Added Equity RE launches with disruptive model: Sell homes on Zillow, let sellers save thousands of dollars, and get out of the way.
SEATTLE, Sept. 28, 2016 — With today’s launch of Added Equity Real Estate, home sellers can keep more of their equity, and buyers get better representation. Unlike any other brokerage, Added Equity is not a member of the Northwest Multiple Listing Service. As a result, it is not required to offer a 3% commission to a buyer’s agent. Both sellers and buyers benefit from this new, simple model.
Founder Craig Blackmon is a real estate broker, attorney, and innovator. His prior firm, Quill Realty, was the first non-MLS brokerage in Washington (Added Equity is Quill’s successor). Co-founder Keith Rea is a longtime principal of Seattle design and marketing firm RMB Vivid. Rea brings the expertise needed to effectively message consumers about this unprecedented value proposition.
Added Equity charges a total commission of 2%, one-third the typical amount. “I’ve done it, I know the model works,” says Blackmon. At Quill, he sold a half dozen homes on Zillow for market value, and his sellers never paid the full 3% to the buyer’s agent.
Critics claim that sellers are shortchanged by not listing on the MLS because they don’t get maximum exposure. Blackmon disagrees. “It’s basic economics: You don’t have to reach every buyer to get fair market value, just a sufficiently large enough pool of buyers.”
Zillow provides the platform to reach those buyers. With its partner sites, Zillow is the massive online leader in real estate search that allows real estate brokers to advertise homes for sale. At 70 million monthly visitors, Zillow traffic is sufficient to garner fair market value.
The savings are dramatic. With the average Seattle house worth $600,000, a seller captures an extra $18,000 in equity by skipping a buyer’s agent.
It makes sense to forego the buyer’s agent, today. Originally all agents, including a “buyer’s agent,” worked for the seller. This changed when Washington enacted Buyer’s Agency, RCW 18.86. Since then, a buyer’s agent represents the buyer, even when paid by the seller.
Which creates a conflict of interest. A buyer’s agent has a personal incentive to convince the client to buy a house offering a higher commission, regardless of the client’s best interests. To address this conflict, the law requires agents to show a home if compensation is offered in any amount.
Added Equity listings offer a buyer’s agent commission of $500. This triggers an agent’s legal duty to show the home to an interested client. But that doesn’t mean that a buyer’s agent should be paid only $500!
Rather, the balance of the fee should be paid by the buyer. On Added Equity listings, buyer’s agents will talk with their clients about their commission. If they ask the seller to pay it, the seller can treat it as a request to pay closing costs, and negotiate accordingly.
When buyers negotiate and pay their agent’s fee, they benefit. The conflict of interest at the heart of real estate is largely resolved, and downward price pressure is finally exerted on the commissions paid to buyer agents.
All consumers benefit from this simple, new disruptive model. For the first time, owners can get the services of a professional real estate agent when selling a home, without also paying a buyer’s agent. Buyers meanwhile get better representation. The future of real estate has arrived, in Seattle.