• There are no Multiple Listing Services (MLS)
• There is no buyer agency
• Real estate agents are employees, not independent contractors
• There is no professional licensing for real estate agents
No MLS and no buyer’s agents? How could anyone ever sell a home there? To quote the article Is the U.S. Model Defensible vs. the UK Model?
“England, after all, has been buying and selling homes long before the Massachusetts Bay Colony was established. And in contemporary times, we hear nothing about homes languishing on the market in Ye Olde England because there are no buyer agents to guide buyers to this home or that home.”
No professional licensing? Now you have gone too far. Real estate agents must be professionally licensed, right? Like somehow the four hour test that real estate agents take in the US qualifies as some significant barrier to entry. As things turn out, the UK has that figured too. The really important things in a real estate transaction, like paperwork and the closing process, are handled by lawyers, as they should be.
Oh, there is one other difference in the UK model. Commission rates average about 1.5%, rather than the 5%-6% sellers pay in the US. That equates to a savings of $21,500 on a $500,000 home, which prompts the author of the article to ask the following fantastic question: What is the American homeowner getting for that additional $21,500 in cost?
There is no way to know, but “it feels like a stretch to suggest that comparable homes are selling for $20K more in the US vs. the UK simply because the American REALTOR has access to a database. More importantly, however, there’s preciously little evidence that these employee-agents in the UK are failing to put forth the effort for the homeowner.”
So, in the UK, home owners pocket a lot more money, real estate agents get a salary and home buyers have figured out ways to find homes without the help of a buyer’s agent. (They must have since the average sale price for a single family home in Central London in 2014 was just under $2.4 million). So, what’s the problem?
The problem is that Keller Williams is Getting Ready to Ruin the United Kingdom by trying to convince them that the US model is better. That everyone would be better served with 6% commissions and real estate agents running around working for free all day. But if I were Keller Williams, I would be more worried about the UK model coming to the US.
To quote the article one last time:
“If selling a home in the U.S. costs $20K more than it does in the UK, there has got to be real value being delivered to the seller. As the world gets more and more interconnected, what works in one country is quite likely to migrate over to another. If British homeowners are getting great service from employee agents who do not cooperate with buyer agents, then American homeowners are likely to start asking just what it is that they get for paying a whole lot more.
Enough said. If you do not want to wait for the UK model to come to the US, check out The Intelligent Home Seller.