Surefield Expands from 3D Tours in Attack on Commissions

Surefield, the local 3D home tour brokerage launched in April by a pair of Redfin veterans and a former Nvidea tech wizard, is expanding their mission to attack buyer’s agent commissions… from the seller’s side.

Here’s an excerpt from their press release:

SurefieldSurefield is dramatically lowering buy-side commissions to bring the U.S. residential real estate market up to date with its peers around the globe. Now sellers don’t have to automatically pay a 3 percent buyer’s agent commission to get buyers into their home because Surefield is using 3D home-tour technology to get them into the home online.

It is a common misperception that the services involved in buying a home are free. The cost of a buyer’s agent comes from the sale of the property, which means the cost indirectly is paid by the buyer in the form of a higher sales price. In many countries, buyers contact listing agents to view homes. If they use a buyer’s agent to represent them, they write a fee into the offer. Even more common, buyers hire real estate attorneys.

Surefield: How You Save

Like most consumers, I am all in favor of improving efficiency and consequently reducing cost in the home-buying process. What Surefield is doing with their new commission structure is similar to what Surefield founder David Eraker attempted to do when he first launched Redfin way back in 2004. The idea was that buyers could use Redfin’s technology to find homes on their own and work directly with listing agents to avoid paying a buyer’s agent commission at all. Redfin faced extreme pushback from the industry and shifted to their current model as a brokerage with salaried agents.

It will be interesting to see if Surefield is better received by the industry than Redfin was nearly ten years ago. The goal of reducing commissions paid by buyers and sellers is a noble one, but it is also very difficult to pull off with so many entrenched interests still controlling so much of the industry.

Surefield’s full press release is reproduced below.

Surefield Modernizes U.S. Home-sale Practices

Virtual 3D home tours get buyers into homes faster with less hassle, sellers save up to 75% in commissions

SEATTLE — Nov. 13, 2014 — Surefield, the first residential real estate brokerage to put sellers first, is dramatically lowering buy-side commissions to bring the U.S. residential real estate market up to date with its peers around the globe. Now sellers don’t have to automatically pay a 3 percent buyer’s agent commission to get buyers into their home because Surefield is using 3D home-tour technology to get them into the home online.

Globally, commission rates for countries with similar gross domestic product per capita are between 1 percent and 2.5 percent. The seller usually only pays for his agent, who also gives home tours to potential buyers. In the United States, the customary total commission rate is 6 percent and the seller pays for his and the buyer’s agent.

It is a common misperception that the services involved in buying a home are free. The cost of a buyer’s agent comes from the sale of the property, which means the cost indirectly is paid by the buyer in the form of a higher sales price. In many countries, buyers contact listing agents to view homes. If they use a buyer’s agent to represent them, they write a fee into the offer. Even more common, buyers hire real estate attorneys.

Surefield has developed a proprietary, virtual 3D home tour system using computer-vision technology, giving buyers the most realistic, remote tour of a home, enabling a new level of commission savings with no trade-offs. Because buyers can view homes remotely 24/7, Surefield embraces this efficiency and passes on the savings. Sellers save big by cutting the typical 3 percent buyer’s agent commission, while still enjoying full seller representation for a total commission of 1.5 percent; other full-service brokers cost between 4.5 percent and 6 percent. This means on a $500,000 home, sellers save up to $22,500 in commission.

“The U.S. real estate industry has been operating as a quasi-cartel for far too many years, just look at the high commission rates as proof of tacit collusion. Surefield’s goal is to deliver the same level of transactional efficiency to U.S. consumers that is found in other developed countries,” said David Eraker, Surefield CEO. “Residential real estate is sold successfully all around the world without automatically prepaying for the services of a buyer’s agent. We are bringing that practice to United States to give sellers more freedom in marketing and accurately pricing their homes, and giving buyers access to homes around the clock.”

According to the National Association of Realtors, 92 percent of home buyers use the Internet to search for homes for sale, and the majority of them find the home they purchase by themselves. But without a home tour, buyers can’t get a feel for the layout of the home, or look at every nook and cranny. Before Surefield, buyers needed an agent to tour homes for sale. Surefield’s virtual 3D home tour is the first and only service to show the entire home inside and outside. The home tour simulates walking through the home, giving buyers a realistic look at the flow and surroundings so they can make smarter decisions during their home search. As a result, sellers receive inquiries from more serious and qualified buyers.

Surefield currently operates in the greater Seattle area, but plans to add more markets. Interested in Surefield in your area, email and let us know: contact@surefield.com.

About Surefield
Surefield (www.surefield.com) is a Seattle area residential real estate brokerage that combines proprietary virtual 3D home-tour technology with experienced full-service agents to help home sellers attract more serious buyers with less hassle, and save up to 75 percent in commissions. The company is backed by 500 Startups, Portland Seed Fund and Jaan Tallinn as well as angel investors.

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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.

55 comments:

  1. 1

    So in other words, they’ve been so unsuccessful they need to drastically cut prices to get any customers.

    Is there some way the typical SB reader can see how little business this company does? Or are they just left to reading press releases?

  2. 2
    Ben Stigler says:

    Touring online? How do you account for what the 3D tour can’t do? Smell, feel, etc. Obviously this was created by tech geeks and not folks who are familiar with how buyers and sellers need to be apart of what is considered the biggest purchase of a person’s life. Not worried about this at all as an industry disruption. Redfin has been around for 10 years and still accounts for a very small percentage of sales in the state in which it’s headquartered – WA.

