The recent Sitzer | Burnett trial verdict has caused quite a stir in the real estate community, challenging long-standing industry practices. This ruling favored the plaintiffs—home sellers—who argued that the National Association of Realtors (NAR) and real estate brokers conspired to inflate home selling costs by mandating the payment of buyer’s agent commissions. Given this ruling, I’ve had some thought-provoking discussions with friends and fellow agents, pondering what this might mean for the real estate industry as a whole. As a result of these conversations, I wanted to share my thoughts and delve into the idea of a world without buyer’s agents and how it could potentially reshape the landscape.

ON THE LISTING SIDE:

The elimination of buyer’s agents would bring about fundamental changes in transaction dynamics. Buyers, without access to MLS or Supra lockboxes, would rely on open houses or the seller’s availability for showings. In the case of highly sought-after properties, this could result in an overwhelming number of appointments, significantly disrupting the seller’s life if they are residing in the house. For a popular listing, there could easily be over 100 showings in a week. Alternatively, if the listing does not sell immediately, the seller or the listing agent would need to make accommodations to be present at the house and facilitate access whenever someone wishes to view it. This may include early mornings, weekends, evenings, and holidays.

While providing a combo lockbox may offer a potential solution for access, it exposes sellers to the risk of inviting unverified strangers into their property. This unsettling prospect raises concerns about potential theft or damage.

Sellers would have to rely on the hope that the buyers visiting their homes are genuinely qualified to make a purchase. Without buyer’s agents ensuring their clients are preapproved by a legitimate and reputable lender before requesting a showing, sellers would have no guarantee that the individuals they invite into their homes (and invest considerable effort in accommodating and answering their questions) can actually afford to purchase the property.

If buyer agents are eliminated, buyers would be representing themselves in their own purchases and drafting their own contracts. For most people, buying and selling a home represents one of the most significant financial transactions they will ever be involved in. Professional training, licenses, and familiarity with real estate laws are crucial in ensuring success and minimizing the risk of lawsuits or substantial financial loss.

FOR BUYERS:

If buyers are representing themselves, they will require a reliable tool to accurately research comparable sales. While Redfin and Zillow websites are available to non-represented buyers, they may not offer all the necessary features for effective searching. The professional tools used by agents are located on the MLS website.

Agents are trained to think like appraisers when researching comps. In cases where close comparable sales are not readily found, agents need to employ multiple approaches to derive the value. A buyer’s agent’s responsibility is to be knowledgeable about which properties the appraiser would likely choose as comparables and to safeguard clients from appraisal risks.

Non-represented buyers must obtain critical competitive information before offers are due. Listing agents vary in their level of communication, and some may not share any information at all. They are more likely to share if they have a relationship with the agent, but sometimes bluffing and misinformation come into play. Self-representing buyers lack the relationships with other agents and the intuition to spot inconsistencies without experience in home purchasing.

Agents are expert negotiators, and obtaining the right information is crucial for a successful outcome. While some buyers may be skilled negotiators in their profession, real estate negotiations require a different context. Should buyers blindly accept the listing side’s terms, or should they negotiate aggressively, risking the opportunity to purchase the property? Working with an amateur introduces unnecessary risks and complications to a transaction.

Unrepresented buyers must know how to interpret property disclosures on their own. A typical disclosure package consists of 30+ files and hundreds of pages of documents. Sometimes, it is not only the information the package provides but also what it omits that matters. Inexperienced buyers need to understand how to read the disclosure package correctly and identify inconsistencies without professional assistance, especially when purchasing a home worth millions of dollars and, on average, 70+ years old. A competent buyer’s agent is familiar with what is normal and what is not for a home of a certain age. If they have questions, they can quickly contact the tradespeople they have relationships with to obtain answers.

Unrepresented buyers must protect themselves from a faulty or problematic preapproval. The market is rapidly changing, and the preapproval status can quickly become outdated depending on the market situation. Blindly submitting an offer without vetting the preapproval is one of the easiest ways to incur financial losses in real estate.

DIRECT CONTACT WITH THE LISTING AGENT:

In a scenario where a buyer approaches the listing agent directly, there are a host of new challenges to consider. The listing agent’s primary duty is to the seller, which could potentially lead to a conflict of interest.

Buyers may incorrectly assume that by working directly with the listing agent, they can negotiate a lower purchase price, as the seller would save on the buyer’s agent commission. However, the listing agent might be legally bound to secure the best possible price for the seller, not the buyer.

Without the protection of a buyer’s agent, buyers are exposed to the risk of oversharing sensitive information which could be used against them during negotiations. For example, revealing the upper limit of their budget could result in the seller pushing for a higher sales price.

Furthermore, the listing agent might not have the time or the incentive to thoroughly educate the buyer about the process, as their primary focus is on representing the seller’s interests. This could leave the buyer prone to misunderstandings or mistakes during the transaction process, potentially leading to legal complications down the road.

Lastly, the absence of a buyer’s agent could mean that the buyer is left unassisted during the crucial post-offer acceptance period. This includes tasks such as coordinating inspections, understanding repair requests, and ensuring a smooth closing process. Professional buyer’s agents usually handle these complex steps, and a buyer going it alone may be unequipped to navigate them effectively.

What We Think: Who You Work With Matters

In a hypothetical world without buyer’s agents, the responsibility of managing every aspect of a real estate transaction would rest on individuals, many of whom may not possess the necessary expertise to navigate such complexities. While the industry contemplates the future of real estate practices after the verdict, the role of buyer’s agents as advocates, advisors, and safeguards remains indispensable. As an agent, my commitment to my clients—ensuring their buying or selling journey is conducted with the utmost professionalism—is stronger than ever.

I trust that the scenarios I have depicted here have allowed you to grasp the extent and significance of the work an agent undertakes behind the scenes. Consider agents as the guardians of their clients and their transactions. The seamless appearance of things is the outcome of agents diligently resolving issues behind the scenes, paving the way for their clients to follow.

When the weather is all sunshine and rainbows, and a transaction proceeds without a hitch, everything appears to be in perfect order. But when the clouds gather and stormy challenges arise—that is when the true value of your representation comes into sharp focus. The agent who stands by you, the company they represent, and their accumulated expertise form your protective shield. This trio is your steadfast defense against unforeseen complications, ensuring your interests remain safeguarded throughout the tumult. It is during these times of difficulty, when push comes to shove, that the significance of their roles is highlighted, mirroring the adage: “Smooth seas never made a skilled sailor.” So, choose wisely, because the protection and guidance your agent, and their firm, provide are your bulwark in the complex world of real estate transactions.

The Trung Lam and Evan Real Estate Group at Keller Williams Silicon City takes pride in our proven track record of excellent customer service. We are passionate about helping clients with their real estate needs and ensuring they have the best experience possible throughout the entire process.

With years of combined construction, property management, and real estate expertise, we understand the complexities of the Bay Area real estate market. We are also well-versed in the entire process from start to finish, and we always keep our clients informed along the way.

Our team is full of highly qualified professionals who have experience working with a wide range of clients. We strive to make sure that each client feels heard and respected, and that their individual needs are met. We will always go the extra mile to make sure that each transaction is as smooth as possible and our clients get the best results.

The Trung Lam and Evan Real Estate Group at Keller Williams Silicon City looks forward to helping you achieve your real estate goals. Contact us today for a consultation!