Craig Blackmon’s latest project helps home sellers and buyers save the costs of using real estate brokers. Thanks to the internet, it’s possible.
SEATTLE, April 7, 2016 — Craig Blackmon has been practicing real estate law for a decade focused on residential property. His new law firm FSBO Law Center is built from the ground up to be a resource for buyers and sellers who want to avoid the high commissions of real estate brokers.
These days it’s possible, thanks to – what else? – the internet. Real estate agents provide two types of services: brokerage services, and legal services. Using free tools on the internet, consumers can provide themselves with the brokerage services they need.
But not the legal services. “Lawyers are uniquely positioned to leverage the internet in the real estate industry,” says Blackmon. “We just have to let consumers know their options.”
In Seattle and elsewhere, there is a genuine shortage of homes for sale. In this market, an owner can likely sell the house for fair market value without incurring the cost of two real estate brokers.
Two brokers? Traditionally, a seller pays 6% to sell a home using agents, with 3% paid to the buyer’s broker (called the “selling broker”). So even though listings are widely available via the web, sellers hire two real estate agents, the listing broker and the selling broker.
Which may be two agents too many. The biggest real estate sites, Zillow and Trulia, show listings that are not on a multiple listing service. With these internet behemoths, a seller can post a home for sale on the internet exactly where it will be found by a large number of buyers, without hiring a listing broker.
These same sites now provide the other essential brokerage service: An opinion of value. As noted by Bernice Rossi on Inman, Zillow’s latest “price your home” feature makes the broker-generated Comparative Market Analysis largely obsolete. Sellers don’t have to hire even one agent, let alone two, to price and sell their home.
Buyers, too, can forego a broker and save. Originally, only brokers knew what houses were for sale. Today, everyone knows what’s for sale. And buyers can use those same pricing tools on the internet. A “selling broker” just isn’t necessary.
If there is no selling broker, the buyer can use the 3% commission to negotiate a better price. Per the listing contract, the listing broker is entitled to keep it. But nothing stops the buyer from asking that it be waived and returned to the seller instead.
“The model doesn’t work very well when there are multiple offers,” notes Blackmon, “but when the seller has one offer in hand, negotiations usually follow.” In the course of those negotiations, the seller and the listing agent will reach an agreement as to what happens to the 3%. And the buyer is able to get the benefit of a 3% reduction in negotiating the final sale price.