The Attack on Buyer Representation

Managing Real Estate Broker with Benchmark Realty, LLC TN Broker License# 289736

I am going to get nostalgic for a moment.  When I was young, I loved watching Bugs Bunny, Daffy Duck, Porky Pig, and all the other Looney Tunes characters from the golden age of animation.  Looney Tunes is still around on TV, but the shows produced from the 1940s, 1950s, and 1960s are far superior to what we see today.

Some of my favorite Looney Tunes episodes were the many battles and escapades between Bugs Bunny and that famous rabbit hunter – Elmer J. Fudd. One phrase used by Bugs over and over when Elmer would try to catch that “rascally rabbit” for his rabbit stew dinner was “You know, this means war!” Bugs was always ready to take on Elmer whenever he felt threatened.  Bugs Bunny always seemed to win. 

So, why am I writing a real estate blog with an introduction talking about cartoon characters?  Shouldn’t I be discussing topics centered around real estate?  Well, as I peruse the headlines on, RISMedia, and other news outlets over the past few weeks, I feel we could be heading toward a showdown like Bugs and Elmer involving a few industry players as well as consumers in preserving some of the fundamental cornerstones of our profession.  Redfin, Zillow, Opendoor, and others are attempting to change how properties are listed and sold.  Lawsuits have been filed by consumers attacking our compensation, especially commissions paid by sellers and earned by buyer agents.  Like Bugs Bunny, we might be coming to a point where some in this business might begin screaming, “This means war!”

I don’t think any of us are going to grab our favorite firearm and go after those who are attempting to change the way we do business.  But if agents who have been in the industry for any period of time are going to remain in it and survive, they must wake up and realize some companies are working diligently to disrupt our business and how we work with prospective buyers and sellers.

I recently wrote in a post on my personal blog how a consumer in Minnesota had filed a class action lawsuit against the National Association of REALTORS® and several of the larger real estate companies including Realogy, RE/Max, Keller Williams, and others.  Since then, additional lawsuits cropped up from consumers in other parts of the country challenging how compensation is shared in a transaction with a buyer representative and the impact it has on the seller’s bottom line.  I am expecting more of these suits to be filed as well as others attacking our current methods of real estate practice. 


The New Paradigm

I believe we may be finally reaching a point where we, as real estate professionals, are just now realizing we have done a very meager job of informing and educating the consumer – and the media – on the benefits of a buyer or seller utilizing our professional services. Over the years, we assumed our industry was safe and far from being dismantled and turned into something entirely different.

The real question we must ask ourselves is a simple one: “Is it too late to change the perception the prospective home buyer or home seller has of us?”  Maybe yes, maybe no.

Unlike many sectors of our economy, real estate is an essential foundational component to economic stability and prosperity in the U.S.  Real estate effects other industries such as construction materials, furniture, and appliance manufacturers, carpet mills, insurance brokerages, and numerous other service providers.  It has always been a reliable gauge for how well the stock and bond markets perform, employment numbers, and other financial indicators.  Our contributions as those who “steward the land” have enabled families to live the American dream and support the growth and flourishment of cities, counties, and states nationwide.

Surviving the New Reality

Since the early twentieth century, our breadth of knowledge and expertise have assisted millions and millions of consumers make the right choices when buying or selling a property. However, our survivability will be tied to how well we are willing to adapt and accept the changes that are taking place now and in the future. Technology, “out of the box” thinking, and large sums of venture capital are driving the changes we are seeing.  These new realities are not going to go away.  They are here to stay. REALTORS® and their brokerages must be willing to embrace and adapt to what is happening if they want to remain in business.  As the saying goes – “you have to play to stay.”

The Disruptors

There are those in the industry who want to radically change how REALTORS® and their brokers represent consumers, market residential properties, and manage the real estate transaction.  They feel the current way of how we do real estate in this country is broken and not consumer friendly – thus the lawsuits and online portals attempting to replace the hard work of the real estate professional. In their eyes, interpersonal relationships and “hands-on” work are not needed as technology can accomplish what we are paid to do. So, what is going to happen to REALTORS® as the industry evolves? 