  3. 3

    RE: Ben Stigler @ 2 – Redfin was more about commission. This company is about an improved form of virtual tour. IMHO they are underestimating the value of buyer agents and grossly overrating the value of their technology. Their floor plan drawings are probably more valuable than the virtual tour, which just take a ton of time to navigate.

    They’d probably make more money selling their VT service to real estate agents for $500 a pop, which is about what it’s worth. And I suspect that others will soon be offering that type of service, if they are not already, which will eliminate any advantage that they have.

  4. 4
    The Tim says:

    By Kary L. Krismer @ 3:

    I suspect that others will soon be offering that type of service, if they are not already.

    Redfin rolled out Matterport 3D Tours on all their listings in August. I believe this move by Surefield is an attempt to dramatically differentiate themselves from Redfin in this area.

  5. 5
    Saulac says:

    Like someone said above nothing can totally replace being there…for the very informed buyers, who want to do all the homework by themselves, the only thing agents do for them is to let them into the houses. Letting people go see the house by themselves should be the focus for those who really want to change the house buying process.
    Look at all those vacation rental by owners sites…letting complete strangers into your house does work. A system to screen/vet potential buyers is easy (per-approve letter/criminal check/credit check/social networking). A system to monitor/log access to properties is also easy (install a visual/audio recording/logging at each property). But I think NAR will not let this happen.
    The workaround NAR rules I think might work is a service that basically turn buyers into licensed “agents”.
    Redfin original business model was actually pretty close to the idea of letting buyers go see for themselves (with field agents)…then assist with contract. I love to see this kind of service comback.

  6. 6

    By Saulac @ 5:

    Look at all those vacation rental by owners sites…letting complete strangers into your house does work. A system to screen/vet potential buyers is easy (per-approve letter/criminal check/credit check/social networking).

    Just because the problems with a system are not highly publicized, don’t assume that a system is working.

    http://abcnews.go.com/US/airbnb-guest-staying-apartment-months-rent-free/story?id=24665707

    I really don’t think the public is to the point where they are going to allow people into their homes just because someone downloads an app to their phone and a company claims they did a background check. But in any case, removing the agent from the equation in seeing houses would just multiply the existing problems. Agents go through fingerprint checking to prove their identity, not just some background check. And they have a duty to watch over the people they let into the house. Your proposal would short circuit all of that.

    Not that there are not problems now, but without a well screened third party present the problems would multiply.

  7. 7
    enatailurker says:

    A good buyer’s agent does a lot more for her clients than just open lockboxes. If you’re an experienced investor, maybe that’s all you need. If you’re a regular person, buying 2-4 houses over your lifetime, you should have an experienced agent helping you. One who is paid enough to really help you through the entire process.

  8. 8

    In the current traditional model, the client/buyer doesn’t pay for the professional services received. Instead, the adverse party in the transaction, the seller, pays those fees. This disconnect between the fee paid and the services received has to date helped to insulate the selling office commission (“SOC”, i.e. buyer’s agent’s fee) from downward price pressures.

    Surefield’s new approach addresses this problem directly. Since the seller offers a nominal amount, buyers and their agents will need to talk directly with each other about how much the agent is owed for the agent’s services. This allows the buyer to exercise a much greater degree of control over the quality of the services provided. And most importantly, now that buyers and agents will have to negotiate directly as to the agent’s fee, market forces will finally be unleashed to rein in the SOC.

    But that’s not all. The traditional brokerage system existed for 100+ years as serving sellers and sellers only. EVERY real estate broker owed a duty to the seller and ONLY the seller, even where the broker was assisting a buyer in buying the property. It was the broker’s job to “sell” the property, i.e. advance the seller’s interests, not worry about the buyer.

    Towards the end of the last century we realized this was totally inconsistent with buyer expectations and the buyer’s legitimate need for some sort of representation. Accordingly, in WA we enacted the Real Estate Brokerage Relationships statute in 1996, RCW 18.86. Since then, buyer’s agents have owed a duty to their buyer clients. But the fact remains that there are 100+ years of culture and practice that are not changed magically by passing a law.

    Surefield’s new model, where buyers and their agents must talk about the agent’s fee, brings the broker and the client closer together. The broker will now have an actual financial interest in serving the buyer. No longer can an agent simply rely on, “Of COURSE I’m looking out for my buyer, I have a fiduciary duty you know!” Rather, the agent will have to provide high quality services to the buyer, or else the agent might not get paid.

    So, Surefield’s new model (a) creates significant market pressure downward on the SOC, and (b) fosters improved buyer’s agency services. I am absolutely thrilled with this new development and where real estate appears to be headed.

    In fact, Quill will be partnering with Surefield to be the “official” buyer’s broker for Surefield listings (a Quill rider will appear with Surefield For Sale signs). Okay, Surefield, let’s get to work selling houses – ;-) – and improving the real estate industry.

  9. 9

    By Craig Blackmon @ 8:

    In the current traditional model, the client/buyer doesn’t pay for the professional services received. Instead, the adverse party in the transaction, the seller, pays those fees. This disconnect between the fee paid and the services received has to date helped to insulate the selling office commission (“SOC”, i.e. buyer’s agent’s fee) from downward price pressures.

    What it does more specifically is make it easier for buyers to come up with a down payment amount. They don’t have to come up with the money to pay their agent, plus their down payment and closing costs. That does though drive up prices.

