Quill Leaves NWMLS, Dramatically Slashes Listing Cost

Full disclosure: Quill Realty is a Seattle Bubble advertiser, and Tim worked with Craig at his previous company WaLaw (also an advertiser) to buy his home in 2011.

Quill RealtyLast week local brokerage Quill Realty (spotlighted in this 2014 post) announced that they will be withdrawing from the NWMLS completely in order to “offer broker services to sellers who want to avoid the cost of a cooperating broker.”

As longtime readers of this site know, I have something of a love-hate relationship with the NWMLS. I love how open they are with much of their data, and I definitely love that listings are kept current in their database, but I hate many of their backward and overbearing rules, and I’m not a fan of some of their data processing methods.

That said, being listed in the local MLS has been the only way to reliably sell your home quickly and for the best price, even back when the MLS was literally a 3-ring binder with listing printouts.

So how does Craig (owner & managing broker of Quill) hope to compete post-MLS? Here’s an excerpt from his press release:

This will allow Quill to sell homes while charging owners only its own, single broker commission of 1%. So home owners will soon be able to sell their houses using the services of a fully licensed REALTOR™ for far less than the 3% to 6% of the MLS.

Quill anticipates being able to put its listings on numerous, highly trafficked web sites, such as Zillow, Redfin, and Realtor.com, exactly those places where buyers are searching today. All without using the NWMLS and without paying the commission of a cooperating broker who represents the buyer.

Will the appeal of paying just one percent of the sale price to a real estate broker be enough to lure sellers to take the plunge? It’s not the first time this kind of thing has been attempted. In fact, it is very similar to the model Redfin began with ten years ago (although Redfin was focused on buyers and Quill is targeting sellers). Over the years, Redfin’s fees have gone up and their service has become closer to what’s provided a typical agent.

The biggest question I had for Craig was whether buyers who are already working with an agent would be steered away from Quill listings since Quill will not be offering to pay the typical three percent to the buyer’s agent. Here’s what Craig had to say about that:

First and foremost, Quill will be relying on the legal and ethical duties of real estate brokers. This conduct you describe may be illegal, and it is grossly unethical. So I believe this won’t happen as often as you are assuming.

Buyers of Quill listings will know as much about the listing as their agent. They won’t need their agent to tour the home, and they won’t need their agent to make an offer. At the end of the day, I like how those disincentives stack up. Those unethical brokers who might be inclined to steer clients away from Quill-listed homes will soon realize that they are making a poor decision. They will soon realize that it is in their interests to assist their clients in buying the homes their clients want to buy, whether listed with Quill or any other real estate firm.

Craig also goes into more detail on his plans on the Quill blog and in a recent Rain City Guide post.

Quill’s new model is similar to what Surefield launched last November (Surefield is also a Seattle Bubble advertiser, and is a Quill partner). The differences between Surefield’s model and Quill’s new model are that Surefield is still an NWMLS member, they charge slightly more at 1.5%, they offer a $2,000 flat commission to buyers’ agents, and their listings include their signature 3D virtual tour on their website.

The current listings-scarce market definitely seems like an ideal time to try something like this. Buyers are desperate for listings, and if they find something they want, they’re most likely going to do whatever it takes to see it, whether it’s listed on the MLS or not.

I’m definitely a fan of moves that will save home buyers and sellers money and bring further pro-consumer change to the real estate industry. I’m not yet convinced that consumers are ready for something this dramatic, and I still think Craig has an uphill battle ahead of him when it comes to dealing with the entrenched interests of buyers’ agents, but I do hope he succeeds.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

143 comments:

  1. 1
    Mike says:

    So what is the bottom line savings here, both optimally and realistically? Can this potentially cut the cost of selling down to the 5% range from the current 9-10%?

  2. 2

    Thanks Tim for the write-up! My only comment in response: I disagree pretty strongly that my model is the same as Redfin’s of 10 years ago. Sure, we’re run like modern businesses (e.g. employees, not independent contractors), so we’re identical in that regard. But Redfin’s revolutionary model – online searching with big commission rebates – was a big change WITHIN the MLS system. My model? For the first time ever, outside of the MLS system. So there are some very significant differences between my model – my new model, Quill 2.0 – and Redfin.

    I look forward to the conversation!

  3. 3

    RE: Mike @ 1 – Yup. Seller broker costs go from 6% to 1%.

  4. 4
    The Tim says:

    RE: Craig Blackmon @ 2 – Well I didn’t say “the same as Redfin,” but rather “very similar.” :)

  5. 5
    greg says:

    I will definitely give them a shot at selling my home for 1%.

    The MLS is a legal cartel that artificially inflates the costs of RE transactions through the monopolies the regional cartels hold on the market. ( there is no room to debate if the MLS is monopolistic or not as they have well over 90% of all open market retail real estate sales .)

    For example I lived in the eu for a couple of decades and my RE agent charged 1.25% to sell my home…. that is a big difference from 5-6% and they have been charging 1 to 2% for many decades , have full service and a fully functional RE market..

    the only reason we in the USA pay 5% to sell a home is because a group of cartels work together to keep it that way , they out spend just about every other lobbying group in the nation, both at state and federal level …

  6. 6
    steve says:

    This is the future of real estate. No more business as usual.

  7. 7
    js says:

    As a potential home seller, I’m interested in saving on the 6%. I’ve never understood why Realtors don’t charge an hourly rate like every other profession.

    My big concern is that I won’t reach as many buyers unless I use the MLS. Fortunately, it’s simple to get the house MLS without paying a Realtor. However, I’ve read from multiple sources that if a full 3% buyers’ agent commission is not offered, the buyers’ agents won’t inform their clients that the house is for sale, and I won’t reach as many buyers. For example:
    http://fsboprimer.com/2007/01/10-common-fsbo-mistakes.html

    Craig, if I were to list my house with Quill, how can I be assured that everyone is going to get an invitation to the party? What about the buyers who do daily searches using windermere.com or a similar broker run site? How would they even know the house was for sale?

  8. 8

    I don’t want to repeat all my criticism of this poorly thought out model from the Seattle is wealthy thread, where Craig was unwilling to address a single issue. But I would love to know why he thinks it would be illegal or even unethical for an agent to avoid dealing with one of his listings. RCW 18.86.050 seem to be pretty clear on the topic.

    (e) Unless otherwise agreed to in writing after the buyer’s agent has complied with RCW 18.86.030(1)(f), to make a good faith and continuous effort to find a property for the buyer; except that a buyer’s agent is not obligated to: (i) Seek additional properties to purchase while the buyer is a party to an existing contract to purchase; or (ii) show properties as to which there is no written agreement to pay compensation to the buyer’s agent.

    As a practical matter it will be somewhat academic, since most agents won’t learn of the listings in the first place because they won’t be on the NWMLS.

  9. 9
    Nic says:

    I’m still a little confused about what you’re paying out to each side. From what I understand the current method is 3% to the buyers agent (selling agent) and 3% to the sellers agent (listing agent).

    Your model is for a homeowner to list on Quill at 1% and for the buyers agent (selling agent) to receive NOTHING (see quote below)? If this is how the market turns, why would any agent want to represent buyers anymore (since they’re not receiving any money) especially if they’re having to put in work to show a house, write up a contract, negotiate, etc?

    “All without using the NWMLS and without paying the commission of a cooperating broker who represents the buyer.”

  10. 10

    They won’t need their agent to tour the home,

    In the “wealthy” thread I asked about the seller having to have their phone number posted on the Internet with Craig’s model. I’m pretty sure he never answered that, but this seems to indicate that because I doubt for 1% Craig is going to handle all the showings.

    And I also questioned him on lockboxes, since I have doubts he’ll be able to program them to specific hours after his subscription through the NWMLS expires. But this would indicate he’s intending to go entirely without lockboxes. Sellers are just supposed to let people into their homes! That IMHO is unacceptable from a personal security point of view, but the increased liability from buyer/seller contact is also very concerning.

  11. 11
    Nic says:

    RE: Kary L. Krismer @ 10 – Interesting…I purchased a new home build in 2011, viewed the home with the BUILDERS AGENT, still got a buyers agent and he still expected to be paid…just saying.

  12. 12

    By js @ 7:

    My big concern is that I won’t reach as many buyers unless I use the MLS. Fortunately, it’s simple to get the house MLS without paying a Realtor. However, I’ve read from multiple sources that if a full 3% buyers’ agent commission is not offered, the buyers’ agents won’t inform their clients that the house is for sale, and I won’t reach as many buyers. For example:
    http://fsboprimer.com/2007/01/10-common-fsbo-mistakes.html

    Craig, if I were to list my house with Quill, how can I be assured that everyone is going to get an invitation to the party? What about the buyers who do daily searches using windermere.com or a similar broker run site? How would they even know the house was for sale?

    First, I’d like to know why you think it’s simple to get your house on the MLS without a Realtor. Did you mean a member of the Realtor associations, or a member of the NWMLS? Unless the agent you hire is a member of the NWMLS, your listings will not appear on the NWMLS. But there are many discount brokers who will list it for a relatively small fee.

    Second, you’re incorrect that failing to offer 3% SOC is fatal to a listing. Agents do have a duty to show any listing where there is an offer of compensation. Might the agent consciously or subconsciously talk down the listing? Maybe, assuming they even notice what SOC is offered prior to showing the property. Neither my wife nor I tend to look at such things in advance, and so we have sometimes been disappointed when submitting an accepted offer to the office, but never seriously disappointed. Note though with a buyer’s agency agreement the buyer will have to pay a commission, and except for cash buyers they may be likely request that the commission be paid by the seller so that it can be financed.

    Third, you’re absolutely correct that buyers won’t see Craig’s listings on Windermere.com, JohnLScott.com or most of the other broker sites (the exception apparently being Redfin). Personally I want all of my listings on all of the broker sites and the third party sites like Trulia, Zillow and Realtor.com, even though those third party sites are horrible sites for buyers, and only used by buyers who do not know any better. You want the maximum exposure for your listing, no matter what the market.

  13. 13
    js says:

    By Kary L. Krismer @ 12:

    First, I’d like to know why you think it’s simple to get your house on the MLS without a Realtor. Did you mean a member of the Realtor associations, or a member of the NWMLS? Unless the agent you hire is a member of the NWMLS, your listings will not appear on the NWMLS. But there are many discount brokers who will list it for a relatively small fee.

    I meant discount brokers:
    http://mysecretagent.com/
    http://mls4owners.com/
    or even a seattlebubble favorite:
    http://www.500realty.net/

  14. 14
    Nic says:

    RE: Nic @ 9 – And this is coming from someone who does believes that 3% for EITHER side is more than it should be. It should be an open marketplace where agents list their fees (for each side) and buyers and sellers choose who they want based on service provided, reviews, etc just like with any other product. Let there be open competition and let the consumers decide if this agent is worth $XX or that agent is worth $xx for what they need, don’t set a standard and say now go find the best one you can since they’re all going to make the same no matter how much or little work they do. As part of it being their selection, I think the buyer should pay for their side, the seller for theirs.

  15. 15
    js says:

    By Kary L. Krismer @ 12:

    Second, you’re incorrect that failing to offer 3% SOC is fatal to a listing. Agents do have a duty to show any listing where there is an offer of compensation. Might the agent consciously or subconsciously talk down the listing? Maybe, assuming they even notice what SOC is offered prior to showing the property. Neither my wife nor I tend to look at such things in advance, and so we have sometimes been disappointed when submitting an accepted offer to the office, but never seriously disappointed. Note though with a buyer’s agency agreement the buyer will have to pay a commission, and except for cash buyers they may be likely request that the commission be paid by the seller so that it can be financed.

    Of course offering less than 3% wouldn’t be “fatal” to a listing. Nothing would in this market.

    And I don’t doubt the integrity of you and your wife. However, I don’t want agents consciously or subconsciously talking my listing down. It may scare off a potential high bidder.

    Here are some links saying not to drop the buyers’ agent fee:
    http://www.investopedia.com/financial-edge/1210/9-for-sale-by-owner-mistakes.aspx
    http://az-for-sale-by-owner-guide.com/ten-common-fsbo-mistakes/
    https://www.forsalebyowner.com/sell-my-house/preparing/dos-donts-selling-owner
    http://fsboprimer.com/2007/01/10-common-fsbo-mistakes.html

    IMHO, the problem with the current system is that it relies too much on the integrity of the sales people involved. The sellers’ agents have a potential conflict of interest because they don’t get paid until the house sells (if it sells). This encourages them to price the house low, and prod the seller to accept bids they might not otherwise. The buyers’ agents have a potential conflict of interest because they might not get paid unless the seller has offered them a commission or the buyer agrees to pay them. This encourages them to not dig deeply for listings and to ignore FSBO listings or word of mouth listings. Why can’t Realtors just charge an hourly rate?? I’d be more than willing to pay $100/hour+++ for a good agent.

  16. 16
    js says:

    By Kary L. Krismer @ 12:

    Second, you’re incorrect that failing to offer 3% SOC is fatal to a listing. Agents do have a duty to show any listing where there is an offer of compensation. Might the agent consciously or subconsciously talk down the listing? Maybe, assuming they even notice what SOC is offered prior to showing the property. Neither my wife nor I tend to look at such things in advance, and so we have sometimes been disappointed when submitting an accepted offer to the office, but never seriously disappointed. Note though with a buyer’s agency agreement the buyer will have to pay a commission, and except for cash buyers they may be likely request that the commission be paid by the seller so that it can be financed.

    Of course not offering 3% isn’t “fatal” to a listing. Nothing is in this market.

    And I don’t doubt the integrity of you and your wife. However, I don’t want a buyers’ agent “consciously or subconsciously” talking down my listing. If their client happens to be the potential high bidder, I don’t want their offer torpedoed by an agent that is less than altruistic.

