It was bound to happen. An Internet startup in real estate had the gumption to actually display, in public, for all to see, what commission a buyer’s broker would make representing a buyer for the homes on their website. And the storm that immediately ensued was a thing to behold.
If you have not been following the news, new home selling platform Trelora started publically displaying the buyer’s broker’s commission for homes advertised on their website. And since Trelora gets their information from the local MLS, and since the local MLS forbids such behavior, it took the local MLS all of about 12 milliseconds to blast out their cease and desist letter to Trelora, who reluctantly complied with their wishes by taking down the information.
None of this comes as a surprise to anyone who closely follows the residential real estate industry. Of all the new-age concepts that have escaped adoption by the real estate industry, the concept of transparency is right at the top of the list. We love you home buyers and sellers, we really do, but we do not want you to know a damn thing about how we operate, especially how much money we make. We have you in the dark and that is where we prefer you stay.
Still, the behavior of the local MLS, REColorado, raises the obvious question: why is it against MLS rules for a buyer to know how much their broker makes? The buyer is, after all, the one employing them.
Now if the buyer is the one actually paying for their broker—which does happen on rare occasions—how can they do so without knowing what the broker intends to charge. On the other hand, if the seller is paying for the buyer’s broker—which is more common—why do they care?
One reason why they care is because if the buyer knows how much money the seller is paying for their broker, they may be tempted to want some of that for themselves. But I have another theory why MLSs go out of their way to make sure no one in the general public sees any compensation information: they’re embarrassed. They are embarrassed by how much money they make for the work they do and the last thing they want is to draw attention to that. It is as good an explanation as any.
All this recent fuss is just one more byproduct of the outdated and asinine custom of having the seller pay for the buyer’s agent. If buyers had to actually come up with the cash for the brokers providing them the service, you can be sure of two things. The buyers would know what the brokers were charging, so keeping it off the MLS would be moot. And the brokers would make a hell of a lot less money.
Will sellers ever revolt and insist that buyers start paying for their own services? Not if the real estate industry has any say in the matter. There are too many dollars at stake. If you are getting ready to sell your home and you would like to know how to keep more of those dollars at stake for yourself, visit ReaListing.
To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.