The Deeply Flawed System

Over 90% of home searches begin online, and from these searches come interested buyers – leads.

Then, usually, those buyers (leads) hand themselves over to a buyer’s agent who calls the seller’s agent.

So let’s break down the way this process most often works.

1. The owner goes through the arduous and expensive process of buying the home.
2. The owner takes on all the risk and expenses (taxes, insurance, etc) of owning the home.
3. The owner incurs all the expenses & labor of maintaining the home.
4. The owner incurs all the expenses & labor of upgrading and prepping the home for sale.
5. The owner provides the listing agent with the information for the MLS.
6. The listing agent enters the MLS information.
7. The homebuyer searches the MLS, or syndicators like Zillow, to find the home.
8. The homebuyer becomes interested in the home – becomes a lead.
9. The lead contacts a buyer’s agent who contacts the listing agent.
10. The transaction is now in the hands of two agents who both sit in between the buyer and the seller.
11.  The buyer agent is financially motivated for a higher price or higher priced home.
12.  The seller agent is financially motivated for one of their higher priced listings.
13.  Both agents are motivated by minimal effort and maximum clients
14.  Both agents are motivated to work with their own network of inside providers.
15.  If the sale for the home closes, the owner loses 6 percent of the gross to the agents.
16.  The gross is neither the net from the sale nor the net after the years of risk and expenses.

This is a seriously flawed system. Moreover, it artificially inflates prices for buyers.

And it is all predicated on the perception, in the minds of the buyers & sellers, that the process is one of overwhelming complexity.

Of course there are activities by which agents help facilitate deals but much of those can be, and already are, handled by lawyers, transaction coordinators and title companies.

Often the final legitimation point that agent’s make is that buying and selling is so emotional that agents are indispensble, as buffers, in order to make the deal happen. But is that true? Rather, two reasonable & motivated adults, who are in direct communication, can generally find a mutual ground of agreement. Indeed, unnecessary difficulty can arise out of a lack of direct communication. And if a bit of buffering is needed, then the new tools can help: automated systems, platforms, AI, and AI agents, etc.

Moreover, the reality for agents is that they spend a great deal of their efforts consumed in the constant search for buyers and sellers. But the FSBO seller…is already the seller. That’s half. Whereupon Zillow has become the number one search tool that brings the buyers. And without the 5-6%, the FSBO listing can undercut the market by an amount that will immediately catch the buyer’s eye.

And even if, going forward, there remains a place for agents in the face of Zillow, automated tools, and AI/agents, is the 6% justifiable? Meanwhile the average European percents are roughly half that. Fundamentally, it is time to question the system at its root, particularly in light of the advent of new online tools.