    IMHO, the problem with the current system is that it relies too much on the integrity of the salespeople involved. The sellers’ agent has an obvious conflict of interest — they don’t get paid until the house closes. This may “consciously or subconsciously” influence them to advise their client to list the house at a lower price and/or accept a less than perfect offer. The buyers’ agent also has a conflict of interest — they don’t get paid unless the seller agrees to a commission or they convince the buyer to pay them. This may “consciously or subconsciously” influence them not to dig deep for listings, particularly the unconventional listings (i.e. FSBO, word of mouth, Quill Realty, knocking on doors, etc). It may also “consciously or subconsciously” cause them to talk a perfectly good listing down. Why can’t Realtors just charge an hourly rate? I’d be more than willing to pay $100/hour+++ for a good agent.

    If you had read my original post carefully, I said that I had “read from multiple sources” that it is a bad idea to offer less than 3%. Here are some more of those sources:
    http://www.mcnaughtonrealtors.com/Blog/10-Mistakes-Every-For-Sale-by-Owner-Should-Avoid
    https://www.forsalebyowner.com/sell-my-house/preparing/dos-donts-selling-owner
    http://az-for-sale-by-owner-guide.com/ten-common-fsbo-mistakes/

  17. 17

    RE: Nic @ 14 – Nic, that is exactly the world I want to see as well. And we will never, ever get there as long as seller’s pay for the buyer’s professional representation. But the Quill model? That’s where I’m headed.

  18. 18

    RE: js @ 7 – A Quill listing is going to appear on Zillow, Redfin, Trulia, and other very popular web sites. Where they will be seen by buyers. Plus a yard sign, open houses, flyer, social media, and all the other tools in a broker’s toolbox.

    Will you get the same market exposure as the MLS? Of course not. Will unethical agents possibly work against your sale? Maybe. In this historic seller’s market, will enough buyers find your house so that you get fair value? I’m betting yes.

    I don’t dispute the value of the MLS. I dispute that it’s worth 6%, in this day and age. When the reason for one half of the fee – the SOC – simply doesn’t exist anymore. The internet will change real estate, just like it has changed everything else. It’s just taken a little time.

  19. 19

    RE: Kary L. Krismer @ 8 – Why would it be unethical for a Realtor to “avoid dealing with one of my listings”? Seriously, Kary? You’re off the rails.

    A broker must put the client’s interests first. If the client is interested in buying my house, the Realtor has an ethical duty to assist. It’s not complicated. And not in dispute.

    As for tours: Through my office. Just like I said in Comment No. 158 of that prior thread. Where you commented about another 30 times or so. But apparently never bothered to read what I wrote initially. Your troll behavior is over the top, and I won’t be taking the bait again.

  20. 20
    wreckingbull says:

    I don’t think this will work. It’s insane. I don’t understand how this gentleman Craig intends to drive his motorcar without a buggy whip.

  21. 21

    By Craig Blackmon @ 17:

    RE: Kary L. Krismer @ 8 – Why would it be unethical for a Realtor to “avoid dealing with one of my listings”? Seriously, Kary? You’re off the rails.

    A broker must put the client’s interests first. If the client is interested in buying my house, the Realtor has an ethical duty to assist. It’s not complicated. And not in dispute.

    As for tours: Through my office. Just like I said in Comment No. 158 of that prior thread. Where you commented about another 30 times or so. But apparently never bothered to read what I wrote initially. Your troll behavior is over the top, and I won’t be taking the bait again.

    First, I asked why you thought it would be illegal. Support what you said.

    Second, just because you claim it’s unethical doesn’t mean it is. To echo pfft, please provide a citation. You’re an attorney and a Realtor. This shouldn’t be that tough. I’ve posted my citation to refute your false claim that it’s illegal. Your just saying it’s unethical doesn’t make it so.

    Third, I asked about the phone number issue in post 171. Sorry I missed “tours provided through my office” portion of your post 158. I did read over that. Not that that short phrase answers all the questions by any means. Does that mean you’re the “Phone to Show.” Does that mean you’ll show up to show every buyer the property?

    And if we’re going to address what is “over the top” it’s not my behavior, which is not troll-like at all. It’s your attempt to deceive consumers by focusing on questionable cost savings and practically completely denying any disadvantages. And your refusal to even begin to deal with all the shortcomings of your system.

    Will you get the same market exposure as the MLS? Of course not. Will unethical agents possibly work against your sale? Maybe. In this historic seller’s market, will enough buyers find your house so that you get fair value? I’m betting yes.

    Admitting it won’t get the same exposure is a lot better than your press release which mentions 92% of buyers using the Internet, or some such nonsense. But the issue isn’t getting “fair value.” It’s getting the best offer possible, and in a hot seller’s market that means getting the most offers possible.

  22. 22

    You are so strange. Even Losh-like at this point.

    NAR Code of Ethics Article I: “When representing a buyer … as an agent, Realtors® pledge themselves to protect and promote the interests of their client.” I thought it was self-evident. A Realtor is contacted by their client who is interested in my listing. It would be unethical for that Realtor to “avoid dealing with” my listing simply because there is no SOC offered. Do you really think otherwise??? You’re alone if you do. How would that be acting in the client’s best interests?

    Highlights of NAR 2014 Survey of Buyers and Sellers: “Ninety-two percent of buyers use the internet in some way in their home search process.” Those buyers who use the internet? The vast majority of them will find my listing, regardless of whether they have an unethical broker, or not.

    Now, as for the legal duty: Where the buyer has signed a buyer’s agency agreement, the agent is promised compensation. So subsection (ii) doesn’t apply. The broker has a duty to make a good faith effort to find a home for the buyer. If the buyer identifies a potential home, I’m confident the law requires the broker to follow up, otherwise it’s hardly a good faith effort to find a home for the buyer.

    So, where a broker “avoids dealing with” a Quill listing identified by the client, that conduct may be illegal – where there is a buyer’s agency agreement in place – and is definitely unethical. Or rather, I think every real estate broker other than you agrees it is unethical. But I understand, it can be hard being a troll. ;-)

    The last word is all yours!

  23. 23
    Mike says:

    I get the impression Kary really misses working in litigation.

  24. 24
    redmondjp says:

    RE: Mike @ 21 – Well, I’m sure that the buggy whip manufacturers’ counsel were highly active in pointing out the dangers of the motorcar as well.

  25. 25
    herrbrahms says:

    While I applaud any attempt to squeeze agent fees, sellers will not be able to squeak by paying just 1% commission once the market becomes more balanced. Put yourself in the shoes of a first-time buyer who doesn’t know much. They get an agent and tour homes. Their agent shows them your home, perhaps because the buyers found it by hunting themselves and presenting it to their agent.

    When the buyers want to make an offer on the home, their agent is going to come to them with hand outstretched because the commission isn’t up to spec. If they’re slick, what they’ll say is that they’ll lower the offer by 2-3% and also write up an agreement with the buyer for a buyer-paid commission of that same percentage.

    The last thing a buyer will want to do is to part ways with their agent and attempt to negotiate the biggest purchase of their lives directly against an agent working for the other team. It’s the used car salesman experience times 10.

    In the end, the seller will pay their agent 1% and pay the buyer’s agent ~2% through a lower accepted price. There are some benefits to this arrangement, like lower county excise taxes and potentially more headroom on appraisal.

  26. 26

    By Craig Blackmon @ 20:

    You are so strange. Even Losh-like at this point.

    I’ll give you that, because your posts do make me feel compelled to say “You don’t understand real estate.” ;-)

    NAR Code of Ethics Article I: “When representing a buyer … as an agent, Realtors® pledge themselves to protect and promote the interests of their client.” I thought it was self-evident. A Realtor is contacted by their client who is interested in my listing. It would be unethical for that Realtor to “avoid dealing with” my listing simply because there is no SOC offered. Do you really think otherwise??? You’re alone if you do. How would that be acting in the client’s best interests?

    Again another post that like the nonsense you posted on anti-trust in the other thread makes me question whether you’re even a lawyer. You think that is a citation? You’re just saying more stuff and a very general rule. But yes if a client does point out a listing the agent will likely have to deal with it in some manner. That’s true of FSBOs too. But absent the buyer’s agency agreement the agent is under no duty to make any attempt to find that listing for their buyer client.

    Highlights of NAR 2014 Survey of Buyers and Sellers: “Ninety-two percent of buyers use the internet in some way in their home search process.” Those buyers who use the internet? The vast majority of them will find my listing, regardless of whether they have an unethical broker, or not.

    Dealt with this in the other thread, but guess what? A buyer using Windermere.com or JohnLScott.com or any other broker site is “using the Internet.” When an agent sends a client a link to a listing that buyer is using the Internet. Why are you trying to deceive consumers about the exposure your listings will give them? It’s extremely disturbing behavior from a Realtor and an attorney.

    Now, as for the legal duty: Where the buyer has signed a buyer’s agency agreement, the agent is promised compensation. So subsection (ii) doesn’t apply. The broker has a duty to make a good faith effort to find a home for the buyer. If the buyer identifies a potential home, I’m confident the law requires the broker to follow up, otherwise it’s hardly a good faith effort to find a home for the buyer.

    Where a buyer has a buyer’s agency agreement is an exception to the rule, but doesn’t negate the original rule. I’m not sure what percentage of buyer’s agents use buyer’s agency agreements, but I suspect it’s less than half. One of the reasons to use a buyer’s agency agreement though is so that the buyer’s agent can negotiate a higher commission if a NWMLS listing offers a lower commission (e.g. Surefield). With your listings though any agent can request the seller pay a SOC (and do a lot of other things NWMLS rules would otherwise prevent). Your claim that your sellers won’t have to pay a SOC is completely illusory, and misleading.

    So, where a broker “avoids dealing with” a Quill listing identified by the client, that conduct may be illegal – where there is a buyer’s agency agreement in place – and is definitely unethical. Or rather, I think every real estate broker other than you agrees it is unethical. But I understand, it can be hard being a troll. ;-)

    Again, very unconvincing argument. Adding the word “definitely” doesn’t make your extremely weak unsupported argument any stronger. But let’s move on. Redfin and WaLaw models were good models because they benefited their clients, either the buyer of the seller.

    Your model does not benefit your client the seller. SOC systems are good for sellers, and bad for buyers, which is why sellers who list go with such systems. So you have a system which doesn’t benefit your seller client. It’s bass-akwards. And it’s based entirely on a false premise–that a seller will get more money because they don’t offer a SOC.

    Let’s go through this again. Buyer is willing to pay up to $500,000 for a house, and since you like to assume they have a buyer’s agency agreement, assume they have a buyer’s agency agreement requiring that they pay 3%. If they go to a house listing on the NWMLS that offers a 3% SOC they will offer up to $500,000. If that NWMLS listing only offers 2.5% they will offer up to $497,500 (not the exact number, but easier math). If they are going to make an offer on your listing they will offer $485,000. Each way the seller nets $485,000 after SOC.

    Your system reminds me of those banks that tried to avoid paying the seller excise tax, which state law requires the seller to pay, and instead making the buyer pay it. Using the lower price of typical bank owned listings, it was complete nonsense for the bank to think that a buyer would pay $200,000 + 1.78% for a property that the buyer would otherwise only pay $200,000 for, just because they weren’t going to pay that tax. Buyers take everything they have to pay into account when deciding what to offer. In the case of condominiums they even take future monthly dues payments into account.

    So lets return to my hypothetical. Seller has a NWMLS offering 3% SOC, and uses a rebate broker that offers to return 1%. In that case buyer would be willing to offer up to $505,000 (again not exact math) because they’re getting back 1%. Seller gets roughly $490,000 after SOC. That actually benefits the seller. Your system doesn’t.

  27. 27
    Deerhawke says:

    Craig, as I said in the other thread, I wish you the best of luck in challenging the prevailing model. However, I am one of those people who actually tried to sell a FSBO in a market like this one (though in a different state). I know that every agent (MLS rules be damned) talked down my listing or flat-out told their sellers that they had heard the house was sold.

    I sure like the idea of paying less in fees, undermining the monopoly etc. But I think the model you had at WaLaw was a sustainable one. I am not convinced yours is.

  28. 28

    By redmondjp @ 22:

    RE: Mike @ 21 – Well, I’m sure that the buggy whip manufacturers’ counsel were highly active in pointing out the dangers of the motorcar as well.

    The problem with your argument is it ignores the fact that I think the Redfin model is a good model, and that the WaLaw model was genius even though I’ve never been with either firm or used their models. I don’t have a problem with Craig’s model because it is different. I have a problem with it because it creates a ton of problems for his prospective clients (addressed in the “Wealthy” thread) and doesn’t really get them more money. If anything it gets them less money because their listings will get much less exposure and they will generate fewer offers.

  29. 29

    By herrbrahms @ 23:

    While I applaud any attempt to squeeze agent fees, sellers will not be able to squeak by paying just 1% commission once the market becomes more balanced. .

    I think it is a model that only works in hot markets, but it doesn’t even work that well in hot markets. Assuming a seller somehow benefits from a buyer negotiating their own agent’s commission (Craig’s main point) a good buyer’s agent is going to be less likely to negotiate their commission down in a hot market than in a weak market because it takes a lot more work and much more skill to get their client’s offer accepted. They are going to want to be compensated for their work and skill.

    On the other hand I can see where a buyer could very well be attracted to one of Craig’s listings because with significantly less exposure it would likely sell for a lower price than if listed on the NWMLS. So I’m not saying the property wouldn’t sell. I’m saying the seller benefiting from Craig’s scheme is completely illusory.

  30. 30

    I keep mentioning the “wealthy” thread. So others won’t have to find it, here’s a link. Discussion of Craig’s model starts at post 133 when Ardell posts a link to his RCG announcement.

    http://seattlebubble.com/blog/2015/05/13/reader-question-is-seattle-just-for-the-super-wealthy-now/

  31. 31
    One Eyed Man says:

    RE: Kary L. Krismer @ 27

    You say ” I’m saying the seller benefiting from Craig’s scheme is completely illusory. ” That’s an overstatement, but certainly to some degree true. Nevertheless it doesn’t justify the current MLS practice of compensating the buyer’s broker with a payola kickback commission from the seller that many buyers don’t understand, aren’t privy to, and never negotiate.

