Realtor owned MLSs are suing NeighborCity.com, a company that advertises Realtor and For Sale By Owner houses for sale for free. They also help place buyers with buyer agents that they rank. The agents that they recommend are never with the listing company and are therefore far less likely to have conflicts of interest. Although the MLSs are alleging copyright infringement, that makes no sense to us. Why would the MLSs (Realtors) sue Neighborcity.com for helping them do their job for free? And isn’t it the sellers’ data? Has anyone asked them if they want their listing information removed from Neighborcity.com? The Realtors still collect the commission, so what is their gripe? We believe the real reason behind these attacks is that the MLSs (Realtors) want to collect double commissions.
The biggest complaint that we have heard regarding syndicated real estate sites like Neighborcity.com, Trulia.com, Realtor.com and the others seem to come when those sites fail to feature the listing agent next to the listing of the seller’s property. When the listing agent is featured with the listing and the buyer clicks on the listing agent to buy the house, the listing broker collects a double commission. In addition, the buyer and seller forfeit their right to representation. That is called dual agency or hogging (a real estate term – really).
By suing Neighborcity.com the Realtors are arguing to keep listings listed longer and to have them sell for less. All in order to collect more double commissions.
Dual agency is a problem we have written about numerous times (link). Dual agency occurs when both agents are from the same real estate brokerage which allows the brokerage to collect (or “hog”) a double commission. In dual agency, the agents are prohibited from negotiating price or terms on behalf of their clients. So the broker gets paid twice as much for doing a fraction of the work.
Real estate commissions are supposed to be divided in half. Half goes to the buyer broker and half goes to the listing (seller’s) broker. When a home buyer clicks on a listing on a real estate website, or calls off a real estate sign, or attends an open house, the buyer is unwittingly forfeiting their and their seller’s right to representation and ensuring that the broker collects twice as much for doing a fraction of the work. “Hoggers” serve no one but real estate brokers. And Neighborcity.com’s business model helps buyers and sellers avoid this problem.
The issues surrounding the lawsuits against Neighborcity.com is where the brokers’ and the clients’ interests clearly divide. Sellers want to see their house effectively marketed and have it sell for the highest price and in the shortest time. Brokers that engage in dual agency collect so much more in commissions, that they don’t mind if the house stays on the market longer and sells for less. Our advice is to avoid dual agency at all costs.
We commend Neighborcity.com for sticking by their consumer friendly business model and we ask consumers to support them by asking their Realtors to make sure that their listings appear on Neighborcity.com.