You might think that in the $160 billion dollar industry that is residential real estate brokerage, somebody would be on the side of the home sellers. You know, the ones that contribute most of those $160 billion dollars. You would be wrong.
Appearances aside, there is really nobody on the side of the home seller. That $160 billion is a mighty big trough, and a lot of people’s livelihoods depend on their continuing to feed at it. For starters, there are the real estate agents themselves. They may claim they act in the home seller’s best interest, and some may even believe it. Unfortunately, whether they acknowledge it or not, they suffer decidedly from the Principle-Agent Problem. For proof, look no further than the research of two noted Stanford professors. What did they discover about these well-intentioned servants? “All of the empirical findings are consistent with agents distorting information to mislead clients.”
If that were the limit to the problem, it would be understandable. Everybody in a more-or-less free market tries to do the best for themselves. I am okay with that. But those not in the real estate industry probably do not know there is an entire industry that does nothing but sell things to real estate agents (to make their jobs more palatable). This “agent support” industry is also not on the side of the home seller. They want agents to make as much as possible, regardless of how unfair it is to home sellers. For the greater the agent’s take, the greater their market.
Perhaps you think these new third-party sites (Realtor, Trulia, Zillow) are on the side of the home seller. After all, the information and marketing they make available can be very beneficial to home sellers. And that is true, to a point. But you have to understand who the customer of these sites is—where their revenue comes from. If you guessed real estate agents, you are correct. To the extent that these third party sites help home sellers, it is just a means to an end. The more home buyers and sellers use these sites, the more they can charge the agents to advertise on them. And more importantly, the more the agents make, the more they can charge them. These sites, while they will never admit it, do not want anything to jeopardize the lucrative commissions the agents garner.
And finally, perhaps you think the ancillary real estate services industry (title, escrow, mortgage, etc.) is on the side of the home seller. Definitely not. Unlike home buyers and sellers, who have at best a fleeting business relationship with these service provides, real estate agents have an on-going relationship with them. These service providers depend heavily on agent recommendations for their on-going business. Hell, some even pay for them with kickbacks, which is illegal. They certainly do not want anything to endanger “their” agent’s livelihood.
So there you have it. An entire industry purporting to serve home sellers when in fact they would like nothing better than to have home sellers pay as large a commission as possible to sell their homes. The bigger the trough…
To see how ReaListing takes the side of the home seller, click here.