    Craig’s model is certainly less than perfect. But the buyer’s ability to negotiate the commission they pay their broker under the MLS system is also illusory for practical purposes unless the buyer is somewhat sophisticated as to the warped method used by the MLS to compensate the buyer’s agent. Why? Because as a practical matter in most transactions, the commission paid to the buyer’s broker is never discussed, disclosed, negotiate or agreed to by the buyer prior to closing. It’s nothing more than an undisclosed kickback. It’s legalized payola fostered by the brokerage industry because it benefits them. If the buyer’s broker were the buyer’s common law agent, the buyer would have a right to sue the agent to recover any such payment.

    Craig’s model may be less than perfect, but so is the MLS model.

    So what should be done? At a minimum, the brokerage law should be changed so that any payment by the Listing Office to the Buyer’s Broker pursuant to the an MLS agreement should be required by law to be disclosed to the buyer prior to any offer. There should probably also be a requirement for a buyer’s broker to disclose in writing to the buyer prior to showing an MLS listed house that the buyer’s agent will receive part of a commission paid by the seller and informing the buyer that they will have the right to disclosure of the MLS SOC and negotiation of the commission prior to making an offer unless the amount or percentage of the brokers commission is agreed to between the buyer and the buyer’s broker in writing prior to that time. That’s pretty much what common law agency would have required in order for the buyer’s broker to receive a commission and the MLS system shouldn’t be allowed to pay undisclosed back door commissions that make the buyer’s ability to negotiate what they pay their broker a difficult if not totally illusory part of the contract process.

  32. 32

    RE: One Eyed Man @ 29 -Antitrust concerns are the reason the LOC isn’t disclosed in a listing. Not sure why they don’t disclose the SOC, but I’ve found few if any buyers really want to know that information. For a time I expressly gave them a choice, but so few were interested, and even fewer interested for any significant period of time, that I stopped even offering to tell them (but of course I would if asked).

  33. 33

    RE: One Eyed Man @ 29 – That’s an extremely complicated solution, all devoted to sustaining the original 19th century artifact of a seller-paid commission. I like my alternative: Just do away with it entirely! Done and done.

  34. 34
    One Eyed Man says:

    RE: Kary L. Krismer @ 30

    We’re only talking about the SOC so anti-trust is irrelevant. As to the public not wanting to discuss the SOC, that doesn’t make it any less of an un-negotiated kickback. You and I both know brokerages that offer or have offered a low listing side as a loss leader (or at least low profit leader) in hopes of making it up by getting the MLS buy side commission on other deals. The MLS system of non-disclosure isn’t a true free market. It’s anti-competitive even if the buyer doesn’t want to know. Just because the caged bird sings doesn’t make it a freebird.

    But from a pure economic standpoint, whether disclosure and negotiation of the commission paid to the buyer’s broker would actually lower the buyer side commission is a different issue. It might be that the transaction costs outweigh any economic benefit to the parties. The deal process is already over the head of most people (and many brokers and attorneys) so maybe there’s no room in the process for additional complexity if it only results in a point or two of potential savings. I’ve always told people that a point or two on anything but a commodity is within the margin of error for valuation ( at least IMO).

    Finally, your clients may not be representative of the clients represented by average brokers without your sophistication. Your clients may well consider that they’re getting a bargain by paying the MLS somewhat standard SOC to you rather than a premium rate you might be able to charge due to your level of knowledge and expertise. They may conclude they are part of the few who benefit from a non-negotiated buyer side commission because your worth that if not more.

  35. 35

    By One Eyed Man @ 32:

    RE: Kary L. Krismer @ 30 – But from a pure economic standpoint, whether disclosure and negotiation of the commission paid to the buyer’s broker would actually lower the buyer side commission is a different issue. It might be that the transaction costs outweigh any economic benefit to the parties.

    I would agree it’s a different issue, but that is seemingly what Craig is trying to encourage. If some sellers agree with Craig’s goals in that area, then I could see that would be a very legitimate reason for them to use his services. I don’t have a problem with that. I just don’t think they should fall for the claims of savings on SOC (as opposed to LOC) which are largely illusory. Craig controls his own LOC, but he has next to no control over the SOC.

  36. 36
    One Eyed Man says:

    RE: Craig Blackmon @ 31

    I generally agree, but unfortunately, although your brokerage model may succeed as a boutique brokerage model, I don’t think your model can gain the critical mass to break the virtual monopoly of the MLS system. To do so I think you need some help by application of the common law of agency at least concerning the source and amount of the commission payment and that would require legislation.

    Your model may well succeed as an alternative along side the current MLS system by attracting a percentage of buyers with the sophistication to see the issue, much like Redfin, but that’s a pure business issue. I thought about doing something similar in the early 1990’s but only by targeting high end deals where attorney expertise could be a big selling point and the percentage commissions are arguably a windfall. A business guy I know talked me out of it when he said that more of those referrals are probably made in the hair salon than the board room. I figured that left me out because I comb my hair with a wash cloth.

  37. 37
    greg says:

    By Kary L. Krismer @ 27:

    By herrbrahms @ 23:

    While I applaud any attempt to squeeze agent fees, sellers will not be able to squeak by paying just 1% commission once the market becomes more balanced. .

    I think it is a model that only works in hot markets, but it doesn’t even work that well in hot markets. .

    naw mate you got this all wrong.

    1% agent fees has been a WORKING model in the EU for many many decades. It works in hot markets , down markets, slow markets….

    Lets not pretend that a 1 to 2 % total commission is unworkable because millions of transactions going back before anyone here was even born is absolute proof that a full service, open and honest real estate market can thrive on 1.5% average fee. Thrive .

  38. 38

    RE: greg @ 35 – Working for who?

    When I was in Paris a tour guide was giving the price of some of the apartments (condos) inside the city. I’m not such a real estate nerd that I verified what he said, but the prices he said were extremely reasonable for Tacoma, not Paris.

    Now maybe that is preferable for a number of reasons, but we’re looking at this from the seller’s point of view, and as such they should want the highest price possible. So the definition of working may be different for sellers than society as a whole.

  39. 39

    The “traditional” model works if everyone recognizes and honors its working parts. All participants understanding and honoring the basics of the traditional model’s working parts, the seller and the seller’s agent and then the buyer and the buyer’s agent, is needed for the “traditional model” to function properly.

    When I list a property, and this has been true for me since buyer agency started which was after I started in the business, I split the two sides out on paper for the seller to see. The start point is 3/3 or a total of 6. Then the seller and I discuss the first 3 and move it up or down or keep it at 3, depending on what is needed to achieve the seller’s goal. This changes from house to house and varies in different market conditions.

    After we negotiate the first 3 and come to a mutual agreement on the cost of my services as the Seller’s Agent, we briefly discuss the second 3. Very briefly because it is not our side of the total equation. We discuss it differently after buyer agency than we did before there was buyer agency. In most cases we set aside the second 3 as a “retainer fee” for the unknown buyer side agent at the time we list the property to negotiate with the buyer. It is not for me and the seller to decide what happens on the buyer’s side of the fence. We merely need to set aside enough for the buyer to hire an agent with…or not…buyer’s choice, so that the buyer can finance the agent costs vs pay them out of pocket.

    The Alternative Business Models like Redfin are formed, in part, to help insure that the “retainer fee” SOC side is being understood, honored and handled differently if not properly. In that sense Craig, you are like Redfin whether you realize it or not.

    That is the difference between a “discount” model and an “alternative” model. A discount model merely pre-negotiates the first 3, the seller side, by having a stated lower cost for the list fee, usually accompanied by a decrease in services. OR the reverse same scenario on the buyer side with a pre-negotiated and stated lower cost on the buyer side. Sometimes a “discount” model claims to be “full service” for less, but usually that is a result of the alternative model not truly understanding what “full service” is and somewhat because only a fraction of “traditional agents” provide it. Once Redfin better understood what full service was, they increased their costs accordingly, as The Tim points out in the post.

    There was a lot of discussion for the first few years as to whether Redfin was a “discount” model or an “alternative” model. Glenn used to get a bit angry (he rarely gets very angry) when people referred to Redfin as a “discount” model vs an “alternative” – “online” model. In truth, they were both based on the definitions above.

    Craig is also both, or rather Quill is also both a “discount” model and an “alternative” model. As to the seller’s services fee (list side), Craig is a “discount” model. As to the buyer’s services fee (sell side) Craig is an “alternative” model.

    Any model that helps “traditional” agents understand that the 3 side of the list fee is actually a retainer fee set aside to give the buyer the benefit of financing their eventually negotiated price for services with their own and unknown at the time of list agent, is an “alternative” model.

    So yes…every seller is generally supposed to set aside a 3% SOC. Whether or not that is the actual fee for the buyer’s agent’s services…is between the buyer and their agent to negotiate. Not the seller.

  40. 40
    greg says:

    By Kary L. Krismer @ 36:

    RE: greg @ 35 – Working for who?

    When I was in Paris a tour guide was giving the price of some of the apartments (condos) inside the city. I’m not such a real estate nerd that I verified what he said, but the prices he said were extremely reasonable for Tacoma, not Paris.

    Now maybe that is preferable for a number of reasons, but we’re looking at this from the seller’s point of view, and as such they should want the highest price possible. So the definition of working may be different for sellers than society as a whole.

    for who? the seller pays the agent and total fee payable is 1-2% depending on the agent and the terms. Most do 1.25% plus some expenses. (the expenses are small and discussed first).
    They have been doing this for a very long time .

    5-6% exists only because in the USA the combined MLS have complete stranglehold on the market and due to our insane lobby system the RE industry is allowed to spend tens of millions a year in lobbying state and federal government to ensure no real competitors can grow.

    There is no way that conducting a simple property transaction for a $500,000 home should result in a $25,000 or $30,000 fee, yet for retail real state that is exactly what the MLS has managed to get away with for decades.

  41. 41

    RE: Ardell DellaLoggia @ 37 – Sorry, Ardell, fundamental disagreement with this: “Every seller is generally supposed to set aside a 3% SOC.” “Supposed to,” because that is the way it has always been done. But we simply don’t need to do things the same way anymore.

  42. 42

    RE: Craig Blackmon @ 39 – FWIW, I would disagree with that too.

  43. 43

    RE: Craig Blackmon @ 39

    IF the other side takes the 3% and negotiates or, or eliminates it, properly…it is the same as your model Craig. And that is why you are not truly an “alternative business model” because you like to pretend you are a lot more “unique” than you are, for obvious reasons.

    The ONLY reason for you or Kary to disagree, is because you assume all agents are greedy and will always just keep it and not discuss that with the buyer.

    Your model FORCES the agent to discuss that with the buyer, and that is a good thing. But is doesn’t change the “mysterious”, hidden behind the curtain, 3.

    Just because you are causing it to be invisible vs transparent does not mean it isn’t there hiding in Quill’s “Cloaking Device”. :)

  44. 44
    ARDELL says:

    RE: greg @ 38

    Other countries do not usually have as strong consumer protection laws or discrimination laws. The “other” fee is at least in part to pay the agent who watches out for the buyer in that regard. So not a fair comparison.

    Buyer Agency was supposed to reduce the incidence of “Buyer Beware” both legally and practically speaking. If there is no need for that…discuss. For some buyers yes and others no. For those for whom the answer is no, Craig’s model provides that option in the marketplace.

  45. 45
    John Wake says:

    RE: greg @ 5 – In the EU in addition to the 1.25% you paid yout agent, you probably also paid for an attorney (or equivalent) but Quill’s price includes the attorney.

  46. 46
    Erik's Step Dad says:

    Kary put your boner away.

  47. 47
    John Wake says:

    My main worry is that Quill isn’t charging enough, 2% – 3% would seem more likely to guarantee success.

    The reason residential real estate is so expensive is the “tragedy of the commons.” Because buyers’ agents are free to buyers, buyers overgraze overuse them.

    American agents are willing to handhold poor prospects because the payoff is so big when poor prospects actually end up buying houses. But it makes the system inefficient and expensive. In the rest of the world where buyers have to pay for their own agents, they don’t.

    Be aware that in most places the buyer will have an attorney (or equivalent) that the buyer pays for. The attorney is doing some of the functions of a real estate agent in the U.S.

    Sellers HATE paying 6% to sell a house. Once some sellers have some success selling houses without paying for the buyers’ agents, it could cascade.

  48. 48
    Marc says:

    By John Wake @ 45:

    Sellers HATE paying 6% to sell a house. Once some sellers have some success selling houses without paying for the buyers’ agents, it could cascade.

    If you subscribe to Diffusion of Innovation theory then the magic number is around 17% market penetration. Per that theory, somewhere around 2-3% of a given population have high risk tolerance that makes them inclined to try new, unproven ideas or products and 13-14% are “early adopters” that are willing to once they’ve seen somebody else try it with some reasonable degree of success. When a product reaches that 15-17% contingent, mainstream adoption cascades swiftly thereafter. Redfin is leading that charge but it appears there’s still a surprisingly long way to go.

    (Not the best source but will have to do in a pinch: https://thebadcompanyblog.wordpress.com/2011/03/09/the-law-of-diffusion-of-innovation-2/
    http://en.wikipedia.org/wiki/Diffusion_of_innovations).

  49. 49
    Blurtman says:

    By Ardell DellaLoggia @ 37:

    The “traditional” model works if everyone recognizes and honors its working parts. All participants understanding and honoring the basics of the traditional model’s working parts, the seller and the seller’s agent and then the buyer and the buyer’s agent, is needed for the “traditional model” to function properly.

    When I list a property, and this has been true for me since buyer agency started which was after I started in the business, I split the two sides out on paper for the seller to see. The start point is 3/3 or a total of 6. Then the seller and I discuss the first 3 and move it up or down or keep it at 3, depending on what is needed to achieve the seller’s goal. This changes from house to house and varies in different market conditions.

    You’ll be scrambling for 1 from the buyer in the future, In šāʾ Allāh.