    Surefield’s new approach addresses this problem directly. Since the seller offers a nominal amount, buyers and their agents will need to talk directly with each other about how much the agent is owed for the agent’s services. This allows the buyer to exercise a much greater degree of control over the quality of the services provided. And most importantly, now that buyers and agents will have to negotiate directly as to the agent’s fee, market forces will finally be unleashed to rein in the SOC.

    I would disagree with this entirely. What this will do is get more buyers’ agents to use buyer agency agreement, so that they have the right to negotiate their commission being paid by the seller. More buyers than not will want that money paid by the seller and that will lock buyers into using a certain agent, and give them less control. Right now many buyers have the ultimate control over the quality of the services rendered, they can get a new agent!

    But that’s not all. The traditional brokerage system existed for 100+ years as serving sellers and sellers only. EVERY real estate broker owed a duty to the seller and ONLY the seller, even where the broker was assisting a buyer in buying the property. It was the broker’s job to “sell” the property, i.e. advance the seller’s interests, not worry about the buyer.

    Towards the end of the last century we realized this was totally inconsistent with buyer expectations and the buyer’s legitimate need for some sort of representation. Accordingly, in WA we enacted the Real Estate Brokerage Relationships statute in 1996, RCW 18.86. Since then, buyer’s agents have owed a duty to their buyer clients. But the fact remains that there are 100+ years of culture and practice that are not changed magically by passing a law.

    I agree with the first paragraph, but disagree with the second. As an attorney you should be in a position to better understand that where the money comes from doen’t affect your loyalties. The duties owed under the “new” statutory scheme are clearly duties owed to a buyer. No change in commission structure will change that or make that more obvious.

    So, Surefield’s new model (a) creates significant market pressure downward on the SOC, and (b) fosters improved buyer’s agency services. I am absolutely thrilled with this new development and where real estate appears to be headed.

    In fact, Quill will be partnering with Surefield to be the “official” buyer’s broker for Surefield listings (a Quill rider will appear with Surefield For Sale signs). Okay, Surefield, let’s get to work selling houses – ;-) – and improving the real estate industry.

    I think you may want to either re-think that arrangement, or re-think everything you said above about loyalty of buyers’ agents to their buyer clients. Do you seriously think that the money coming from the seller is a huge concern, but being the official buyers’ agency of the listing firm isn’t a concern?

  10. 10
    ARDELL says:

    RE: Saulac @ 5

    The original Redfin model had no Field Agents. Access to the property was via an Open House or the Listing Agent.

  11. 11

    RE: Kary L. Krismer @ 9 – Oh Kary. You’re so far removed from the practice of law and vigorous analysis of conflict of interest issues that you no longer see conflicts where they clearly exist. You said: “As an attorney you should be in a position to better understand that where the money comes from doen’t affect your loyalties.”

    WA Attorney Rule of Professional Conduct 1.8(f):
    A lawyer shall not accept compensation for representing a client from one other than the client unless:
    (1) the client gives informed consent;
    (2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; and
    (3) information relating to representation of a client is protected as required by Rule 1.6.

    Pretty basic stuff you knew some time ago, I am sure.

    Not sure about me being the “official buyer’s agency of the listing firm.” (a) I don’t even know what that phrase means. (b) In any event, to the extent the relationship between Quill and Surefield creates a conflict of interest, it is not significant and absolutely consentable.

  12. 12

    RE: Craig Blackmon @ 11 – I’m well aware of the conflict of interest rules, but what I was referring to is an insurance company paying the fees doesn’t significantly change the duties of an attorney to the insured. Or do you want to argue that that model should be changed too, and if someone is sued they should pay for their own attorney fees and only have the insurance company pay any amount found to be owing.

    And again, seriously, you don’t think being the official anything of the listing firm is a serious concern? That is much worse, IMHO, than just accepting the money they’re offering to any agent who brings a buyer. You’ve created an impression that you have an interest in a particular transaction going through, rather than an interest in your buyer finding a property somewhere. You’ve created an impression that you’re going to be less likely to advise the buyer to walk from the transaction, because you’re the official buyer’s agency of the listing firm.

  13. 13

    With all due respect, Kary, clearly you had forgotten about this particular conflict of interest rule. You assumed it didn’t exist because of the longstanding practice in the insurance realm. Nothing else can explain your initial comment.

    Note also that there is a very large body of insurance law that is addresses this exact conflict of interest. The same is not true in real estate or really any other context where a third party pays the professional fee. In real estate, the third party payor is adverse with no obligation to the client, unlike an insurer.

    As for whether there is a conflict when Quill hangs a rider on another broker’s For Sale sign, this aspect of the industry is rife with conflicts. The name and number of the listing agent appears on the sign all the time. Doesn’t the listing agent have a much greater conflict of interest with a potential buyer than Quill? To avoid a conflict, only a disinterested third party broker could appear on the For Sale sign. And that is obviously never going to happen.

    So yes, I agree with you that this raises a conflict of interest. But (a) they are inherent here, and (b) surely the client can consent to it. So no, I am no concerned by this conflict. Seriously.

  14. 14

    RE: Craig Blackmon @ 13 – I don’t see how what I said earlier in any way indicates whether or not I knew about the RPC. Disclosure/informed consent is an entirely different issue than where your duties lie, which is what my point was. For real estate the duties of a buyers’ agent is set by the statute which covers buyers’ agent duties. Those are in now way affected by who pays the money. There is no requirement of disclosure/informed consent in RE transactions, as there is in the law, but either way the party providing the service has to represent the interests of the party they represent, not the party paying the money. That you should understand that as an attorney was my point.

