations of Keller Offers, claims that it will actually bring more protection to consumers. It provides representation to sellers who might otherwise be left to fend for themselves in dealing with the iBuyers, she said. Plus, before even bringing an offer from Offerpad to a seller, the Keller Williams agents must have the seller sign a consent form, she said. The form discloses that the agent and their broker could ultimately receive compensation from Offerpad on the front and back end.
Keller Williams also requires agents to complete a certification program to participate in the Offerpad partnership. The venture will be live in Dallas-Fort Worth and Phoenix by the end of August. Ziegler expects it to yield 3,000 to 5,000 “opportunities” per month for Offerpad to buy homes across a planned 12 markets by the end of the year.
Skeptics contended that the Keller Williams partnership with Offerpad would simply make using Offerpad more expensive for sellers by inserting additional cost into the transaction.
But that wouldn’t be the case if Keller Williams agents follow its fee recommendation, Ziegler said. Not only would there be no listing fee paid by the seller to the agent. The program creates “operational efficiencies” for Offerpad that generate savings for the iBuyer. For Offerpad, these savings offset the cost of the 1 percent fee paid to the Keller Williams agent, resulting in a service fee for the seller that is no higher than what the seller would be charged without representation, she said.
Ziegler emphasized that Keller Williams does not require brokers and agents to charge a 0 percent listing fee to clients who sell to Offerpad.
“[We] do not dictate commissions. That is a RESPA [Real Estate Settlement Procedures Act] violation. We would never do that,” she said. “But we train to it [the 0 percent fee], we encourage it, we speak to it and the agents are aware of that — as are the brokers.”
On the other hand, the 1 percent fee paid by Offerpad on the front and back end are not recommendations. They are set under the terms of the partnership, said Keller Williams spokesman Darryl Frost.
Ziegler also clarified that the program does not require that the same agent who helped a client sell their home to Offerpad will also automatically become the listing agent that resells their former client’s former home (now owned by Offerpad) for Offerpad.
The agent’s broker is entitled to the Offerpad listing, but not necessarily the same agent.
“The broker may choose to assign one agent to a transaction on the front end and then another agent on the back end, and they’re doing that because they’re assessing their risk for their business and they’re making a judgment call,” Ziegler said.
Asked for examples of regulations in some states that might cause brokers to perceive such risks, Ziegler noted that “some states don’t allow dual agency.”
Dual agency refers to a situation in which an agent is tasked with representing both the buyer and seller in the same transaction.
Frost, the Keller Williams spokesman, later reiterated that Keller Williams agents that help clients sell to Offerpad under the program only represent the seller. They do not serve as dual agents, he said.
Editor’s note: This story has been updated with additional comments from Keller Williams; to correct that Josh Team is Keller Williams’ president, not its CEO; and to correct the spelling of Gayln Ziegler’s name.