The five year dispute between the Justice Department and the National Association of Realtors is finally, mercifully, over. Predictably, both sides claimed victory, even though it’s hard to remember just what they were fighting about. But while one might assume that the market has moved beyond talk of “opt-outs” and “virtual office web sites,” this week’s settlement will shape the industry for years to come.
Real estate has crossed the Rubicon, never to go back. Now all parties, with the court’s blessing, have sanctioned the rights of innovators and entrepreneurs to create new ways of doing business and accessing MLS listings. In the world of listings ("IDX" to real estate technology insiders), all brokers are now in the same boat -- traditional and alternative, online and bricks-and-mortar. For a given MLS, everyone can display the same listings, with the same level of detail, on their public web site. (Whether they choose to do so is another matter.)
The bigger change comes in new, uniform support for VOWs (Virtual Office Websites, the parts available to registered users). Innovative brokers are now free to provide buyers and sellers online tools and information that match (or exceed) those available to traditional agents at their desk. And now MLSs must make their data available to brokers who want to build a better mousetrap. Ultimately, this is good for everyone -- brokers, agents, buyers and sellers -- even if they don’t yet realize it.
In its news release, the Justice Department predicted that commissions would fall as a result of the settlement. This assumes that the only new models our industry can create are “discount” models -- more do-it-yourself, less commission. But maybe what consumers want is more for their money, not less for less money? Maybe they like “traditional” local agents and just want to find a new way to work with them? Innovation, on a level playing field, will answer these questions.
At Sawbuck, we created an “alternative” model that preserves commissions and uses traditional local agents (only the best ones), yet gives buyers the information, tools and control they want, plus the financial incentive they require. We did this by attacking the “ancillary services” that have become brokers’ cash cow: mortgage and title.
This model has saved homebuyers thousands of dollars through our negotiated below-market mortgages (with no closing costs) plus our unique no-fee settlement. Our Realtor partners earn full commission, get high-quality buyers and happily pay our referral fee. Yet this consumer-friendly, agent-friendly model was disallowed by NAR’s original VOW policy. That’s why the Justice Department asked us to testify at the planned trial.
Now, we no longer have to put an asterisk in our business plan (*note: business model may become moot at any time). And I’ll bet the surety that comes from this settlement, and the level playing field it establishes, will launch a hundred new business plans.