  50. 50

    RE: Blurtman @ 47

    haha I used to handle trust funds for “widows” in my previous 20 year, now obsolete, career. I’m not afraid of becoming obsolete after 25 years in this one.

    It won’t be the first time. Bring it on! I’m looking for an excuse to retire! :)

  51. 51
    Blurtman says:

    By Ardell DellaLoggia @ 48:

    RE: Blurtman @ 47

    haha I used to handle trust funds for “widows” in my previous 20 year, now obsolete, career. I’m not afraid of becoming obsolete after 25 years in this one.

    It won’t be the first time. Bring it on! I’m looking for an excuse to retire! :)

    :>)

  52. 52
    Jonness says:

    By Kary L. Krismer @ 8:

    (e) Unless otherwise agreed to in writing after the buyer’s agent has complied with RCW 18.86.030(1)(f), to make a good faith and continuous effort to find a property for the buyer; except that a buyer’s agent is not obligated to: (i) Seek additional properties to purchase while the buyer is a party to an existing contract to purchase; or (ii) show properties as to which there is no written agreement to pay compensation to the buyer’s agent.

    Wouldn’t Craig simply need to agree to pay buyer agents one penny per transaction in order to circumvent this.

  53. 53
    Jonness says:

    The majority of the more senior agents will fight new change to their deaths. A similar percentage of younger agents will have much less of a problem accepting new models. As Maxwell Planck put it, “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

  54. 54

    By Jonness @ 50:

    By Kary L. Krismer @ 8:

    (e) Unless otherwise agreed to in writing after the buyer’s agent has complied with RCW 18.86.030(1)(f), to make a good faith and continuous effort to find a property for the buyer; except that a buyer’s agent is not obligated to: (i) Seek additional properties to purchase while the buyer is a party to an existing contract to purchase; or (ii) show properties as to which there is no written agreement to pay compensation to the buyer’s agent.

    Wouldn’t Craig simply need to agree to pay buyer agents one penny per transaction in order to circumvent this.

    That might circumvent that issue, but it also raises the issue of why Craig feels compelled to leave the NWMLS. There are some limits/rules on SOC staying in the NWMLS, but Surefield gets by with a $2,000 SOC, and I don’t believe that is the lowest limit by any means (particularly if Craigs LOC is lower than Surefield). I’m not going to say he could get by only offering 1 cent, but I don’t know that he can’t either.

    And as addressed in the “wealthy” thread, that would avoid many of the other issues of his system, particularly agents not needing to follow any of the NWMLS rules which prevent all of the annoying practices that buyers agents have thought up over the years which annoy sellers and listing agents. Buyer’s agent wants to present an offer–buyer’s agent can simply show up one night and knock on the door, totally bypassing Craig. Buyer’s agent wants to look at the property with his buyers–buyer’s agent can simply show up at any time and knock on the door, ignoring any showing restrictions Craig promised . An agent want to have the listing after Craig listing fails to find a buyer. Agent can just show up during his listing period and start explaining to the seller what a bad decision that they made going with Craig, and explain all the advantages they have to offer. Craig won’t be able to do anything about any of that, particularly if the other agent is not a member of NAR.

  55. 55
    John Wake says:

    Another fact supporting Craig’s model is the recent popularity of “Coming Soon” listings is some markets. I don’t know in which markets but apparently in some markets “Coming Soon” listings have become common. Quill’s listings are the equivalent of a “Coming Soon” listing that will never “come” to the MLS.

  56. 56

    RE: John Wake @ 53 – Popularity? Tim did a piece on Coming Soon in various areas where it is allowed, and his findings back then was it wasn’t popular at all. But in any case, Coming Soon is something that is done to benefit the agent, not the seller. It wouldn’t surprise me that DOL might come down on agents in Washington where Coming Soon is allowed.

    http://seattlebubble.com/blog/2014/07/09/zillows-coming-soon-slow-start/

    You can find out how many Coming Soon listings there are by going here and typing in a state name.

    http://www.zillow.com/homes/Nevada_rb/

  57. 57

    RE: Jonness @ 50 – Yup, I could. Would that be a more effective way to sell the home, a multiple broker listing with a $.01 cooperating commission offered? Not in my opinion.

    That is the Surefield route, and I respectively decline to walk it. I think I will have a lot more success by marketing the home directly to buyers, without giving brokers “behind the curtain” access to the listing information. With access to all of the information in the listing – unlike the buyer, who has only the client-available info – the broker can easily dissuade the client from pursuing the home further.

    Everyone is very concerned about an agent’s ability to steer a buyer away from a Quill listing. I see that being a much bigger concern if Quill is within the NWMLS, like Surefield. Quill is out entirely and will setting the rules for a whole new game.

    Finally, the problem with the broker system IS the selling office commission. All of those rules designed to curb agent behavior? Why do you think their behavior needs curbing? Because they are all fighting for the contractual right to that fat 3% SOC. If no SOC is offered, why would agents act poorly towards the seller? How is that helpful – at all – in convincing the seller to maybe kick some money the agent’s way for bringing a buyer?

  58. 58

    By Craig Blackmon @ 55:

    If no SOC is offered, why would agents act poorly towards the seller?

    To get their client’s offer in front of the seller before any other offers. To get it in front of the seller without any meddling by a pesky listing agent who might be looking out for the seller’s interests.

    Yes they risk upsetting the seller, but that doesn’t mean they won’t try something. I once had an agent want to do a presentation of an offer on the day the elderly husband seller client unexpectedly died! I had a hard time convincing the agent it might be better to wait at least one day.

  59. 59

    By Craig Blackmon @ 55:

    Everyone is very concerned about an agent’s ability to steer a buyer away from a Quill listing. I see that being a much bigger concern if Quill is within the NWMLS, like Surefield. Quill is out entirely and will setting the rules for a whole new game.

    You’re setting rules no one has to follow! Don’t you get that???!!!!

    In contrast, if you offer at least some SOC then there’s a DOL licensing violation.

    But the biggest problem isn’t agents steering clients away from your listing. The biggest problem is agents won’t even know about your listing. That’s the elephant in the room.

  60. 60
    John Wake says:

    RE: Kary L. Krismer @ 54 – Nice link.

    Here’s where I got the idea that “Coming Soon” AKA “Pocket Listings” were popular in some areas, http://procuring-cause.com/2015/04/06/the-evolving-mls-part-2/

    MLS usage is dropping – pocket listings:
    We started to see this phenomenon grow a couple of years ago and now it’s becoming more pervasive to the point where it’s been institutionalized in some MLS systems and ostracized in others.

    Some MLSs felt the need to reinforce their relevance in the sales process so they embraced “Coming Soon” listings to offer subscribers a way to load their pocket listings and expose them to the other participants.

    Also, as mentioned in that same post from Bob Bemis, NAR’s recently announced “Upstream” initiative could facilitate pocket listings.

    Or should they collect their listings in their own private network and feed them to the MLS only when the MLS is ready to receive them – read: when the MLS will do business their way?

    Thus the concept of Project Upstream was born. At its core, Upstream is a more organized, more widespread, more grown-up version of pocket listings.

    He disclosed Project Upstream, where the brokerages would combine their resources into a national aggregation that would/could displace the MLSs by reversing the flow of listing data. The members would share information with each other first, before sending it to the MLS. It is the “office listing” or “pocket listing” taken to a new level by having large companies involved and cooperating in the effort.

    Listings would start on Upstream and then be distributed only to MLSs who complied with the brokers’ demands for more voice in governance. Upstream would also control the flow of listings to the portals (Zillow, Trulia – even Realtor.com) by distributing listings only to those that met their demands for display and lead routing.

  61. 61

    RE: Kary L. Krismer @ 57

    Kary said: “The biggest problem is agents won’t even know about your listing. That’s the elephant in the room.”

    You’re missing the part where the buyers WILL know. I agree their agents likely won’t, unless the buyer tells their agent. That’s when they decide whether to contact their agent or just go buy it without the agent.

  62. 62
  63. 63

    RE: Craig Blackmon @ 60

    I think maybe Kary’s never sold a For Sale by Owner.

    For Sale by Owner homes that show on Zillow, but not in the mls, are easier than those that are not on the internet. It’s not that hard Kary. For Sale by Owner homes outside the mls were much more common before MLS4Owners ,and similar and newer alternative models came out about 10 years ago.

    They are still very common in other parts of the Country and always have been, especially in markets with no equity built up where the seller doesn’t have enough equity to promise an SOC. You can’t get blood from a stone.

    It used to be a lot harder to find them before there was a Zillow. :) We did “one time showing agreements” with the owner of the house before showing it.

    Here’s how it plays out in case you haven’t done one before. I see a For Sale by Owner sign that happens to be in the neighborhood where my client wants to live. I write down the phone number and call my client and tell my client to call the owner for a showing. I tell them if you want me to be there I will be there. If you want to buy it, we’ll figure out how. Let’s just see it first and see if you like it enough to buy it. Same thing happens with a For Sale by Owner on Zillow that I or my client find.

    It happens more when my client pinpoints exactly where they want to live and we are not relying on “listed” homes. It’s just part of the real estate business and always has been.

    There are some people who choose not to be “in the mls” and Craig gives them that “alternative”. That is why it is an “Alternative Business Model”. If it were the same as your model it wouldn’t be an “alternative” to your model.

    Can’t you think of 5 reasons, and quickly, why a seller wouldn’t want to be or can’t be in the mls? Say 2% of sellers? When Redfin started they wanted 2% marketshare. Maybe Craig to start wants 1% marketshare. There has to be 1% of would be sellers for whom Craig’s biz model would be advantageous.

    Stop being glass 90% empty and look for the 10% that he can give that you can not. Anyone without enough equity to promise an SOC is a really good example. Forget about willing to pay an SOC for a minute and know that some people don’t have the equity to do that. Some people are just at the brink of a short sale and don’t have that extra equity. They may have 1% or can squeeze 1% out of it. Just think how much more they could get for their house if they didn’t have to advertise it as “a short sale” just by shaving off the SOC.

    The mls is great…but really…you can’t think of 5 examples of sellers who can’t be best served IN the mls?

  64. 64

    By Ardell DellaLoggia @ 59:

    You’re missing the part where the buyers WILL know. I agree their agents likely won’t, unless the buyer tells their agent. That’s when they decide whether to contact their agent or just go buy it without the agent.

    The will know if they are looking, AND if they are looking in the places Craig’s listings appear. Those are two big ifs.

    And I don’t know how many times I have to say this, but it’s all about exposure. Even in a hot market with multiple offers you want as many offers as possible. You never know where that one “best” one will come from. Limiting your exposure can be very costly.

  65. 65

    By Ardell DellaLoggia @ 61:

    RE: Craig Blackmon @ 60

    I think maybe Kary’s never sold a For Sale by Owner.

    I’ve never actually come to terms with one. Even ignoring the fact that you typically look at many houses before a buyer will make an offer, the other issue is often a FSBO will think their house in marginal condition is worth more than it is. So it’s not that I ignore them, but nothing has ever come of the efforts to deal with them.

    This market though is where it would be the most likely, because for one thing you do run out of properties to look at pretty quickly in some areas if your buyer is only looking in a smaller area. That’s part of the reason I’ve said this is the type of market Craig’s model would work best in.

  66. 66

    By Ardell DellaLoggia @ 61:

    Stop being glass 90% empty and look for the 10% that he can give that you can not.

    My main issue with Craig is the way he is trying to “sell” it. Totally downplaying the extent of the lesser exposure and not having any control over agents, etc. Also practically ignoring the possibility of having to pay a SOC to a buyer’s agent and the that fact that a 3% LOC in not locked in stone. As I said, the savings are largely illusory.

    If he was selling it like you do, giving examples of where it might work well, that would be one thing. But as it is he reminds me of the 1031 Exchange person teaching a class that didn’t address any of the downsides of doing a 1031 Exchange. 1031 Exchanges were just a great thing to do because you save on taxes!

  67. 67
    John Wake says:

    RE: Ardell DellaLoggia @ 61 – Been studying FSBOs.

    In addition to those who are forced to go FSBO because of lack of equity, here are a few other types of FSBOs.

    DIY People. Have you built your own deck or made matching curtains and comforter yourself for the baby’s room? Then you might be a DIY person who just enjoys doing that stuff. For some DIY people going FSBO is not just about saving money, they just like to do stuff themselves.

    “I Hate Real Estate Agents” People. They had a bad experience in the past with a real estate agent. Maybe their house sold too soon, “It sold in 3 days and the agent did nothing,” or the house took too long to sell, “It didn’t sell because the agent did nothing.”

    Retired People. They’ve bought and sold a few homes, are generally familiar with the process, and have the time available to try doing it themselves.

  68. 68

    RE: Kary L. Krismer @ 64

    Well…that’s just Craig. :) He wants to use the 1% as a hook, and I think he was pretty honest about that from the beginning. Many if not most alternative models want to say they are the best and only way because the whole system is broken. Their clients become those people who hate agents. Lots of people hate agents. There’s a market for that. :)

  69. 69

    RE: John Wake @ 65

    Yes, I agree. It’s just a Help You Sell service like the original Help You Sell, except it might make more sense now that there are better options as to displaying online photos and information.

    I’m not understanding why this is supposed to be a new concept. What makes it “new” is that there is a Zillow and a brokerage site, Redfin, who will post For sale by Owners. But the concept itself is as old as real estate.

  70. 70

    RE: Ardell DellaLoggia @ 67 – The new part, Ardell, is a real estate broker who can assist those sellers by providing professional marketing experience, WITHOUT having to put it on the MLS and thus without having to pay that additional 3% SOC. That’s Quill. And it is a brand-new, one-of-a-kind real estate firm.

  71. 71
    Blurtman says:

    If Craig/Quill could also engineer a 1% payout to the buyer’s agent, that would be a killer model. Right now, if we assume 3/3 is standard, Craig/Quill seems to be 1/3. So for a $600k house, that is savings of $12k. If it were 1/1, that would be savings of $24k. For $1 million home, that is a savings of $20k as a 1/3 model, and $40k as a 1/1 model.