    But I think you’re missing another of my points. It’s extremely bizarre to go off about how the seller paying money for commission creates an impact on how a buyer agent will represent their client, but then state that you’re going to have this special arrangement with a particular listing firm as a buyers’ agent. IMHO the latter is much worse than the former from a buyer’s point of view. In the latter case there’s a specific relationship with the listing firm that doesn’t exist with other agents who could represent the buyer. That would bother me as a buyer much more than the seller paying the commission when that occurs on virtually every other listing.

    But you’re right that there are all sorts of conflicts in real estate. When I show one of my listings to an unrepresented buyer I could refer them to another agent who would give me a referral fee. That is allowed, but it is not something I have ever done because I don’t like the implications. Instead I just say they should get their own agent and perhaps mention using a particular rebate agent.

  15. 15
    Marc says:

    By Craig Blackmon @ 8:

    So, Surefield’s new model (a) creates significant market pressure downward on the SOC, and (b) fosters improved buyer’s agency services. I am absolutely thrilled with this new development and where real estate appears to be headed.

    In fact, Quill will be partnering with Surefield to be the “official” buyer’s broker for Surefield listings (a Quill rider will appear with Surefield For Sale signs).

    I would agree that, if successful, Surefield’s model will put massive pressure on commissions and that such a result will ultimately be good for buyers, sellers, and agents as the parties will have much clearer contractual relationships and weaker agents will be run out of the business. Of course, that’s a big if.

    The big problem Surefield’s got is they’re going this alone. I suspect there are only two brokerages in the state that will not discourage their buyer clients from buying such a home either overtly or covertly and that’s yours (Quill) and mine (WaLaw). And the only reason for that is because our clients understand that they are on the hook for our total fee even if the commission paid by the seller won’t cover it (I assume that’s the case for Quill). And they’re ok with that arrangement in no small part because they’re getting an attorney on their side. I’ll bet dollars to donuts that traditional agents will avoid these listings like the plague and bad mouth the houses they do have to show.

  16. 16

    By Marc @ 15:

    The big problem Surefield’s got is they’re going this alone. I suspect there are only two brokerages in the state that will not discourage their buyer clients from buying such a home either overtly or covertly and that’s yours (Quill) and mine (WaLaw). And the only reason for that is because our clients understand that they are on the hook for our total fee even if the commission paid by the seller won’t cover it (I assume that’s the case for Quill). [promotional material omitted.] I’ll bet dollars to donuts that traditional agents will avoid these listings like the plague and bad mouth the houses they do have to show.

    Your sort of obfuscating the facts and the solution I mentioned above. You (and presumably Craig and every other rebate agent) use a written buyer’s agency agreement. That leaves you free to negotiate with the seller for a higher commission if their .5% doesn’t cover your commission. Rule 104(d). And that is the solution other agents will turn to too. In the extremely unlikely event an agent runs into one of these Surefield listings, they don’t need to avoid them, they just need to get a buyer agency agreement signed. Ideally that would be before showing the client the listing, but it wouldn’t need to be.

    So, no it’s not just you and Craig that will be willing to make offers on these listings. Assuming you were right though, a seller would be extremely foolish to list under such terms.

  17. 17
    Marc says:

    By Kary L. Krismer @ 16:

    That leaves you free to negotiate with the seller for a higher commission if their .5% doesn’t cover your commission. Rule 104(d). And that is the solution other agents will turn to too. In the extremely unlikely event an agent runs into one of these Surefield listings, they don’t need to avoid them, they just need to get a buyer agency agreement signed. Ideally that would be before showing the client the listing, but it wouldn’t need to be.

    I recall there’s a rule about not requesting additional commission than that stated in the listing and I’ll defer to your reading on it for purposes of this reply.

    On that basis, you are absolutely correct. However, that will require such a massive change in agent behavior that I do not think Surefield can stay solvent long enough for it take hold.

    It’s like spitting in the wind and hoping the wind’s direction will change before you get smacked in the face.

  18. 18

    RE: Marc @ 17 – I have no idea about their solvency, but they clearly are not a significant player such that they would likely have any impact on the overall market. So I agree they are spitting in the wind, but I’d use another descriptor. And the reason I’d use that other descriptor is that their clients are not likely to be happy after having their property take a while to sell and then when an offer comes in still end up negotiating an increased commission. Keeping a property on the market isn’t free, unless maybe the property is free and clear and you don’t care how long it takes to sell. So unhappy clients are likely to cause some splash-back.

    But to touch a bit more on the commission issue, buyers’ agents have a duty to try to find the buyer a property, but they are under no duty to show properties for which there is no commission agreement. RCW 18.86.050(1)(e). So no duty to show FSBOs, for example. But that doesn’t mean that you can just offer a commission of $1 and force agents to show your property without consequence. That would be an absurd system. State law wouldn’t restrict asking for additional commission, but MLS rules sometimes do. My position is that Rule 104(d) allows that request where there is a properly structured buyer’s agreement, although I will admit Rule 104(d) is hardly a model of clarity. It refers to a “condition” but it is not clear whether that condition is having a buyer’s agreement which allows the commission to be negotiated with the seller, or if merely having the buyer’s agency agreement is the condition that allows the negotiation. If the former, the standard buyer’s agency agreement wouldn’t suffice, but that doesn’t bother me much because I don’t like that form. It would though affect my position that all an agent needs to do is have a buyer sign an agency agreement, because they would need to have it be the right agreement.