In my last blog post, I talked about how an agent’s role in a transaction will change to that of a consultant or shepherd of the transaction and buyers and sellers will choose exactly which services they want from us to assist them in selling or purchasing their home.  We are already seeing this trend beginning in certain parts of the country, especially with firms like Redfin who are utilizing technology and agents who sit in cubicles to initiate, manage, and close a transaction.  Also, the direct online buyers, known as iBuyers, are attempting to lure home sellers by eliminating the listing agent in selling a home but instead utilize their services.  iBuyer companies, such as Opendoor, Zillow Offers, and others, claim they can provide simple and easy solutions for sellers who want to quickly sell their homes at a competitive price with fewer hassles.  Time will tell if these companies can survive long term – especially if the economy goes into another period of recession.

Buyer Representation is Under Attack

Buyer representation, as we know it, is under ever-increasing attack by not only attorneys associated with the recently filed lawsuits but some of the large venture-capital backed companies who want to do everything they can to remove the buyer’s agent from the transaction. 

The Latest Announcement: Redfin Direct and Online Buying

Redfin recently announced the launch of their new online buyer program called Redfin Direct in Boston. Briefly, this program allows buyers to make offers on Redfin-listed homes online, directly through the company website.  There is no buyer’s agent involved and the listing broker – Redfin – assists unrepresented buyers through each step of the home purchase. They provide a questionnaire for buyers to complete when they want to make an offer. Redfin says the questionnaire provides detailed information on how to make an offer, order an inspection, work with a lender and to close the transaction with an attorney/title company.  If a buyer wants to have the home inspected, they contact the listing agent so the inspector and buyer can have access to the house.  All the paperwork goes directly to the listing broker, Redfin. The buyer is dependent on the listing agent to ensure everything in the transaction is in order.  Knowing how Redfin operates, I expect they will continue to expand Redfin Direct in major markets throughout the country. 

The issue I have with what Redfin and other startup companies are doing by eliminating buyer representation is the buyer has no one to speak for them in the transaction.  Buyers are without a professional agent who can advocate for them, especially during the critical stages of the deal. Certain phases of the transaction are full of “drama” including the post-inspection period when repairs need to be negotiated with the seller or during the pre-closing period when issues pop up at the final walkthrough and need to be addressed before everyone sits down at the closing table. Buyers are going at it alone and without professional guidance and counsel.

In the online buyer option such as Redfin Direct, who do you think is going to ensure the seller’s needs will always come first?  Who owes the loyalty and obedience to the party in the contract who has an agency agreement with the listing broker?  It will always be the listing agent and listing broker. These folks are driving the transaction. In my opinion, this is dangerous and creates serious challenges for the buyer from contract to closing.  Redfin defends the non-buyer rep arrangement by stating today’s consumer wants other options when buying a home and should be able to navigate the various steps with little to no help from a broker. Long story short – they do not need a buyer’s agent.  But I believe buyers do need representation.

Buyer representation is a hallmark of what we do as REALTORS®.  In Tennessee, before 1996, buyers were forced to work with an agent under the listing broker to help them buy a property.  Many within and outside the industry felt buyers were at a serious disadvantage and needed formal and legal buyer representation.  As a result, in 1996, our state created our current agency law, and it created an official buyer agency designation to guarantee home buyers had someone who truly represented and advocated for them. It changed how agents worked with buyers and provided them with someone who could be able to “go to bat” without worrying about upsetting the seller and listing broker who previously were the source of their commission.  What Redfin and others are creating with online home purchasing is taking us back to the “good old days.”  The listing broker controls the entire transaction.  We will have to wait and see if Redfin can gain traction in other markets with this new home buying option. 

Defending Our Work as Real Estate Professionals

If we want traditional buyer representation to continue, agents are going to have to wage “war” against those who wish to destroy it.  There are a large number of agents and brokers in this country who devote a significant amount of time and energy working with buyers.  To wage battle against companies like Redfin, an agent is going to have to know and convey their unique value proposition to the consumer. A buyer or seller must understand we know what we are doing, and they can be confident in our ability to get the job done.

I have written in previous posts on this blog as well as in my book, “Do You Have a Minute?” your value proposition is probably the most critical element of selling real estate.  This is especially true as the market continues to evolve and adapt to numerous technological and generational changes.  Those who can communicate their value proposition to the client will be more than likely remain in this business in the years to come — those who can’t will die on the vine.