    Would the monetary savings at 1/3 be enough for folks to bail on the traditional model? At 1/1 I would say certainly.

  72. 72

    RE: Blurtman @ 69 – Total commission = 1 %. Period. Full stop. There is no SOC offered. If one is requested in offer it will be considered.

    So not 3/1 or 1/1, just 1. At least until asked by buyer.

  73. 73

    RE: Craig Blackmon @ 68

    Help U sell was the same, Craig.

    “Help U Sell – Created in 1976, the Help-U-Sell Real Estate model was the pioneer for providing an alternative to the dated 6% commission structure. We never insist on fees based on a percentage of the sales price, allowing consumers to save thousands of dollars compared to what they would have spent on a traditional broker’s fee. Help-U-Sell Real Estate is a full-service, set-fee organization and our licensed professionals manage the entire home sale process from start to finish, including handling all negotiations, providing referrals, showing the seller’s home, and providing expert advice and representation. ”

    Help U Sell was not for many years part of any mls system, and I don’t know that it is always in the mls now. It was an “Assist 2 Sell” For Sale by Owner servicing company with the same “providing an alternative to the dated 6% commission structure” back in 1976. Their fees were a menu of services and in 1976 they called the 6% commission structure “dated”. :)

    From 2006: “…They’ve (sellers) just paid thousands of dollars to be a FSBO. They are not on the MLS and the websites they are on are only Help-U-Sell sites…” From Blue Roofs post below.

    https://blueroof.wordpress.com/2006/08/19/why-i-think-help-u-sell-assist-2-sell-suck/

  74. 74

    RE: Craig Blackmon @ 68

    Help U Sell the same as Quill. There may be a 2nd comment that posts as I thought I already answered this.

    “Created in 1976, the Help-U-Sell Real Estate model was the pioneer for providing an alternative to the dated 6% commission structure. We never insist on fees based on a percentage of the sales price, allowing consumers to save thousands of dollars compared to what they would have spent on a traditional broker’s fee. Help-U-Sell Real Estate is a full-service, set-fee organization and our licensed professionals manage the entire home sale process from start to finish, including handling all negotiations, providing referrals, showing the seller’s home, and providing expert advice and representation. ”

    Funny how they were calling the 6% commission structure “dated” back in 1976. :)

    From 2006: “The part that I really don’t like is how many sellers (of many different brokerages) don’t realize that their homes are not being listed on the MLS.”

    Help U Sell went into bankruptcy proceedings at least twice since 1976. It’s possible that Help U Sell and Assist 2 Sell, or at least some of their franchise offices, offer an in MLS option.

    But in 1976 and for decades thereafter, Help U Sell was Quill without a Zillow and Redfin as a “push-tool”.

    I wish you luck Craig and I do think your chances are better because of Zillow and Redfin allowing For Sale By Owners. But do some research. The concept is very old except for the new internet “Public MLS” options.

  75. 75

    RE: Craig Blackmon @ 68

    Craig,

    What happens when Quill contacts you via Zillow and you treat the seller as the client and the buyer as a customer. Is it 1% for “both sides”? A total of 1% if the buyer comes direct?

  76. 76
    marc says:

    Craig,

    Will Quill 2.0 clients continue to get an attorney to handle the legal services piece of their deal as they did in Quill 1.0 or is it only a licensed broker handling the deal for them?

  77. 77

    RE: marc @ 73 – I’ll still be splitting my fee with an attorney… :-)

  78. 78

    RE: Ardell DellaLoggia @ 72 – Not sure I understand the question. If a buyer contacts me directly via a Quill listing shown on Zillow, I will gladly provide the Quill forms that can be used for an offer. The buyer would be my customer, at no additional charge.

  79. 79
    Blurtman says:

    RE: Craig Blackmon @ 70 – Thanks for the clarification. I guess it makes sense for a BPNA- buyer purchase, no agent. But when there is a buyer’s agent, he/she will probably like to receive something along more traditional lines, and not share in the 1%. And human nature being what it is, you cannot expect a buyer’s agent to be open minded about a Quill listed home.

    Home pricing is not standardized and I guess there is arbitrage around the margins. It always seemed odd to me that the seller pays the buyer’s agent, but the seller can recover the money in the sales price. If a flat 1% total became established, would it lower home prices? But before then, the seller pockets the 5%.

  80. 80

    By Craig Blackmon @ 75:

    RE: Ardell DellaLoggia @ 72 – Not sure I understand the question. If a buyer contacts me directly via a Quill listing shown on Zillow, I will gladly provide the Quill forms that can be used for an offer. The buyer would be my customer, at no additional charge.

    What do you mean the buyer will be your customer? You’re creating a dual agency type situation? If so two questions arise. 1. How? 2. Why?

  81. 81

    By Blurtman @ 76:

    It always seemed odd to me that the seller pays the buyer’s agent, but the seller can recover the money in the sales price.

    Thinking about who pays what is what got us into the nonsense of Washington’s prior agency system, where most agents were deemed to represent the seller because the seller was paying the money.

    I’d argue the seller doesn’t pay the money–it’s the buyer paying the money and the seller is merely a conduit. As I explained above:

    Buyer is willing to pay up to $500,000 for a house, and since you [Craig] like to assume they have a buyer’s agency agreement, assume they have a buyer’s agency agreement requiring that they pay 3%. If they go to a house listing on the NWMLS that offers a 3% SOC they will offer up to $500,000. If that NWMLS listing only offers 2.5% they will offer up to $497,500 (not the exact number, but easier math). If they are going to make an offer on your listing they will offer $485,000. Each way the seller nets $485,000 after SOC.

    Buyers with agents on one of Craig’s listings are no more likely to offer list plus the stereotypical 3% (Craig’s implicit assumption in his sales pitch) than they are to offer list less 3%. And again, if on a NWMLS listing a buyer wants to capture some of the SOC for themselves, there’s rebate brokers like Redfin. And doing that they get their own agent representing them who is not in any way locked into selling one particular listing.

  82. 82
    ARDELL says:

    RE: Kary L. Krismer @ 77

    I saw Craig say that elsewhere. Seller as client; “buyer as customer” when they buy direct with no agent. Like the old days of sub agency.

    I’ve seen all of the agency options evolve over the years. My favorite was a one liner buyers had to sign before you entered the first house with them.

    “I do not represent you…until and unless…you hire me to do so.”

  83. 83
    greg says:

    By ARDELL @ 42:

    RE: greg @ 38

    Other countries do not usually have as strong consumer protection laws or discrimination laws. The “other” fee is at least in part to pay the agent who watches out for the buyer in that regard. So not a fair comparison.

    Buyer Agency was supposed to reduce the incidence of “Buyer Beware” both legally and practically speaking. If there is no need for that…discuss. For some buyers yes and others no. For those for whom the answer is no, Craig’s model provides that option in the marketplace.

    :)
    The EU most certainly provides excellent consumer protections. I often hear RE people immediately attempt to claim that the US system is somehow “better” , it is a red herring to distract from the reality that here in the USA we charge far more for what amounts to the same level of service. In fact the only real difference I can think of is that over here Buyers agents sometimes drive their clients around, although even that has faded over the years.

  84. 84
    greg says:

    By John Wake @ 43:

    RE: greg @ 5 – In the EU in addition to the 1.25% you paid yout agent, you probably also paid for an attorney (or equivalent) but Quill’s price includes the attorney.

    Yep one does pay an attorney but that fee (0.5% to 1%) includes a bunch of stuff we pay for here on top of our MLS/RE agent fee…… so it made more sense not to muddy the waters with it and instead I said a 1-2% fee (at 2% it would cover all non government expenses)

  85. 85

    By ARDELL @ 79:

    RE: Kary L. Krismer @ 77

    I saw Craig say that elsewhere. Seller as client; “buyer as customer” when they buy direct with no agent. Like the old days of sub agency.

    I’ve seen all of the agency options evolve over the years. My favorite was a one liner buyers had to sign before you entered the first house with them.

    “I do not represent you…until and unless…you hire me to do so.”

    The problem with that is statutes now define agency relationships, and the only way for Craig to create an agency relationship with the buyer too (dual agency) is to have them sign a buyer’s agency agreement. And having a buyer sign a buyer’s agency agreement is not a good thing for the seller client! Actually it’s not good for the buyer or the agent either. I really don’t understand what Craig is thinking on that one. Why would anyone want to setup a system that encourages dual agency?

  86. 86

    By greg @ 80:

    In fact the only real difference I can think of is that over here Buyers agents sometimes drive their clients around, although even that has faded over the years.

    It does surprise me how some agents don’t drive their clients around, although I can see that if there are too many of them or small children involved. Many are concerned about the liability, and I can see that with children (not to mention dealing with child seats, etc.).

    What’s more surprising though is that some don’t preview–ever. I seldom preview the first two outings with clients, because it’s more about seeing what types of things the clients like and don’t like. And at other times there just might not be time to preview. But to not do it at all seems to be really disrespectful of the clients’ time.

  87. 87
    Blurtman says:

    RE: Kary L. Krismer @ 78 – Maybe a dual listing price – $1 million with agents, $940,000 without.

    Remind me how the 3 and 3 are paid to the agents, transactionally.

  88. 88

    RE: Kary L. Krismer @ 82

    “…and the only way for Craig to create an agency relationship with the buyer too (dual agency) is to have them sign a buyer’s agency agreement.”

    That is just so wrong I hardly know where to begin. It’s the exact opposite. The buyer would be signing a “non-agency” agreement. No buyer should sign a Buyer Agency Agreement (41A) with an agent who was already hired by the seller to represent the seller at the time they first meet. See 41B Buyer-no Agency. That is the form for “buyer as customer” so there is no confusion and no claim of “undisclosed dual agency”.

    Think of it as buyer as customer of the seller. That might help. The agent represents the seller, and the buyer is the customer of the seller and the seller’s agent both.

  89. 89

    By Blurtman @ 84:

    RE: Kary L. Krismer @ 78 – Maybe a dual listing price – $1 million with agents, $940,000 without.

    Remind me how the 3 and 3 are paid to the agents, transactionally.

    A seller can ask whatever they want, but if a buyer is only going to offer $500,000, they are not going to offer more just to pay their own agent.

    About the only situation I’m aware of that involves money and tends to get ignored is the King County Capacity Charge. Buyers seldom take that into account, in my experience. So you could have two houses next to each other, both built in 2010 but only one of which still owes the capacity charge, and it wouldn’t be surprising to see them both sell for the same amount.

    As to how the LOC and SOC are paid in a traditional transaction, the buyer pays the total purchase price to an escrow agent and that escrow agent will get commission disbursal forms from each brokerage involved and then pay the commission amount(s) to the brokerage(s).

    You could argue that the buyer pays the seller’s commission just as easily as arguing that the seller pays the buyer’s commission. Making either argument doesn’t really get you anywhere.

  90. 90

    By Ardell DellaLoggia @ 85:

    RE: Kary L. Krismer @ 82

    “…and the only way for Craig to create an agency relationship with the buyer too (dual agency) is to have them sign a buyer’s agency agreement.”

    That is just so wrong I hardly know where to begin. It’s the exact opposite. The buyer would be signing a “non-agency” agreement. No buyer should sign a Buyer Agency Agreement (41A) with an agent who was already hired by the seller to represent the seller at the time they first meet. See 41B Buyer-no Agency. That is the form for “buyer as customer” so there is no confusion and no claim of “undisclosed dual agency”.

    Think of it as buyer as customer of the seller. That might help. The agent represents the seller, and the buyer is the customer of the seller and the seller’s agent both.

    It’s not wrong. The only way for a listing agent to create an agency relationship with the buyer is to have them sign a buyer’s agency agreement. RCW 18.86.020(1)(c). http://app.leg.wa.gov/rcw/default.aspx?cite=18.86.020

    Also, there is no reason for a buyer to sign a non-agency agreement, although that might reduce confusion. But it doesn’t actually change the legal relationship that would otherwise exist. See Annie Fitzsimmons Legal Hotline answer dated 9/28/2014.

    Note it wasn’t clear that Craig was intending to create a dual agency situation, which is why I asked post 77 if that’s what he was doing.

    Personally I would never refer to a party as customer and cringe when agents use that term. Parties are either buyers or sellers (or in the case of an open house curious neighbors) and they may or may not be be clients. When you start using the term customer confusion can be created.

    Similarly, I cringe when agents who are members of a team use the term “partner.” That implies that they have a partnership, and that creates all sorts of legal issues.

  91. 91

    RE: greg @ 80

    You could be correct, but I don’t think so, because the total fee amount was the same before protected classes had the right to property ownership and buyers had agency rights. It was just a straight 6 vs 3/3 in the rhetoric, but the total amount was the same.

    That right is relatively recent here in the Seattle area. Persons of color not being allowed to own property in certain neighborhoods in Seattle is still in some of the Deeds, though those restrictions are no longer enforceable. Some even limit the time of day and number of hours a person of color is allowed to be IN the neighborhood, let alone own property in the neighborhood. Again, no longer enforceable, but still a big issue. Expand that to many classes, including gay rights, in this day and age, and agents not in the picture often opens the door to a number of abuses as to the right to own property for protected classes. I don’t think you can make the statement that in Europe a gay married couple buying property will have no issues with discrimination and have ample protections. I’m sure that’s not the case.

    Buyer rights as clients vs customers has only been around in a big way since 1995 or so, and Craig reverting back to “buyer as customer” is somehat a statement that the Buyer as client experiment has indeed failed, and is taking a reversal.

    But no…not a red herring to “double” the fee, because the fee was the same when we all worked for the seller and buyers had no rights of representation. It did not increase at all after that event. Stayed exactly the same. The only thing that changed was the 3 to the “other” agent was optionally to represent the buyer vs the seller. But the same 3 was paid to only represent the seller as well if “buyer no agency” AND the total of 6 was paid to the Sellers’ Agent only, if he did not have an “assist” of an agent who was bringing the buyer in the door.