    Also I would point out that even assuming the standard buyer’s agency agreement isn’t adequate to allow negotiation of the commission, a buyer could ask for seller concessions in paying other closing costs, similar to the seller financing provisions of Form 22A. So same result.

    Anyway, there is no set commission applicable to every transaction and every agent, and this is yet another example of how commissions can be negotiable., but this instance the negotiation would be after the signing of the listing agreement.

  19. 19
    wreckingbull says:

    I love industry disruption, but anyone who buys a home solely on a 3D virtual tour is an idiot. There must be some opportunity to actually spend time in the home before an offer is written, right?????

    If the 3D tour is just a tool to better qualify buyers, then maybe this makes a little more sense.

  20. 20
    wreckingbull says:

    Whoa, this is a bit creepy. While I am very impressed with the quality of their 3D technology, within two minutes I was able to learn quite a bit about a home owner by browsing his book collection, peeking at a few stacks of papers, and glancing at framed documents.

    As a seller, I am willing to give up this sort of privacy for a pre-approved buyer, but I’m not so sure I would open my abode up to the entire world.

  21. 21

    RE: wreckingbull @ 19 – Yes! A buyer of a home listed by Surefield has the same access as to any other home listed by any other broker. Surefield listings will even have the occasional open house – I’m hosting one this afternoon!

  22. 22
    ongsomwang says:

    I don’t claim to be an expert on Real Estate. I am just an amateur learning the ropes, and hoping to put my home on the market sometime in the middle of 2015. I have been vascilating between using a traditional agent, redfin, or maybe an attorney like Quill/WaLaw.

    As someone who is not confident that I will be able to sell my home for the price I want, the idea of paying such a low commission is tempting. I don’t want to “waste” money on 6% commission fees if I am wasting money.

    After reviewing the SureField site though I am a bit concerned though, and I am not sure why anyone would use them. I find it strange that they have barely sold a few dozen homes.

    Maybe someone can convince me. I would love to use SureField simply for the fact that I will save money. I am just concerned that very few people will see my home on the market as a viable option.

  23. 23

    By ongsomwang @ 22:

    I find it strange that they have barely sold a few dozen homes.

    Where are you getting that data? Unless they’ve changed their NWMLS ID numbers, I’m not seeing anywhere near that level of sales. I wouldn’t have made the comment I made in the first comment above if they had a few dozen sales.

    I think you may be picking up sales of one of their brokers while that broker was with other firms, including Redfin.

  24. 24

    RE: Kary L. Krismer @ 18 – You said:
    “Anyway, there is no set commission applicable to every transaction and every agent, and this is yet another example of how commissions can be negotiable, but [in] this instance the negotiation would be after the signing of the listing agreement.”

    On the listing side, clearly the commission is negotiable, no question. You’re right. And that’s why listing fees range from $500 (Hi, Ray!) to 3+%.

    But on the selling/buyer side? How is that commission “negotiated” since it’s paid by the seller? What is “negotiated” when the seller and the listing agent complete the listing agreement and set the SOC? Specifically, when and between whom is the SOC negotiated? Answer: It’s not, under the “traditional” system, at least to date.

    Surefield’s announced SOC changes that. Because the buyer’s agent will likely believe he or she should receive more compensation for their professional services, there will be a discussion about some additional fee to be paid by the buyer.

    Note, Cary, you’re absolutely right, if an agent has obtained a signed Buyer’s Agreement, then that’s an easy conversation. That’s because when the client signed the Buyer’s Agreement the client agreed to pay the specified compensation, even if more than any SOC. If there is no signed Buyer’s Agreement, then it will be a much more difficult and surprising conversation particularly for the buyer, because the buyer may never have even considered being responsible for any portion of the buyer’s agent’s fee. Regardless, since Surefield’s SOC is likely less expected to receive and may be entitled to receive, the issue is clear. Either buyer and agent will need to renegotiate their agreement, or buyer will need to negotiate an additional SOC from the seller through the offer and contract.

    In either event, there will in fact be genuine and meaningful negotiation of the SOC. That conversation will happen before an offer, if the buyer is asked to sign a Buyer Agreement; or it will happen when it’s time to draft the offer. But it will happen. On Surefield listings, the old adage “everything is negotiable” will finally apply to the SOC as well.

  25. 25

    By Craig Blackmon @ 24:

    Surefield’s announced SOC changes that. Because the buyer’s agent will likely believe he or she should receive more compensation for their professional services, there will be a discussion about some additional fee to be paid by the buyer.

    I saw that discussed in the Seattle Times article on the topic: http://seattletimes.com/html/businesstechnology/2025012164_surefieldlowersfeesxml.html

    If a buyers’ agent feels the $2,000 fee is too low, it’s something the buyer and their agent can negotiate, according to Surefield.

    The only problem is, Rule 104(a) only allows the listing firm to initiate the discussion to negotiate that increase in commission. 104(d), which I’ve been mentioning, creates an exception to that rule, and allows the buyer side to start the discussion, but at a minimum it requires a buyer’s agency agreement.

    So basically the negotiations envisioned require the buyer’s agent to violate NWMLS rules. There might be a good defense to that if the comments to the commission said it was negotiable, but it apparently does not.

    BTW, I think this might backfire on them. I’ve tried a number of things on commission over the years, and one was disclosing to the buyer what the SOC was on each listing they saw. I had one buyer where I got the impression that he didn’t like a the sellers because they only offered a lower commission. He knew me, not the sellers, so he didn’t like them offering less.