The pressure on the industry to transform itself will continue in the foreseeable future.  Lawsuits will continue against the large national brokerages and NAR.  Startup companies with lots of venture capital will continue to pop up and provide new “solutions” for the consumer – especially the homebuyer. 

It is my belief the buyer representation side of our business is vital to protecting the consumer and their interests as they set out to find a new home. For this piece of our business to continue and endure for years to come, REALTORS® must be willing to fight for their existence as buyer agents.  I am hopeful there will be an effort to preserving buyer representation soon. We all need to be ready to step up and do what needs to be done to keep it around.  If we don’t, online buyer portals like Redfin Direct will be the “go to” place for buyers to purchase their next home.  We might find ourselves sitting out in the cold, wondering what happened.



Posted by

John M. Giffen, CRB, CRS, GRI

Principal Broker / Benchmark Realty, LLC

(615) 371-1544


Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Barbara Todaro 05/19/2019 09:05 AM
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi John and very well said. I cannot imagine entrusting what is for most of us our largest investment in the hands of a digital entity. 

May 16, 2019 07:41 PM #1
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224


                               Thank you, John. 

May 18, 2019 06:58 PM #2
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, John M. Giffen  great job in writing this post.... saw it on Kathy Streib 's weekly feature.... this is the statement that says it all:

"...just now realizing we have done a very meager job of informing and educating the consumer – and the media – on the benefits of a buyer or seller utilizing our professional services." 

agents are not educating the public and will pay a grave penalty in the future if it continues....

May 19, 2019 04:37 AM #3
Jill Sackler
Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY
LI South Shore Real Estate - Broker Associate

For a period of about 6 months about 2 years ago, Purple Bricks, an entity like the one you describe where the transaction is completed online and the fee was something like $3,500, was everywhere. You couldn't go 5 minutes without seeing a T.V. commericial. Then, suddenly, it disappeared. I think consumers weren't ready for that business model here in New York. There are plenty of consumers who want to be handheld during this really important time of their lives. What will happen next is anybody's guess but they could suddenly come back with a vengeance when the timing seems right and then everything you've said will come to fruition.

May 19, 2019 07:55 AM #4
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello John - your "Looney Tunes" reference is 'spot on".  Careful!  

May 19, 2019 08:58 AM #5
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Hi John__Am seeing this on Kathy Streibs "What I learned" post and it is uncanny how much in line we are in our thinking...of course if you read my posts I get very heated and maybe too passionate about what is happening to our profession. I see it as a real challenge to get other agents as fired up as I am--I truly believe that those large firms like Z and R are behind the lawsuits that are cropping up all over the nation against NAR and the buyer brokerage, etc...There is a reason I am so outspoken about all this--those "Disruptor's" who are taking us down as we speak here in the Hampton's! Z is the one who s doing it here and they have done it by buying out the listing databases--we have not been connected to an MLS until now and that begins on Monday. I predict that the next thing that happens across the country are buy-outs like Z did here..May even include private MLSs. I believe they are setting up a model that can then be used across the country--a model of:  Z owns the data--(they actually stole our data from us)--then they shut down the platforms we were using and told us (brokerages) to go whistle...I hear they are now calling our clients and buyers to sell them houses  and mortgages--they have all the contact information from our internal database, which was part of another listing platform, HREO--That was bought a year ago by Z. What we have now is a "backdoor" portal to something they call "OutEast" and it is an unworkable listing platform that is populated with all the data that we worked so hard to gather, except we have no way to access it--all data is theirs now and we are on the outside looking in !... Top that off with a housing downturn here because of overpricing and new property taxes and tax laws--a perfect storm you might say! There is no business--no buyers--or renters, for that matter (Renters because of AirB&B) This is a resort town and it is a small 2nd home market that is in the throws of a crash bigger than the housing recession in 2009-10! We are in big trouble and I suggested that we create a "cartel" of sorts--agents as outspoken as I am to lobby maybe to bring about the changes that are needed to protect the public, now that the licensed agent appears to be going extinct. We are licensed in order to protect the public from unfair and dubious practices--Sorry abou tthe rant but I had to speak up. Thanks for your wonderful, informative post!