    There is/was no reduction of fee because there was one agent vs two. To this day the contracts are worded that way. In that sense nothing has changed in many decades as to total fees. So no…it’s not a red herring to increase fees to offer the option of buyer protections. The failure is that the buyer agents don’t really do that, and still perform their duties the same in most cases as they did when buyer was treated as “customer” vs “client”. As many attorneys have said recently, court cases seem to be reverting back to “Buyer Beware”, though that is more because WA Statute vs duties owed compared to WA Agency Laws are at odds with one another in that regard.

  92. 92

    By Ardell DellaLoggia @ 88:

    There is/was no reduction of fee because there was one agent vs two. To this day the contracts are worded that way. In that sense nothing has changed in many decades as to total fees.

    That raises another issue. Technically it’s the listing agent that pays the SOC. The commission is not reduced if their is no agent on the other side.

  93. 93
    ARDELL says:

    RE: Blurtman @ 76

    The oddest part to me is that an appraiser does not address the full 6% difference and makes no reference to it. The comps are never adjusted for cost of transaction differences.

    Even odder is the appraiser will call me when he is using one of my sales as a comp. He will ask if there is s seller credit to buyer and adjust the price for that credit. But have zero interest in adjusting for an agent commission credit of the same amount.

  94. 94

    RE: Blurtman @ 76 – I’m not sharing my commission. It is a single broker listing, with no cooperating commission offered. So seller pays 1% to Quill Realty to market the home and attract buyers.

    As noted elsewhere, and fundamental to the Quill model, Quill will share a portion of this 1% with the seller’s attorney. But the seller no longer pays for the buyer’s professional representation.

    Unless asked and negotiated. A buyer is of course free to include in the offer a seller-paid commission for the buyer’s agent. Negotiations to ensue.

  95. 95

    RE: Kary L. Krismer @ 89

    Kary,

    The original legal method when Buyer Agency became an option was for the Agent for the Buyer to submit a legal addendum rejecting the offer of compensation from the seller and replacing it with an offer of compensation from the buyer direct. Then there was another document requesting that the Buyer Paid Compensation be included in the price “as a convenience to the transaction”. That method was short lived, but was more transparent. Brokerages nipped that in the bud because it drew too much attention to the compensation not being reduced when the buyer had no representation.

    In that sense Quill IS a FIRST in that they do not alter their 1% and adjust it upward when the buyer has no agent to pay.

    Craig,

    Kudos on that one, Craig, and that is why I asked and your answer did surprise me. Advertise THAT!!! That is unprecendented change. That you will do “both sides” as client+customer for only 1% is your hook. Use it! I never heard of any company that would not attach another fee for doing the work of “the other side” or include that in their original pricing. Technically you are including that in your original pricing, but both sides for 1% is crazy low. Find a way to highlight that feature of Quill. If I had to ask and you didn’t even understand why I was asking the question, you are missing a huge opportunity. Make that your #1 advantage for both buyers and sellers of your listed properties. It’s huge and not implied.

    To the person commenting and saying 1/1…Craig is taking that down to 1/0. Holy Caboley!

  96. 96

    By Ardell DellaLoggia @ 92:

    Craig,

    Kudos on that one, Craig, and that is why I asked and your answer did surprise me. Advertise THAT!!! That is unprecendented change. That you will do “both sides” as client+customer for only 1% is your hook. Use it! I never heard of any company that would not attach another fee for doing the work of “the other side” or include that in their original pricing. Technically you are including that in your original pricing, but both sides for 1% is crazy low. Find a way to highlight that feature of Quill. If I had to ask and you didn’t even understand why I was asking the question, you are missing a huge opportunity. Make that your #1 advantage for both buyers and sellers of your listed properties. It’s huge and not implied.

    To the person commenting and saying 1/1…Craig is taking that down to 1/0. Holy Caboley!

    What are you responding to? Craig hasn’t said what he’s doing or what he meant by the term “customer.” But assuming it’s as you indicate, sellers should hate that! Sellers are much better off with their own agent than having a dual agent. And they should pay less for any system that encourages dual agency in any manner.

  97. 97

    RE: Ardell DellaLoggia @ 92 – Thanks Ardell. It’s why Quill is leaving the NWMLS, so I can put the zero in “1/0.” And while Quill will handle the transaction for 1%, it will of course inform the buyer that the buyer should get their own representation, either from an attorney or from a real estate broker working as the buyer’s agent. But the seller isn’t going to pay for it.

    To get out in front of Kary’s inevitable howls, there is nothing illegal or unethical with this arrangement. A broker is a buyer’s agent unless (under one of several exceptions) the broker has been appointed the seller’s agent per a written agreement between the seller and the firm. RCW 18.86.020(1)(a). Which of course will apply with every Quill broker. The Quill broker, as the seller’s agent, can still provide services to the buyer, but with fewer duties owed. RCW 18.86.030. Again, buyers will be encouraged to get their own representation, and any professional retained will be given access to the Quill forms that can – but don’t have to be – used for the offer and PSA.

  98. 98

    RE: Kary L. Krismer @ 93 – Do you get it now, Kary? The customer/client distinction mirrors the distinctions between the duties owed in .030 (Duties of Broker) and .040/050 (Seller’s and Buyer’s Agents Duties). Absent an agency relationship, the party is a customer; with the agency relationship, the party is a client.

  99. 99

    By Craig Blackmon @ 94:

    To get out in front of Kary’s inevitable howls, there is nothing illegal or unethical with this arrangement. A broker is a buyer’s agent unless (under one of several exceptions) the broker has been appointed the seller’s agent per a written agreement between the seller and the firm. RCW 18.86.020(1)(a). Which of course will apply with every Quill broker. The Quill broker, as the seller’s agent, can still provide services to the buyer, but with fewer duties owed. RCW 18.86.030. Again, buyers will be encouraged to get their own representation, and any professional retained will be given access to the Quill forms that can – but don’t have to be – used for the offer and PSA.

    Give me a break–I didn’t say there was anything illegal or unethical about it. I was asking you to explain exactly what you meant by using the ambiguous term “customer” followed by “at no additional charge.” I’m relieved to hear you’re not contemplating some sort of dual agency.

    McDonalds has customers. Attorneys and real estate agents have clients. The parties who have opposing interests to the client is not a customer.

  100. 100

    By Craig Blackmon @ 95:

    RE: Kary L. Krismer @ 93 – Do you get it now, Kary? The customer/client distinction mirrors the distinctions between the duties owed in .030 (Duties of Broker) and .040/050 (Seller’s and Buyer’s Agents Duties). Absent an agency relationship, the party is a customer; with the agency relationship, the party is a client.

    What part of any of those statutes uses the term “customer?” I’m missing it. If you ever get sued an attorney is going to have a field day with your calling a buyer a customer.

  101. 101

    RE: Kary L. Krismer @ 97

    Read it again, but read WA Agency Law …look for ‘subagency” as an option and see Form 41B. It is the buyer’s right, as an option available to them, to NOT have an agent represent them. That, in legal terms (you may need to consult an attorney about the differentiation – ask Craig-he’s apparently free haha) as to client vs customer.

    Craig and I have to get to our Open Houses now because we actually work in the field. You really do need to get out in the real world more Kary. Everything looks a little different when you are sitting in your khaki’s watching the game and reading RCWs. :)

  102. 102

    RE: Kary L. Krismer @ 97 – Here’s a 15 year old post that discusses the distinction: http://realtytimes.com/consumeradvice/buyersadvice1/item/20066-20000622_clientorcustomer

    In fact, here’s the Google search result for “real estate client customer”: https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=real%20estate%20client%20customer

    Check it out. Really, the distinction is widely known, recognized, and not in any dispute. Although you seem strangely unaware of it… ;-)

  103. 103

    By Ardell DellaLoggia @ 98:

    Craig and I have to get to our Open Houses now because we actually work in the field. You really do need to get out in the real world more Kary. Everything looks a little different when you are sitting in your khaki’s watching the game and reading RCWs. :)

    Ardell, not need to get insulting. I’ve been out already today and will go out again shortly.

    And seriously, now you’re pulling the same BS that Craig is. Trying to give the impression that you’re busier than you are. You really don’t want to go there.

  104. 104

    By Craig Blackmon @ 99:

    RE: Kary L. Krismer @ 97 – Here’s a 15 year old post that discusses the distinction: http://realtytimes.com/consumeradvice/buyersadvice1/item/20066-20000622_clientorcustomer

    In fact, here’s the Google search result for “real estate client customer”: https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=real%20estate%20client%20customer

    Check it out. Really, the distinction is widely known, recognized, and not in any dispute. Although you seem strangely unaware of it… ;-)

    Again, I’m going to have to ask if you’re really an attorney? Citing to articles by the press? That first one is clearly wrong (at least under Washington law) because they say without a contract a buyer is “clearly not a client. ” Oh, and the rest of that same paragraph of the article is also wrong. But nice citation. /sarc

    I would still refer to a buyer as my client even if a non-agency agreement was used. It would be just like a limited service broker limiting their agency duties. They are still clients of the listing firm, but the client is not the principal of the broker. It’s actually the one instance where I like the fact they now call us all brokers, because it makes sense in that context over calling us agents when an agency relationship might not exist.

    But no, I’m not going to deny that some agents will use the term customer, just like some of them describe their team members as partners. So it’s not surprising you’ll find Google searches that use the term.

    I’m saying using the term is not a good idea, because the term is ambiguous in the context of real estate transactions. “I show my listings to unrepresented buyers as a customer service.” Who is the “customer” there? The seller whose listing the agent has a duty to try to sell, or the unrepresented buyer?

  105. 105
    Blurtman says:

    RE: ARDELL @ 90RE: Kary L. Krismer @ 86 – Thanks K and A. As a seller, I look at the 6% as a cost to me. As a buyer, I look at comps which include the 6%.

    Quill seems sort of like providing a turn-key FSBO solution. In the case of a FSBO, how is the buyer’s agent’s compensation handled?

    If a buyer has not contracted with a buyer’s agent, then I suppose the buyer’s only third-party cost would be legal expenses. Is that approximately correct?

    In the case where a buyer has contracted with a buyer’s agent, and the buyer independently finds the ideal home on Quill without any input from the buyer’s agent, does the contractual agreement with the agent still apply, i.e., does someone have to pay his/her 3%?

  106. 106

    By Blurtman @ 101:

    If a buyer has not contracted with a buyer’s agent, then I suppose the buyer’s only third-party cost would be legal expenses. Is that approximately correct?

    In the case where a buyer has contracted with a buyer’s agent, and the buyer independently finds the ideal home on Quill without any input from the buyer’s agent, does the contractual agreement with the agent still apply, i.e., does someone have to pay his/her 3%?

    Not sure what you mean by third party cost, but there are lender costs and the cost of the title policy for the lender. There’s also insurance.

    As to the second paragraph, it would depend on what the buyer’s agency agreement said.

  107. 107

    RE: Kary L. Krismer @ 100

    Actually that bit was for Craig…so he would wonder how I knew he was doing an Open House today. :)

    As to you “getting out more” I am talking about I have never, ever, known an agent who didn’t understand that distinction It is a very important distinction in real estate and ALWAYS has been. Take an ABR course. Most seminars given by attorneys, at least back in the days when Blanche wrote that article in Realty Times and about 7 years prior to that article, every agent was taught the difference.

    I am SURE absolutely SURE that someone in your office in the last decade, and even you yourself, has checked “SELLER” and “SELLER” on page one of the contract. That IS seller as client and buyer as customer. If you haven’t done it just look in the file cabinet in your office at Page 1 of Form 21 on any property that is same agent “on both sides” and the majority will be that seller as client-buyer as customer relationship. And I’ll bet almost NONE accompany it with a 41B as they are supposed to.

  108. 108

    RE: Ardell DellaLoggia @ 103 – I stopped wondering about you and what you know a long time ago. :-)

  109. 109

    RE: Blurtman @ 101

    Blurtmans says: “As a buyer, I look at comps which include the 6%.”

    Well…but…we just throw 6% around as the start point of 3/3. You really can’t know if the comps are 6% or not. Even we as agents can’t know that unless we are the agent in the transaction. The only place it shows is on the closing statement. If the first 3 is negotiated down with the seller and the second 3 is negotiated down with the buyer, you would not now that, nor would I.

    The only ones I do that stay 3/3 are usually the ones that are $300,000 or less in price. Maybe $400,000 or less in price. Somewhere in there it changes for me and for most agents.

    That’s the odd part of discounters showing “savings”. Do you really think people who are buying and selling million plus homes are always paying 3/3? It’s a scale, like every other business. On the low side it’s full and on the high side it has the deepest discount, as to price of purchase and % cost of service.

    Even my old business of managing financial portfolios operated on that basis. Most businesses where cost is a % of value have a sliding scale. On trust funds we charged 1/2 of 1% per month to manage them for portfolio values up to X and then a sliding scale and then as I recall it said “over a million dollar portfolio the amount over a million is by negotiation”.

    Why does everyone think starting at 6% and then negotiate, and negotiation is a must be by law in every state, always ends with the negotiation at full boat? I never understood that. Even Redfin and Craig seem to say that. Is it really because they don’t understand the business they are in?

    I’ll let someone else answer the rest of that as I only use “Buyer Contracts” when it benefits my buyer client for me to do so, which is rare.

  110. 110
    Blurtman says:

    By Ardell DellaLoggia @ 105:

    RE: Blurtman @ 101

    Blurtmans says: “As a buyer, I look at comps which include the 6%.”

    Well…but…we just throw 6% around as the start point of 3/3.

    ****

    Sure. The point is that as a buyer in a certain price range, I view the agents’ compensations to be in the comps, whether it is 3, 4, 5 or 6%.

    So going back to the million dollar home example then, assuming both agents can work for 2 each, and Craig holds fast at 1, and the buyer’s agent expects 2, it is a 1% savings, or $10k. Is it worth the risk of gambling on a new business model? Don’t know.

