Is the Traditional Real Estate Model Under Pressure?

BETHESDA, Md., May 8, 2017 /PRNewswire/ -- Asked to comment on changes affecting the traditional real estate model, Stephen Carpenter-Israel, President and Broker of Buyer's Edge, a leading Bethesda, MD-based Exclusive Buyer Brokerage firm, said that the increased use of the internet to buy or sell a home as well as a recent California Supreme Court ruling on the controversial practice known as "dual agency" are shaking the real estate industry to its core.  As a result, homebuyers and sellers are becoming increasingly skeptical of the traditional brokerage model and confused about how best to move forward with the complicated and time-consuming purchase or sale process. "As homebuyers and sellers become more savvy, they are increasingly looking for a true fiduciary relationship with their realtor," said Carpenter-Israel. "They are demanding complete transparency and loyalty with no conflicts or competing interests."

Consumers' widespread embrace of technology and new ways of thinking spurred the creation of tech startups such as Zillow, Trulia, and Redfin in the mid-2000's.  "These new online database companies upset the 'cartel' of the old brokerages," explained Carpenter-Israel.   They gave homebuyers and sellers free access to information with a just a few taps on their smartphones.  By revolutionizing data collection and presentation, these house hunting websites empowered educated, independent consumers to look for better ways to buy or sell their homes.  "While the internet has caused a major paradigm shift in the way the real estate industry transacts business, the new technology has also brought many more options and opportunities to consumers, real estate agents and brokers across the country by increasing transparency and the ability to quickly and easily search vast amounts of opportunities," said Carpenter-Israel.

The rise of on-demand technology is forcing real estate brokerage firms to deal more openly and honestly with what has historically been a fairly secretive system explained Carpenter-Israel. "In fact," he said, "The need for increased transparency and full disclosure was the focus of a recent California court ruling that may change the very structure of the industry."  In that case, the litigation revolved around the practice of "dual agency" when a real estate broker is representing both the buyer and seller. The California Supreme Court ruled in favor of the home purchaser who said he overpaid because the size of the house was misrepresented by the seller's listing agent. The salespeople for both the buyer and the seller worked for the same company. "The ramifications of this case may lend credence to the case for eliminating dual agency transactions and push the industry to accelerate the trend towards brokerage firms choosing to exclusively represent either buyers or sellers, but never both," said Carpenter-Israel. "With 25 states having already eliminated an individual real estate agent's ability to serve as a dual agent, the timing may be right for meaningful change in the real estate brokerage community."

Representative Lorena Gonzalez Fletcher, a state legislator in California has introduced legislation that would prohibit the practice of dual agency in commercial real estate transactions. The proposed legislation may be the first of many similar efforts across the country that would fracture the tradition model of Real Estate companies representing both sides of transactions and require completely separate firms to represent each side, not just a disclosure of the conflicts.

For more information, contact Steve Israel, Buyer's Edge, 4849 Rugby Avenue, Bethesda, MD 20814, USA.  Phone: 301.657.1475 or 800.207.6810 (toll free), Fax: 301.657.4494,e-mail: [email protected] or visit www.buyersagent.com.

FOR MORE INFORMATION 
Contact:  Wendy Carpenter-Israel
Email: [email protected] 
Phone: 301.657.1475

SOURCE Buyer's Edge