Regarding the DOJ suit and settlement announced this week, I believe the first question we must ask ourselves as an industry, if we are to be clear-headed about it, is this:
What are we afraid of?
What demon previously sleeping under our industry bed will now awaken simply because we must do something as simple as stating publicly how buyer’s agents are paid?
The fact that some industry folks are spooked by this speaks volumes. It’s as if they’ve been caught sinning and handed a penance of debilitating severity.
Fear and anxiety run deep in our industry. We are twitchy squirrels, not confident lions. I believe this stems from an understanding, deep down, that we countenance incompetence and mendacity at a very large scale.
This is our original sin, and it makes us guilty about a lot — even when there should be nothing to feel guilty about.
Would NAR have settled so readily if they weren’t fully aware that at least half of their members are Realtor-casual buttheads? I don’t think so. But they chose numbers over seriousness long ago.
Because, honestly, any good buyer’s agent already talks with their clients right out of the gate about how they get paid, and does so confidently. There’s no hiding the ball. And truly professional Realtors – the ones who don’t require remedial training and a pedantic code of ethics to channel them (fingers crossed!) towards doing the right thing — would never steer clients away from a listing because of a small co-broke.
So, as usual, good agents and brokers will roll with this. They fear nothing. But that’s not to say that this settlement is inconsequential.
Redfin, which has always rebated part of their buyer’s commission, is a likely winner here because consumers may understand that benefit a bit more now. Glenn Kelman’s blog post about the settlement was ecstatic. Zillow and Opendoor are steadily reducing co-broke rates (see Mike DelPrete’s analysis on this) and could begin messaging that to buyers now that this information is public (e.g., “buy a home with fewer agent fees built into your price”).
It’s possible that this could all result in commissions going down more broadly, more quickly — an effect implied in the DOJ action — but that is far from certain.
And even if that were to happen?
I put the question to you again:
What are we afraid of?
OK, switching gears to something I think is more consequential…
Rocket Mortgage is a beast. I mean, pretty much everyone killed it in Q3, but their numbers are insane:
- Loan origination volume up 122% to $89 billion
- $6.6 billion in GAAP earnings year-to-date
- $3.5 billion in cash on hand
Roughly 60% of Rocket’s loan volume is direct to consumer. They pour $500 million into technology each year and a boatload on brand and performance marketing. They own their own referral real estate brokerage, Rocket Homes, and recently launched a Realtor tech platform they expect 15,000 agents on by year-end.
We talk a lot about Zillow’s hold on consumer attention and dollars, but Rocket will play an increasingly large role in determining who wins and loses in real estate in the coming years. Get really familiar with what they’re doing.
That’s it. Stay safe and healthy, and enjoy your weekend.