  111. 111
    ARDELL says:

    RE: Blurtman @ 106

    That’s the million dollar question. :)

    Even Craig says he won’t stay at 1%. It’s a loss leader position to get a toehold. Like the new restaurant that does a buy one get one free coupon when they first open. Redfin increased their commission but that was more happentstance than design.

    Worth noting. Not all markets start negotiating at 3/3. I’ve worked in low price markets that start at 7 and high priced ones that start at 5. But by and large nationally, you move this way and that of 6.

    I price mine for the work involved. It’s a little harder to do that and sometimes we need to “fair it out” at the end. But even doing it that way moves around the 6 for talking point purposes.

  112. 112
    Blurtman says:

    RE: ARDELL @ 107 – Too late, Ardell. You are on record as saying we should negotiate agents down to 1.5/1.5. :>)

  113. 113
    ARDELL says:

    RE: Blurtman @ 108

    LOL Everyone can do that… on a pricy house. Always could. In the traditional model every agent is free to set their own fees. We are independent contractors. That’s why Traditional Brokerages can’t quote fees. We are not employees of them. We pay them. They don’t pay us.

    Every agent is their own business with their own commission options.

  114. 114
    Qui Patitur says:

    108 comments and counting…..wow…..hit a nerve…..as a recent real estate ex-pat I applaud the business model. The NWMLS monopoly went AWOL with fees during the bubble burst and continues to roll out new fines! Seriously folks, step back and look at the forest! Most of my educated friends have sold their homes by owner using their lawyer unless they were in the deeps woods of no-where. I find this interesting, frequently in my local community the owners post photos (not professional listing photos) on Facebook asking potential buyers to contact them before they list their home for sale on the community page. I haven’t tracked this diligently, but I am not seeing many of them make it to the NWMLS with listing agents on Redfin. I will be following what happens with Quills business plan as I have several people that will be looking to downsize and leave the area in the next few years.

  115. 115

    By Ardell DellaLoggia @ 104:

    I am SURE absolutely SURE that someone in your office in the last decade, and even you yourself, has checked “SELLER” and “SELLER” on page one of the contract. That IS seller as client and buyer as customer. If you haven’t done it just look in the file cabinet in your office at Page 1 of Form 21 on any property that is same agent “on both sides” and the majority will be that seller as client-buyer as customer relationship. And I’ll bet almost NONE accompany it with a 41B as they are supposed to.

    First, you don’t understand Form 21. The choices there are:

    Selling broker represents: (1) buyer, (2) seller, (3) both parties, or (4) neither party and
    Listing broker represents: (1) seller, or (2) both parties.

    Checking 2 and 1 (seller and seller) is not a choice of seller as client and buyer as customer. The word “customer” doesn’t even appear on form 21.

    Second, there is no reason for using Form 41B in that instance–so it is not something the agent is “supposed to do.” Again, see Annie Fitzsimmons Legal Hotline answer dated 9/28/2014.

  116. 116

    RE: Kary L. Krismer @ 112

    As Craig pointed out it is peculiar that you don’t know this distinction since it is a main principle in real estate sales when it comes to your relationship with a home buyer. It’s pretty simple and best explained in the “seller-seller” scenario when you are the only agent in the room and the seller is your only client.

    A customer is someone you help your seller client sell the home to, and the fact that the buyer is a customer and not a client demands full disclosure. The disclosure is that everything you do and say when talking to that buyer is geared to the best interests of the seller. Every question they ask that you answer, you answer in accordance with the best interests of the seller. Seller-Seller means only seller is considered as to best interests of “your client” who is not the buyer. It’s full on “Buyer Beware”.

    If you don’t understand the difference when you are speaking to a buyer as to whether that buyer is your seller client’s customer or your client, let’s agree to disagree here.

    Craig is the one with the new buyer as customer business model and he does know the difference and this post is about him and his “new” business, so whether or not you agree with me and Craig is irrelevant.

    I’ll agree that the 41B does not cover that situation and NO form does, which is just sad given the number of seller-seller contracts that go through, especially in a weaker market. I’m sure Craig can do a better job as to that full disclosure than the mls forms ever will. As long as the brokerages insist on clouding the agency issues by saying “listing agent” vs agent for the seller and calling the Buyer’s Agent a “selling broker”…there is no hope for a better understanding or better buyer representation.

    Absent the best interests of the buyer EVER being the goal of brokerages and forms, going back to buyer as customer only, as Craig is doing, is at least more honest. Luckily buyers usually know instinctively if you are looking out for their best interests or just selling to them.

    The cost of selling “to them” is “free”. So if no agent (and a lawyer one at that) or brokerage is going to ever understand what buyer as client is, or how they need to change their actions accordingly, then Craig is right and zero SOC should be the wave of the future, as it was in the past. Call buyer agency dead and bury it…get rid of the cost of “procuring a buyer” for the seller and no SOC is correct. But only if you are ready to call true Buyer Agency a failed experiment except maybe as a small niche market. Until there is a class for agents training them when to tell a buyer “don’t buy this house” and why…call buyer agency dead as a doorknob. They’ve had 20 + years to come up with the training…never did.

    There you go Blurtman #109. I won’t go 1.5/1.5 with you, but I’ll go 3/0 with you and even 2/0 on a pricey house. :) If no one’s representing the buyer then no one should be charging the buyer (or the seller) for the cost of representing the buyer.

  117. 117

    RE: Ardell DellaLoggia @ 113 – OK Ardell, it sounds like you got my six! I look forward to working with you on my single broker listings and – who knows! – maybe helping a client make an offer on one of yours. Man, the air is so fresh and clean once you leave the MLS, you can see for miles… You should join me!! :-) Well, technically, I haven’t done it yet, but it will happen this month.

  118. 118

    RE: Ardell DellaLoggia @ 113 – Ardell, this is just a side-track at this point, because it only came up due to the term “customer” being ambiguous, and my asking Craig if he was intending some sort of dual agency. He his not, so the topic could really be dropped.

    What I find “peculiar” though is that Craig, an attorney, would use such an ambiguous term. I suspect he again has his sales hat on and is just trying to lure in some buyers. But he creates the risk that they will think he’s doing more for them than what he is.

    I would strongly recommend against an agent ever using the term “customer” unless they define it, because it is ambiguous. If a third party is interested in one of my clients’ listings they are a “buyer” or more specifically an “unrepresented buyer.” There is zero need to call them anything else, particularly a customer. As mentioned, that could give them the impression that you are intending something more in your dealings with them, and I suspect in the event of litigation if they sued the use of the term would get them past the agent’s summary judgment motion.

    But this is an area many agents don’t understand. Prior to the RCWs being clarified to clearly require a buyer’s agency agreement, many agents thought merely checking the boxes on Form 21 would create dual agency. You thought that as I recall. Now that is clearly incorrect, but many agents still don’t understand. They think that to get “both sides” of the commission they need to create a dual agency situation. There is so much agent confusion on this topic that DOL is apparently planning on continuing covering the topic in the 2016-2017 Core classes.

    But again, this is a side-track. Use the term “customer” at your own risk if you wish. I’ll continue to deal with buyers and sellers, and specify when they are my client.

  119. 119
    greg says:

    By Ardell DellaLoggia @ 88:

    RE: greg @ 80

    You could be correct, but I don’t think so, because the total fee amount was the same before protected classes had the right to property ownership and buyers had agency rights. It was just a straight 6 vs 3/3 in the rhetoric, but the total amount was the same.

    That right is relatively recent here in the Seattle area. Persons of color not being allowed to own property in certain neighborhoods in Seattle is still in some of the Deeds, though those restrictions are no longer enforceable. Some even limit the time of day and number of hours a person of color is allowed to be IN the neighborhood, let alone own property in the neighborhood. Again, no longer enforceable, but still a big issue. Expand that to many classes, including gay rights, in this day and age, and agents not in the picture often opens the door to a number of abuses as to the right to own property for protected classes. I don’t think you can make the statement that in Europe a gay married couple buying property will have no issues with discrimination and have ample protections. I’m sure that’s not the case.

    Buyer rights as clients vs customers has only been around in a big way since 1995 or so, and Craig reverting back to “buyer as customer” is somehat a statement that the Buyer as client experiment has indeed failed, and is taking a reversal.

    But no…not a red herring to “double” the fee, because the fee was the same when we all worked for the seller and buyers had no rights of representation. It did not increase at all after that event. Stayed exactly the same. The only thing that changed was the 3 to the “other” agent was optionally to represent the buyer vs the seller. But the same 3 was paid to only represent the seller as well if “buyer no agency” AND the total of 6 was paid to the Sellers’ Agent only, if he did not have an “assist” of an agent who was bringing the buyer in the door.

    There is/was no reduction of fee because there was one agent vs two. To this day the contracts are worded that way. In that sense nothing has changed in many decades as to total fees. So no…it’s not a red herring to increase fees to offer the option of buyer protections. The failure is that the buyer agents don’t really do that, and still perform their duties the same in most cases as they did when buyer was treated as “customer” vs “client”. As many attorneys have said recently, court cases seem to be reverting back to “Buyer Beware”, though that is more because WA Statute vs duties owed compared to WA Agency Laws are at odds with one another in that regard.

    I was attempting to say your rebuttal was a red herring. In that consumer protection is one of the first things American RE people use to create the illusion of a higher standard in the USA, and thus provide some justification for the huge fees (5%-6%) vs 1%- 2%….

    The facts are very clear, American retail Real estate consumers do not have more or better protection than most other developed economies. I can see how somehow might wish to believe they do but providing a second agent who has virtually no legal power is vastly less than the requirement by law to have retail RE transactions conducted by RE attorneys.

    There are lots of systems out there, most provide good protection buy very few charge anything vaguely approaching the insane costs of the USA.

    I would add that the great trick the RE industry ever played was create the two agent system that breaks both the sellers and buyers ability to truly negotiate the fees charged.

    The MLS controls the market, and the two agent system ensures that the average consumer stymied.
    Even someone with good knowledge can really only shift the dial on one half of the fee. The seller might be super cool and work his agent down from 3% to 1.5% but even that leaves the other 3% untouched and pretty much untouchable if they hope to get large buyer pool.

    That means even a smart informed consumer can at best work a 10-25% reduction….. when we all know that this is a fat margin business and by fat I mean blue whale kind of fat. Which of course is exactly why there are far far too many people in the game, they only need get a couple of clients a year to make it worth while, and that tells me the market is broken.

  120. 120
    greg says:

    By ARDELL @ 110:

    RE: Blurtman @ 108

    LOL Everyone can do that… on a pricy house. Always could. In the traditional model every agent is free to set their own fees. We are independent contractors. That’s why Traditional Brokerages can’t quote fees. We are not employees of them. We pay them. They don’t pay us.

    Every agent is their own business with their own commission options.

    NO , just stop. AT best the average consumer can work just one agent down in price, and perhaps squeeze 0.5% off the buyers agent as well but no more than that.

    The average consumer in WA IS paying 5%-6% and when they get something off it is just the seller side agent , almost never the buyers agent because the buyers agent has zero reason to reduce the fee, after all they tell the client that the seller is paying and they “own” that client once they sign.

  121. 121

    By greg @ 117:

    The average consumer in WA IS paying 5%-6% and when they get something off it is just the seller side agent , almost never the buyers agent because the buyers agent has zero reason to reduce the fee, after all they tell the client that the seller is paying and they “own” that client once they sign.

    You’re ignoring rebate brokers, where the buyer doesn’t even have to negotiate.

    But part of the issue is the fee being contingent. Contingent fees will always be higher than fees that have to be paid regardless of outcome. If I recall correctly, for a time (still?) WaLAW was charging a greatly reduced fee, but it wasn’t contingent, for the most part (I don’t want to misrepresent their terms).

    Finally, if you do get to the point of negotiating fees, the possibility comes up that the buyer will have to pay a fee that isn’t being financed by running it through the seller.

  122. 122

    RE: greg @ 116

    The first agent always charged the total, and even more so before there was an mls. To this day the first agent still contracts for the total. The instructions to escrow of what to pay the 2nd agent do not come from the buyer or the seller, they come from the first agent, and the 2nd agent confirms the amount. When there is/was only one agent the commissions were not lower.

    The mls created a sharing of that total if a 2nd agent assisted the first agent in selling the property. It did not ADD a 2nd commission…it split the first one. There are still markets in the US that do not have an mls and do not split the commission unless the first agent needs an assist and basically hires the 2nd agent to assist. NYC was notably the last holdout in that regard, though there are likely some less notable small areas who do it as well.

    The mls was not created to double the commission and it did not change the commission. The mls was created to provide a larger pool of inventory and to share that inventory…and share the commission when the company selling the property is different than the company listing the property. That is why to this day the agent for the seller is called “the listing agent” and the agent for the buyer is called “the selling agent”.

    The mls is not a cartel that created a double fee. It is an inventory sharing system that created a splitting of the fee. The total fee was not changed.

    I had my 25th Anniversary in real estate yesterday. There was an mls when and where I started, but there were still some neighborhood brokerages that did not put their inventory into the mls. They did not charge less. When they eventually became members of the mls to gain access to the other brokers’ inventory, they did not charge more.

    I wonder as you speak what price range you are referring to as even the discount brokers who started out with deeper discounts have jacked up their fees considerably, thus proving out that the lower fees of approximately half were not possible to sustain. Go to Redfin’s sliding scale. At $200,000 there is no discount for listing a property and only a $250 bonus for a buyer. Even at $700,000 their discount is no where near what they originally thought they could discount and stay in business.

    To Kary…and this is why “customer” is key to whether or not lower fees can be achieved via Quill by converting the buyer from a client to a customer. It is the KEY to this biz model being successful or not. Not a sidebar. It is the main principle of the business model offering services at 1%. A buyer can choose to simply be a customer of that seller…or go outside of the model and separately contract to be a client of a different company to assist them in the purchase. Buyer’s choice. The buyer chooses whether to be a customer of the seller or a client of their own separate and equal representation.