  26. 26

    RE: Kary L. Krismer @ 25 – Baloney. I am about 99.99% certain that the NWMLS form Buyer Agreements (41A and 41B) satisfy the “condition” requirement before the selling agent can request an increase in the SOC. The alternative would be absurd. The NWMLS would not provide it’s members and subscribers with a form that doesn’t even satisfy one of the directly relevant and applicable rules. If that were the case, then every member and subscriber would have to have their own form drafted by their own attorney, simply to comply with MLS rules. Absurd.

    So, Kary, go back to where you started. Buyer’s agents with clients interested in Surefield listings will have a very strong incentive to enter into a Buyer’s Agreement. That, of course, will require negotiation of the the fee due the agent, a term of the Agreement. Perfect. Market forces will now be allowed to work their magic on the “SOC” (using quotes because really market forces will be exerted on the fee overall, of which any SOC is one part).

    Once the agent has the signed Buyer Agreement – of course the NWMLS forms will suffice – the agent can ask for an increase in the SOC. This is completely consistent with NWMLS rules including Rule 104.

  27. 27
    Erik says:

    RE: Craig Blackmon @ 8
    6 comments when 5 is the rule and a plan to dominate the real estate industry. You are starting to gain momentum. I predicted you would be successful and you are starting to show that. Good job.

  28. 28

    By Craig Blackmon @ 26:

    RE: Kary L. Krismer @ 25 – Baloney. I am about 99.99% certain that the NWMLS form Buyer Agreements (41A and 41B) satisfy the “condition” requirement before the selling agent can request an increase in the SOC. The alternative would be absurd. The NWMLS would not provide it’s members and subscribers with a form that doesn’t even satisfy one of the directly relevant and applicable rules. If that were the case, then every member and subscriber would have to have their own form drafted by their own attorney, simply to comply with MLS rules. Absurd.

    You might want to check the date of the rule and compare that to the date of the forms. The forms were last revised in 2010 and the rule which creates the exception was added in 2012.

    I would hope though that the standard forms are sufficient, but the wording of the rule is poor, as is the case with a lot of the rules.

    For others, who do not have access to the rule, it begins: ” Only if the buyer so requests as a condition of a written buyer representation agreement . . ..” Very unclear what exactly they mean, but there is nothing in the standard forms which suggests a power to negotiate commission if the amount offered is less than the amount committed to by the buyer. It only says the buyer has to pay that extra amount.

    And I would again add, it’s not exactly clear that a buyer’s agency agreement is good for a buyer. They have advantages and disadvantages.

  29. 29
    wreckingbull says:

    This conversation between Craig and Kary is good becuase yes, they are subject matter experts, but more importantly – it shows how completely frigged the current MLS system is.

  30. 30
    Mike Bates says:

    This concept might work for experiened buyers, on the other hand I’ve worked with other buyers that need all the help they can get from their buyer’s agent.

  31. 31
    Blurtman says:

    Why doesn’t Google have a RE listing service?

  32. 32
    Erik says:

    RE: Blurtman @ 31
    They totally should and blow all these half wits like Redfin, Zillow, etc. out of the water. There is a market for a real company to take over.

    It was the real estate companies farming out work to put listings online. Then zillow came, which was a big update. After that, redfin came to compete with zillow. Redfin does a slightly better job than zillow, but not much. Redfin has been stagnate for way too long. I have a feeling they are about to get dominated by a progressive company. I hope Google puts them out of business, but I would be okay if it was another company too. Redfin came out strong and got complacent.

  33. 33
    Erik says:

    RE: Kary L. Krismer @ 28
    I just slipped out of paying back dues from the hoa totalling about $8500. I took your advice and consulted a real estate attorney on that condo I bought at the auction. Thanks for the advice. I haven’t ever regretted consulting with a lawyer yet. You guys get a bad rep, but lawyers have only reduced my stress and saved me money.

    It was because the condo I bought was previously purchased before the rule was created. Makes sense, but I am not smart enough to figure it out on my own. I am smart enough to know I am not smart enough to figure it out myself.

  34. 34
    Blurtman says:

    “In the late 1800s, real estate brokers regularly gathered at the offices of their local associations to share information about properties they were trying to sell. They agreed to compensate other brokers who helped sell those properties, and the first MLS was born, based on a fundamental principle that’s unique to organized real estate: Help me sell my inventory and I’ll help you sell yours.”

    Sounds a bit cheesy. Of course, this was pre-internet.

    “n the late 1800s, real estate brokers regularly gathered at the offices of their local associations to share information about properties they were trying to sell. They agreed to compensate other brokers who helped sell those properties, and the first MLS was born, based on a fundamental principle that’s unique to organized real estate: Help me sell my inventory and I’ll help you sell yours.”

    “Yours” is a bit presumptive as the broker owns nothing here.

    http://en.wikipedia.org/wiki/Multiple_listing_service

  35. 35
    cshecks says:

    Not sure how I feel about this service. When I bought my condo I used an agent who was a friend of a friend and I did all the work (gave me his MLS log on etc) and when I found out how much money he received for the little to nothing he did I flipped the $#%#%$ out. On the other side of the coin – when I decided to short sell my place in the downturn I happened upon an amazing agent (through an attorney) who worked his freaking tail off and literally made that sale happen almost single handedly. I felt horrible that the schmuck who I bought through got so much coin while this absolutely amazing agent received ten times less than my original buying agent. I’m not sure what the answer is but a large gap definitely exists (from a buyers perspective). More regulation, licensing and stringent requirements regarding quality of service would go a long way to giving RE agents a better name.