May 19, 2019 11:44 AM #6
Adam Feinberg
NYC Condo, Co-op, and Townhouse specialist

Most of my business to date has been buyer representation. I wrote a recent post on many ways I have presented value for my buyer clients. That said, the market is overdue for disruption, though it should be disruption that works for the market- not favoring one side over another.  I agree with you that our industry has done a poor job representing the value that we create in the process. I have long argued that the standards to become an agent are far too low- which quite honestly, has allowed me to stand out from the pack. That said, I hate doing deals with agents representing the other side of the transaction that need their hand held at every step because they are incompetent (and I am supposed to be the new guy and they are supposed to be the experienced ones). I am still new to this business, but I switched careers because I saw opportunity due to the low skill level of too many agents in my area. My first career was on Wall Street- and whatever your personal opinions might be, I have worked with a lot of very knowledgeable people- a lot of Subject Matter Experts (SME). We have a lot high producers that are then looked up to as experts- but not all high producers in this business are really experts. The Manhattan market doesn't have many members of the NAR, nor does it make sense in our market as we have our own trade association that knows our unique market well. That said, none of the trade associations have really done a good job explaining the true value of a buyer representitive. When combined with a body of workers that has too high of a level of barely miminal competitence - it's no wonder why our industry is being attacked from multiple angles.  We must raise the bar.  There will be repercussions from agents at all angles- but better to raise our standards that have the external community attack us until they find their own solutions.

May 19, 2019 12:20 PM #7
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

Public facing debates and agents faulting other agents does not help Jane and Joe Citizen. But much of it is justifying being involved in the slice of the sale. In small rural markets you list, sell what you have listed and with full property disclosure you don't have to convince anyone of your value. Just list a large inventory across the board in all prices, types, conditions, locations and make it easy in the marketing to filter the inventory to find the best fit. That's where the effort is spent. Listing, selling and not finding fault with other agents in the same profession visible to the public that does not enjoy the infighting John M. Giffen .

May 19, 2019 01:30 PM #8
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Crystal balls are foggy...what we know is that the Redfins etc. of the world etc. in our experience have such very minimal training and experience that as with everything will sort itself out and the cream will rise...

May 19, 2019 07:47 PM #9
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

There are 3 types buyers, those that value what a buyer agent does for them. those looking for the cheapest price possible right now no matter what, and those who dont know what they need. These big companies in their haste to make profits are mowing over buyer rights and buyer agency. The one thing i do is keep providing the best possible service to my clients. By giving more, my referral base brings me an ulimited flow of clients by doing a good job and leaving the impression with everyone i cross, what an agents job is and why it is so important. It can cost or save tens of thousands of dollars when consumers in their haste choose poorly

May 20, 2019 05:06 AM #10
Chuck Willman
Utah Homes - Alpine, UT
Utah Homes

And it's not just buyer representation that is under attack. There are the low fee seller entities that pretend they can do just as good a job as a real estate agent for much less.

Here's the problem- their incentive is to close the deal. They need to make their low commission and move on to the next deal so that they don't have to bother with the time consuming task of making sure the seller has someone fully interested in representing their interests.

I received a call from a friend who used a discount selling group. He discovered that he received discount advice and now he's left trying to figure out how to respond to all the low-ball offers. His agents says, "these seem good to me." That might be because his agent is new and probably needs his tiny commission to put food on the table now instead of later or never.

I'll say the controversial thing: Disruption is inevitable in every industry. It is our duty to communicate the value we offer. However, it *is* difficult to have our voice stand out above a very well funded group that can plaster the town with billboards decrying the evils of commission.

Any thinking person should be able to realize that there is a price to everything. But, as rational economic decision makers, we can be swayed by the allure of maximizing the profit on our home sales or minimizing the costs of our home purchases. So- we, the agents, are easy targets.

I would hope that we agents could fight this fight with the assistance of a larger entity... an entity to whom we already pay our dues... an entity that would actually work in our own interests instead of casting such interests aside for the allure of even bigger money from those who wish to take the pay-out route to purchasing an industry away from those who have been down the road of revamping the business in a way to protects sellers, buyers and the professionals who enable the transaction process in a way that has been litigated to the point of protecting the interests of every party involved in the process.