    Not semantics. A clear distinction. Ball’s in their court to hire and pay for an agent or not. Craig took his ball and went home. No sharing. :)

  123. 123

    By Ardell DellaLoggia @ 119:

    To Kary…and this is why “customer” is key to whether or not lower fees can be achieved via Quill by converting the buyer from a client to a customer. It is the KEY to this biz model being successful or not. Not a sidebar. It is the main principle of the business model offering services at 1%. A buyer can choose to simply be a customer of that seller…or go outside of the model and separately contract to be a client of a different company to assist them in the purchase. Buyer’s choice. The buyer chooses whether to be a customer of the seller or a client of their own separate and equal representation.

    Not semantics. A clear distinction. Ball’s in their court to hire and pay for an agent or not. Craig took his ball and went home. No sharing. :)

    No. The relationship of a buyer to a seller and their listing agent is exactly the same when the buyer has an agent as when they don’t. The only difference is that when they have an agent the listing agent will typically deal with them through the buyer’s agent. To start calling them a customer is misleading the consumer, and not a good practice.

    I’m somewhat shocked you are so focused on this “customer” thing. That’s the type of thing a naive buyer or seller would worry about, not a professional in the industry. Professionals should use precise language, and “customer” should be avoided for the reasons I stated above. But again, you’re free to take whatever risks you wish. I can only warn you about the consequences of your actions.

  124. 124

    RE: Ardell DellaLoggia @ 119 – On the MLS issue, some may not realize how good we have it in Seattle. Unlike many/most areas, the NWMLS is not a Realtor owned entity. That has helped with many of the changes in the industry and the development of alternative models like Redfin’s. Also, many areas might have multiple MLS entities servicing the area, where we mainly have one large MLS serving a large area. That has advantages too.

    Does the NWMLS do everything in the best possible way? Probably not. But there are certainly worse MLS entities out there.

  125. 125
    Deerhawke says:

    At the height of a hot market in 2000, I saw an immigrant friend whose East Side agent managed to convince him that 4.0% was the normal listing agency fee and 2.0% was the normal selling agency fee. The house did have its quirks, but it was properly priced and in that hyper-hot market, it should have sold. Most of the initial calls from agents were not about whether the house was still available, but whether the agent had made a mistake on the forms about the SOC. The agent assured him that that he had not.

    At a time like now when there was no inventory of that kind of product and even bad houses were selling for high prices, his house did not sell. It was ignored.

    If the MLS is the main way houses are marketed, this is virtually bound to happen. Each agent knows that a willing and able buyer is an economic asset. Why should he accept a lowered commission if he doesn’t have to? Business models do not work when they rely on some form of self-sacrifice.

    I think the only thing that is going to change the MLS is death of a thousand cuts. Redfin has caused a lot of change. Smaller alternative and discount brokerages are proliferating. But the things that fascinate me more are the internal list-servs at companies like Microsoft and Amazon. I know of a couple of houses in my neighborhood that have sold in this way without going on the MLS.

    It will be interesting to hear how you do Craig. Keep us posted.

  126. 126

    RE: Deerhawke @ 122

    I was surprised when I just looked at the Redfin commission sliding scale on their website at how high their commissions have gotten. When Tim in the post said “Redfin’s fees have gone up and their service has become closer to what’s provided a typical agent.” I thought he was over-stating…until I checked. The increase is dramatic since last I checked and hiding it in that sliding scale has made it a more quiet increase. I was surprised by both the increase in fees and their lack of transparency about it.

  127. 127
    A_Brit_Who_Stumbled_Across_This_Site says:

    5-6% fees? Really? Thats shocking and frankly borderline criminal.

    And Kary, here in London we manage to have sky-high property prices to rival Manhattan with agents doing nicely, on 1-1.5%.

    Interestingly the internet here is starting to get sellers to not use agents at all. Instead pay a flat fee to the internet site to host the advert, provide the hoardings. Nothing else. You heard it here first…

  128. 128

    RE: A_Brit_Who_Stumbled_Across_This_Site @ 124 – This is the extent of my research on London prices, but it appears they might possibly equal Seattle prices, not Manhattan prices.

    http://www.foxtons.co.uk/properties/uk-london-flats-for-sale-290/flats-for-sale-in-london.html

  129. 129
    A_Brit_Who_Stumbled_Across_This_Site says:

    Its a year-old but its an interesting article, both on comparative costs of property and total transaction costs.

    http://www.ft.com/cms/s/2/b4a78608-e298-11e3-a829-00144feabdc0.html

    Editted as link didn’t seem to work the first time.

  130. 130

    RE: A_Brit_Who_Stumbled_Across_This_Site @ 126 – Interesting article. I particularly liked how it goes into the different costs of ownership–buying and holding. It called NYC’s real estate taxes high, but I couldn’t follow that entirely. High real estate taxes will result in lower values (e.g. Texas).

    Anyway, maybe NYC isn’t as expensive as I would have thought.

  131. 131

    Inman news picked up the story. Inman is a private subscription insider RE news service along the Lines of Realty Times. Not a small deal when someone drops out of the mls. :)

    http://www.inman.com/2015/06/02/qulil-realty-to-unplug-from-northwest-mls-to-sidestep-paying-buyers-agent-commissions/?utm_source=20150602&utm_medium=email&utm_campaign=dailyheadlinespm

  132. 132

    RE: Ardell DellaLoggia @ 128 – LOL, the agents over there are having a field day laughing at Craig’s volume (even though many of them don’t know how little of the low volume is listing volume). And now that information is public, I feel more comfortable discussing it. As disclosed in the article, Quill has had only 12 closed transactions, both listing and buyer transaction.

    The problem I’ve alluded to in the past in the coverage of these alternative models is the low volume most all of them have. Consumers just don’t like the services for one reason or another. And when a model generates low volume at a discount, obviously is not a sustainable model.

    So what does a firm do if it’s failing? It throws a “Hail Mary” pass. That’s all these alternative models tend to be, but without the context no one knows that. But that has been the case with many of the alternative models covered here.

  133. 133

    On the “customer” issue, Craig apparently has more in mind that what he let on here. From the Inman article:

    Quill Realty’s new model is also a play to double-end the deal.

    For unrepresented buyers, Quill Realty will provide broker or attorney services to them for a “reduced fee,” Blackmon said. Broker services would be provided by someone other than the listing agent, he said

    First, this seems entirely inconsistent with the “no additional charge” statement Craig made above.

    Second, I realize a lot of agents will refer unrepresented buyers to another agent at their same firm. I don’t. But getting an attorney through someone who represents your adversary, the seller? Wow.

  134. 134

    RE: Kary L. Krismer @ 130 – Who said the attorney would be with the same firm as the one that represents the seller? Different lawyer, different firm. Where Quill represents both buyer and seller, the parties will have a different agent AND DIFFERENT ATTORNEYS AT DIFFERENT FIRMS.

    Why don’t I get the benefit of ANY doubt from you? You don’t think I understand conflicts of interest? Neither of us is stupid, Kary. Either you’ve literally lost your mind, or you’re blinded with fear and rage by anyone who dares to do anything differently in real estate. I mean, the “customer vs. client” criticism? Good God, Kary, it’s in wikipedia! http://en.wikipedia.org/wiki/Real_estate_broker#Agency_relationships_with_clients_versus_non-agency_relationships_with_customers

    I’m officially leaving this thread. Thanks for all of the great commentary and insight, some of it has been very helpful as I continue to refine my model and do something unique in real estate.

  135. 135
    ray pepper says:

    damn…what the hell is going on here?…can someone fill me in..I don’t want to read the 130 remarks…SUM IT UP PLEASE!? any fighting…Kary/Ardell? Millionaire Mike? Steve Tytler have something to do with this insanity?

  136. 136

    By Craig Blackmon @ 134:

    RE: Kary L. Krismer @ 130 – Who said the attorney would be with the same firm as the one that represents the seller? Different lawyer, different firm. Where Quill represents both buyer and seller, the parties will have a different agent AND DIFFERENT ATTORNEYS AT DIFFERENT FIRMS.

    Craig, I realize that you are trying to deceive the entire world with your sales pitch. But I didn’t say the attorney would be with the same firm. My problem was getting a referral to an attorney from your adversary! You don’t see a problem with that? Seriously? You don’t see a problem with that?

    And yes the buyer will have a different agent, but there will be someone, probably you, at the firm, being a dual agent. And since there aren’t that many agents at your firm, that likely means that either the buyer’s agent or the seller’s agent will be a dual agent. Whichever one it is will be the loser.

    Deceive much?

  137. 137

    RE: ray pepper @ 135RE: ray pepper @ 135 – Craig came up with a new system, and to promote it a very misleading way of representing what it is, how it works, and who it is good for.

    A seller only pays 1% to sell their house (ignoring the SOC that they may have to pay and that other firms don’t charge the 3% LOC he claims is standard).

    A buyer is a customer who Craig has no relationship with (ignoring that he will refer them to attorneys and someone else at his firm may be their agent for a fee).

    There’s more I’m sure, such as his 92% of buyers use the Internet to distract from not being on Broker sites, but it’s late.

    I wouldn’t have had a problem if Craig had just announced his model and then stated the advantages and disadvantages of it, and who it was good for and who it was not good for. And as Ardell mentions, there are some it would be good for. But that’s not even close to what he did.

  138. 138
    ray pepper says:

    Well…Bravo! The NWMLS and the archaic 6% fees Model of Real Estate, as we know, is dying. But, as a seller I WANT to be on the NWMLS and UNLOAD my property as FAST AS I CAN. I do not want to be a guinea pig in an attempt to save a few grand. Between Mortgage payments, taxes, insurance, utilities, upkeep, and hazards of potentially leaving home vacant with vandalism and theft its not even near worth it………..Hell no!
    As it still stands today the MLS is still what we got and with thousands of Agents clamoring for their commissions I do not see leaving the mother ship…..YET…………
    The fact is, as laid about by Google at least a decade ago( that we have discussed at NAUSEUM) the MLS is approaching ventilator status. A new efficient system for transferring real estate comes closer and closer to reality each and every year that goes by. We will look back and laugh at how much $$$$ we used to WASTE on selling our homes.
    Until then SELLERS get your home on the market and pay no more then 200-500 to LIST, then put your 2.5% Buyers Agent commission out there. Once on the MLS you have a shot at unrepresented buyers and BAMMMM you just sold your home for nothing. If the buyer comes along REPRESENTED, and you like the offer, then take it and RUN!
    Not sure if I call Quill or any of these people PIONEERS. What is certain is their clients are the GUINEA PIGS and they are the ones who have EVERYTHING to lose while the “Explorers” seek new worlds with NO MONEY in their pockets!

    I suggest Quill give their first 50 listings FREE so they can show some stats to people who may choose to use them. We all know selling a property on the Eastside “CURRENTLY” can be done by a guy in a monkey suit standing on the corner holding a sign. Show the PUBLIC some real success numbers, not hopes and dreams, and check back in a couple years.

  139. 139

    By ray pepper @ 138:

    I suggest Quill give their first 50 listings FREE so they can show some stats to people who may choose to use them. We all know selling a property on the Eastside “CURRENTLY” can be done by a guy in a monkey suit standing on the corner holding a sign.

    50 listings–how many years do you expect Craig to go without revenue? ;-)

    And a guy in a money suit is overkill. In some hot areas all you need is a monkey! ;-)

    Seriously, I’m glad you can see the defects in this model. It’s a bit disconcerting that few of the consumers on this site seem to see it. They’re apparently blinded by Craig’s save 5% BS.

  140. 140
    Enough says:

    RE: John Wake @ 67 – Kary!! PLEASE stop it already.
    Clients know that they could be looking at an agent that would want %%. They also know there is a better chance to sell it without an agent and pay just the 1%. They also probably know that they have less exposure. I am 100% confidant that the seller and agent/buyer can work out a fair % to the buyer agent so that everyone is happy and the house gets sold.
    But trust me – I have 15+ years in SEO, website design, and in real estate marketing. The #1 most searched site: Zillow.com – you have heard of that site before right? Even if an agent is sending clients new listings from the MLS – the majority of people will look at sites like zillow anyway – even craigslist.

    Even though Zillow has a lot of miss information – it DOES have way more listings that any MLS because it has mls listing, FSBO listings, pre-foreclosures, coming soon listing, make me move listings…etc.

    I just had a friend selling their home and we wanted to list it – his wife wanted to put it on Zillow and “see” what happens first – full price offer the next day and zero commission – and this was from a Realtor buying a home for himself. Did they get the most exposure? Did they get the best price? Who knows – they knew they weren’t getting maximum exposure…They accepted the price so they were happy with it – could they have gotten more? Who knows – but that’s what they wanted to do! And they saved about $9000.00 just on the buyer agent commission.

    So please – just do what you and let other people decide what they want to do.

  141. 141

    RE: Enough @ 140 – You obviously cannot understand what I’m saying. I don’t care whether people take alternative models. What I care about is those models being sold in a deceptive manner. “You’ll save X% and there is no downside.” Total BS.

    Tell consumers what your model is, what advantages it has, and what disadvantages it has.

    And as to your antidotal evidence of what your friend did, not only is that antidotal, but without giving more information there’s no way to know whether they left 15% on the table trying to save 6%.

  142. 142
    Craig says:

    Kary, the term is “anecdotal” not “antidotal.” The latter is what one might take for some affliction, like maybe Rank Trollism…. ;-)

    I agree 1000% with your point: An alternative business model should be frank about the costs and benefits of using the new model. Presumably those benefits outweigh the costs (or else the business won’t be around very long). And nobody – not me, not Enough, not anybody who has weighed in thoughtfully on this issue – believes that Zillow is all benefit at no cost. Clearly that is not the case – as Enough explicitly states!

    Finally, nobody will EVER be able to know whether reducing transaction costs let to a higher net for the seller, or not. That’s simply unknowable. But what is knowable – and as Enough explains – is that a consumer now has the ability to make that determination for herself, with meaningful options thanks to Zillow. And that is a good thing!

  143. 143

    RE: Craig @ 142 – So much for spell-check! ;-)

    And I agree with your last paragraph, except I’m not sure how much of that is due to Zillow.

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