  36. 36

    RE: Kary L. Krismer @ 28

    To simplify things, think of it this way. The buyer agency agreement creates an additional obligation for the buyer added to his other closing costs. While negotiation by the buyer’s agent with the seller regarding commission already stated in the listing is generally not allowed under Realtor Code or local mls rules, and that has long been the case, ANY buyer can ask ANY seller to cover some or all of his closing costs.

    Once the additional commission, if any, agreed to between the buyer and his agent becomes part of the buyer’s buyer closing costs, the issue is resolved. That has long been the recommended way to handle these things, for at least 15 years or so. Nothing new.

  37. 37

    RE: Kary L. Krismer @ 28

    To simplify things, think of it this way. The buyer agency agreement creates an additional obligation for the buyer added to his other closing costs. While negotiation by the buyer’s agent with the seller regarding commission already stated in the listing is generally not allowed under Realtor Code or local mls rules, and that has long been the case, ANY buyer can ask ANY seller to cover some or all of his closing costs.

    Once the additional commission, if any, agreed to between the buyer and his agent becomes part of the buyer’s closing costs, the issue is resolved. That has long been the recommended way to handle these things, for at least 15 years or so. Nothing new.

  38. 38

    RE: Ardell DellaLoggia @ 36 – The only thing is, the rule created the exception has only existed for two years. ;-)

    But I was thinking something similar. On the listing side, the NWMLS doesn’t feel it can in any way compel a seller to honor a term of the listing as to when they can accept an offer. Thus, if a listing says offers will be reviewed on Friday, buyers cannot be assured that the property will still be on the market on Thursday. Perhaps the new rule is a reflection of that–they cannot control third parties who are not members. Thus they cannot control what buyers put in their offers. If not for a buyer’s agency agreement, there would be seldom be any need for the buyer to negotiate SOC, so any attempt to do so would be something the agent would be behind. But if you have a buyer’s agency agreement, the buyer would be motivated to negotiate the SOC, and in fact may even need to do so to be able to buy the property.

    Still, that doesn’t explain the poor drafting of the new rule, other than perhaps they wanted to be consistent with the poor drafting of other rules. /sarc But hey, at least we have the “Legal Bulletin” which explains the new rule, by repeating its language. /sarc /sarc /sarc

  39. 39

    RE: Kary L. Krismer @ 38

    You appear to think that the rules create the practice. That is not the case. After a large number of agents create ways to deal with the changing realities of clients and the marketplace under current market conditions, the rules come out to help standardize and define those methods already put into practice by the agents…not vice versa.

    Regarding “will look at offers on” yes, I have had this discussion at length with Craig and I agree with you. The mls can’t trump the rights of buyers to put a different date in their offer as to acceptance. The mls can’t trump the law that all written offers must be presented to the seller. The mls can’t tell the seller he s not allowed to accept a bonafide offer from a ready, willing and able buyer. They can only help regulate, for the agents benefit, a practice that began long before there were any “rules” about it other than buyer rights, seller rights and the laws in play.

  40. 40

    RE: Ardell DellaLoggia @ 39 – I’m more concerned about the rules create the fine! Tim covered the Zillow Coming Soon fines a few weeks back, and if you go and look at the October violations, the ones he mentioned weren’t the only ones.

    Also, as I’ve mentioned, I think buyer’s agency agreements have advantages and disadvantages for buyers (but mainly advantages for agents), so I’m not real crazy about a desperate move for survival by a tiny, tiny brokerage that will make it more likely more buyers will be pushed into buyer agency agreements when that might not otherwise be in their interest. And when you add into that the brokerage’s comments about how the SOC will be negotiated anyway, this is starting to smell of bait and switch. Somehow their simplistic charts that compare a 6% commission to a 1.5% commission don’t mention that future negotiation. /shocked

  41. 41
    Blurtman says:

    If you are a buyer and know the area, do you really need an agent? And if new internet technologies replace the dinosaur MLS so that listings are knowable and not restricted information, who needs RE agents? Perhaps out of area buyers? Sellers of dud properties? Hire a lawyer to handle the paperwork, and if necessary, hire a RE consultant, with contractural milestones.

  42. 42
    The Tim says:

    By Erik @ 32:

    It was the real estate companies farming out work to put listings online. Then zillow came, which was a big update. After that, redfin came to compete with zillow.

    You’ve got that backward. Redfin launched in October 2004. Zillow launched in February 2006.

  43. 43
    Erik says:

    RE: The Tim @ 42
    Thank you.

  44. 44
    Erik says:

    RE: The Tim @ 42
    We need a voice to balance out your constant praise of Redfin. I have nominated myself for that job since losh is no longer here to beat that website down with words. Losh was in real estate for his entire life and some of his last words of were that Redfin basically sucks. I am carrying the torch.

    Honestly, I like Redfin. They do a decent job and their data is pretty accurate.

  45. 45
    ongsomwang says:

    By Erik @ 44:

    RE: The Tim @ 42
    We need a voice to balance out your constant praise of Redfin. I have nominated myself for that job since losh is no longer here to beat that website down with words. Losh was in real estate for his entire life and some of his last words of were that Redfin basically sucks. I am carrying the torch.

    Honestly, I like Redfin. They do a decent job and their data is pretty accurate.

    Sounds like Redfin is the best alternative out there right now if you want to save money.

  46. 46
    The Tim says:

    By Erik @ 44:

    RE: The Tim @ 42
    We need a voice to balance out your constant praise of Redfin.

