Don’t Become Your Parents

Think about it; having Sellers pay the sales commission of the agent they are negotiating against even “sounds” stupid.  Yet this is the way the real estate industry has operated for over 50 years.  The reasons for this “odd” business model may have been valid at one time.  But that was long ago and in a very different time, as in a pre-color TV time.  So why are Seller’s still paying buyer’s agents 3%?   

“I thought we had to”.  This is the answer I hear most often when I ask Seller’s why they are giving away their money?  “That’s the way the system works”, ranks a close second on the sad excuse meter.  Both answers are wildly wrong, but each has somehow morphed into a consensus that comes off as fact.    Truth is, Sellers have been misled.  Imagine that?

There is a very large secret to the Atlanta real estate market.  It’s common knowledge with everybody in the real estate community but virtually unheard of at the consumer level.  When we say Atlanta real estate is different from the rest of the nation, we mean it structurally.     Specifically, the Multiple Listing Services (MLSs), that drive our industry.

The National Association of Realtors (NAR) owns 90% of our nation’s MLS companies.  As the owner of virtually all of our nation’s MLSs, NAR dictates rules and policy for each local area.   It’s their rules.  That said, on behalf of multiple class-action lawsuits, the Department of Justice (DOJ) has been investigating “their rules” for years now. 

Our next blog will expand on “why” Atlanta is NOT governed by NAR rules.  But know this, of the 10% of MLS areas not governed by NAR, Atlanta represents the largest and by far the most lucrative.   The lucrative part being the reason so many people aren’t keen on openly discussing Atlanta’s unique market situation.  Too much money to be made by using NAR rules.    

Real estate more or less works in the same in Chicago, Dallas, Philadelphia, Denver, etc., because of NAR.  Fact: Atlanta doesn’t have to play by those rules.   Unfortunately for the consumer, national “franchise” brokers like KW, ReMax, Compass, and Coldwell operate consistent business models across the nation.  It’s the point of franchising.   This means Atlanta consumers find themselves paying into rules and traditions they don’t need to pay.  They do this in large part because they didn’t know they had any options.  And sadly, in many cases, franchise agents don’t discuss the options because it hurts their brokerage’s pocketbook. 

The good news, Atlanta has over 1,900 independent real estate brokerages!  This is a shockingly large number for a market the size of Atlanta.  Why?  Atlanta has no NAR control!  Outside of Atlanta, mandatory agent participation in NAR is 100%.  In Atlanta, optional agent participation in NAR is less than 40%.   This tells us where the future is going.

Because of our unique situation, long-term change in the real estate industry will start in Atlanta.  And it begins within the ranks of Atlanta’s independent sales agents.   I write this on behalf of Wynd Realty.  But in truth, I write this for every one of Atlanta’s independent local brokerages.

Today’s independent sales agent was yesterday’s franchise agent.  They have learned and moved on.  Know this; home sellers will save money by using independent sales agents.  Does this mean independent agents are cheaper—it does not. 

Independent agents don’t have a national franchise to feed.   Sellers save.  Independent agents actively negotiate buyer commissions.  Franchise agents default to 3%.  Independent sales agents cut out the middleman and take on the unnecessary.  A mantra for all entrepreneurs since the wheel.   Franchises agents are famous for the status quo.

The nation is watching what happens in Atlanta as a potential sales model for the future.  NAR has run its course.  If it wasn’t mandatory, it would die.  The franchise business model is old and in the way.  Be a part of the change, use independent real estate agents for your next transaction.

The story of why NAR doesn’t control Atlanta is an epic, once-in-a-lifetime David vs Goliath story.  It’s also a very weird story about race.  The reasons behind Atlanta’s real estate secret discussed in our next blog.    

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