So yes. This is our plight. And I will continue to accept this challenge, though it is daunting. Unfortunately a few consumers will be burned by these short-cutting entities. If you look at their yelp scores, many of them are doing a tremendous disservice to their clients. If disruptors can do the job better and make the customers happier- they deserve their place in the sun. I've not seen evidence that these entities have managed to do that yet. 

May 20, 2019 07:14 AM #12
AJ Heidmann ~ CRS
McEnearney Associates, Inc. - Alexandria, VA
YOUR Alexandria & Arlington, VA Real Estate Expert

John ~ A great post and I won't try to tackle the whole thing, but regards to Redfin Direct I think there will be buyers that use this and then regret it... after the fact.  Scott Godzyk mentioned the three types of buyers and this will appeal to the later 2 groups, but they just don't know what they don't know.  The lure of saving a few thousand dollars may blind them to all the things that we as buyer agents cover; location, commute, desirability, etc, so that when they go to sell in future years the lack of good objective advice on the purchase will bite them in the butt.  Giving a buyer a bunch of data is nice, but without anaylsis and context it is just a bunch of noise.

I can think of 2-3 investors that I know that Redfin Direct might work for, those buying at least one property a year, but I doubt it will be marketed to that group.

May 20, 2019 09:00 AM #13
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

I love the use of Looney Tunes here! Great job. Congrats on the well deserved and very informative feature post!

I would never purchase a home without a buyer's agent by my side!

May 20, 2019 09:28 AM #14
Barry Owen
Pareto Realty - Nashville, TN

Greetings John (Fellow Nashvillian)! Right on! I'm facilitating a meeting with Principal Brokers at Greater Nashville REALTORS this afternoon 1-3 . . . and I'm adding your post to our discussion.  Stop by if you're in the area.

May 20, 2019 09:46 AM #15
Stephen Turner
Gemcraft Homes (TriCorner Realty) - York, PA

quite an article but worth the read! Best take-a-way:

"Those who can  (and DO!) communicate their value proposition to the client will be more than likely remain in this business in the years to come — those who can’t will die on the vine."

May 20, 2019 10:37 AM #16
Caroline Gerardo
CMG Financial - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

One thing we can be certain of: change. 

May 20, 2019 02:37 PM #17
Michael Eisenberg
eXp Realty - Bellingham, WA
Bellingham Real Estate Guy

Very well said. When Redfin's unrepresented buyers start having problem, what will happen? More lawsuits? You're certainly right e need to communicate our value, but in the short term most of those that turn to these disruprtors aren't even listening.

May 20, 2019 05:15 PM #18
Susan McCall, Independent Listing and Buyer Agent
Compass Realty Solutions - Portland, OR
Bringing buyers and sellers together!

The sad thing about most people involved in a real estate transaction is that they do not know what they don't know.  Most sellers sell once or twice in their lives and do not know what the industry is like today.  Most buyers are doing the transaction for the first time.

There is a commercial here on local TV by R that states that they get the listings and know about new homes on the market quicker and faster. When this information comes from our local MLS and the local agents that post these listings how can they get the listings faster?  No one understands where the listings come from. Perhaps it does make a difference if a new listing is posted 3 or 4 minutes faster to a certain website, but who is checking?

There is just so much fluffing being done.  When I was in real estate school this was borderline cause for censure.   

May 20, 2019 10:22 PM #19
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi John:

I thought the looney tunes was a great analogy...and I enjoyed them thoroughly myself. This was a thoughtful, and you're right...there is alot going on from a disruption and business-changing perspective, and we are no doubt going to see many more changes. But who REALLY benefits? Consumers? I think not.

Welcome to ActiveRain - I look forward to more thoughtful posts from you, and learning more about your business and the areas you service!


May 22, 2019 06:04 PM #20
Debe Maxwell, CRS | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Love the Looney Tunes analogy, John - and this entire post! I missed it on the feature board AND on Kathy's list but, glad I caught it from your FB page!

I do SO agree - we need to be loud and vocal about this topic. The disruptors are among us and if John Q is not educated, selecting 'the cheapest' will be an easy choice. 

This is so true - "Those who can  (and DO!) communicate their value proposition to the client will be more than likely remain in this business in the years to come — those who can’t will die on the vine."  Scary but, true.

May 31, 2019 04:55 AM #21
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