    Obviously I like Redfin, but I fail to see how my post @ 42 could be considered in any way to be “praise of Redfin.” I was simply stating basic facts with zero commentary.

    By ongsomwang @ 45:

    Sounds like Redfin is the best alternative out there right now if you want to save money.

    If your top priority is to save money, there are better options. For most home sales around Seattle, WaLaw and Quill (disclosure: both are advertisers) will both cost you less than Redfin. There are other inexpensive choices too.

  47. 47

    RE: ongsomwang @ 45 – Ahem. Well. As Tim notes, there are less expensive alternatives. And besides, if you’re spending a few hundred thousand dollars, should saving money in the very short term be your only consideration? I think a more prudent approach would be to look at cost as ONE factor to be considered in selecting an agent to work with. Another factor? The quality of the representation and the ability to identify and reduce your risk. And on that issue, Quill – and WaLaw – both beat Redfin handily.

  48. 48

    Smoke and mirrors. Someone’s not telling the truth here..

    “Sellers save big by cutting the typical 3 percent buyer’s agent commission”.

    Then why have all their closed “residential” sales ALL offered and paid a standard 3% selling office commission? And most their active listings offer the the same.

  49. 49

    RE: Julie Lyda RE/MAX Northwest Realtors @ 48 – That’s not even the worst of it. Again, this is practically bait and switch, but the one thing it was for sure–a publicity stunt.

    Fortunately it’s a publicity stunt that didn’t seem to fool anyone (yet).

  50. 50

    RE: Kary L. Krismer @ 49 – What you see as a publicity stunt, others see as an exciting new twist in the evolving real estate industry. As long as someone else pays for the buyer’s real estate services, the SOC will remain insulated from market forces. This “publicity stunt” is a step forward in bringing real estate out of the 19th century and into the 21st.

    Did Surefield get some press as a result of this new twist? Absolutely, and rightly so. It is newsworthy. Did Surefield make this move for purposes of growing its business? Duh. We’re all here to make a living, not just make the world better. So of course Surefield hopes to use this twist to its advantage. That doesn’t detract from the significance of this twist.

    And their current listings? They all predate the change in the model, right? If their first (and second, and third…) listing offers a $2k SOC after the change in the model, then it’s real fire, not just smoke and mirrors, right?

  51. 51

    RE: Craig Blackmon @ 50 – First, a reminder, you have an association with Surefield.

    Second, the program isn’t that new. They have done this prior to the announcement. As an agent you have the ability to see how well that worked out. The average consumer, not. That was the point of my first piece. But if this were Jeopardy I would answer you 3 months and 3 days. As an agent you can provide the Jeopardy question to that answer, but the consumers here cannot.

    Third, this is bass akwards. It asks the seller to abandon something that works for them. It’s the buyer who should be trying to shake up the system, but Redfin and others already did that.

  52. 52

    RE: Kary L. Krismer @ 51 – An “association.” Wow. That is a big deal.

    Wait. Aren’t we all “cooperating brokers”? Aren’t we all paid by the seller, regardless of who we work for? Wouldn’t it be appropriate for the listing agent to automatically refer any inquiries about a property to another broker, even one in another office?

    Given those realities, you are making a mountain out of a molehill. But hey, we all have our own styles.

    It is in the seller’s interest to reduce transaction costs. Currently the seller generally pays 3%. Surefield reduces that dramatically, on an average home to about .5% or so. Sounds like a beneftit to the seller to me. But then again, maybe you just represent buyers… ;-)

  53. 53

    RE: Craig Blackmon @ 52 – If I were you I wouldn’t step too deeply into the “association” issue. But my point was simply that your association with Surefield might be the reason that you are one of the few (if not the only person) who actually thinks this is a good idea. When someone posts in a days/weeks old thread supporting a questionable system, I think it’s important to point out to others that relationship, in case they haven’t read the whole thread or perhaps forgot the relationship.

    As to referring inquiries to another broker, no I think it’s the listing agent’s job to answer questions about their listing. Referring out to another agent to show a property or actually write an offer is another matter. Personally I tend to show my listings, because there’s no better way to get feedback.

    Finally, I’m going to channel Losh and say you don’t understand real estate. An agent who has a relationship with a buyer is a valuable thing to a seller. If a seller is going to cut transaction costs they should cut the listing agent side first, but the last thing they should have is a system which pays the listing agent 3x what they are offering the buyers’ agents. Wait, strike that, the last thing they should want is a system that doesn’t work and is merely a desperate publicity stunt.

  54. 54

    Hey Tim, for the love of all that is good, please restore the five comment limit! Some of us cannot help but take the bait – and lay it out – time, after time, after time….

    Kary, you win. This time. ;-)

    Everyone, have a great Thanksgiving!!

  55. 55

    RE: Craig Blackmon @ 54 – Actually, I asked Tim about the limit on this thread before exceeding the limit, but this is a good example of why the 5 post limit was a bad idea. There are many reasons why this Surefield scam was stupid, bad idea, and that cannot all be said in five posts. With the 5 post limit both you and Surefield could come in and post a bunch of nonsense about what a great idea this is, and I wouldn’t be able to counter the nonsense. Consumers would be mislead. And for about the 5th time, if consumers had access to the NWMLS system they would realize what a large portion of crap was served up in that press release.

    But in general I do try to live by the 5 post limit in the main threads.

    And finally, LOL on the bait comment. You post the association comment in response to my reminder of your obvious conflict of interest, and you call my posting bait?

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