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Honesty in Real Estate.
Stop unfair, deceptive, and abusive iBuying tactics.
This Petition will be sent to:
- Attorneys General, All U.S. States
- Consumer Financial Protection Bureau
- U.S. Federal Trade Commission
- U.S. Dept. of Justice
- U.S. Dept. Housing & Urban Development
- U.S. House Financial Services Committee
- U.Ss Senate Banking Committee
- Office of the Comptroller of the Currency
- U.S. Securities and Exchange Commission
Honesty in Real Estate
Real estate agents, and the buyers and sellers they have faithfully represented for decades, are under threat from a small number of technology companies looking to disrupt the real estate industry. This movement began back in 2004 when companies like Trulia and Zillow were formed, and has recently neared a tipping point that will long have repercussions on the housing market and on the economy as a whole. That is why we support educating consumers to the lack of transparency, hidden costs, and community dangers of real estate iBuying platforms.
Attack on Real Estate Agents:
Recent articles in major news outlets have reported a class-action lawsuit that has recently been filed against most of our nation’s real estate agents, brokers, MLS’s (Multiple Listing Systems), and NAR (The National Association of Realtors). The lawsuit claims the above referenced organizations conspired to keep real estate agent commissions artificially high (at 6%). This accusation is baseless, and made with the express purpose of steering future home buyers and sellers away from hiring traditional real estate brokers and toward high cost iBuying platforms.
- Real estate commissions are 100% negotiable in every state
- MLS’s do not regulate commissions nor censor low commission listings
- Nationally the average real estate commission is well below 6%
- iBuying platforms in reality charge more per transaction than real estate agents, but do not call it a commission
E.g. Zillow routinely charges 7% in fees while Offerpad and Opendoor routinely charge 7.5%. Though they do not call these fees a “commission”.*
Media attention from the antitrust lawsuit on “commissions”, and strategically placed advertising, have been used to mislead and steer home sellers toward these more expensive iBuying platforms. We believe this campaign is a deliberate effort by a small number of large technology companies not simply to digitally disrupt an industry but also to mislead home buyers and sellers into thinking they’re getting lower costs and more value through these iBuying real estate platforms. Which they are not.
As just one example, Zillow has been steadily expanding its influence in the real estate industry and begun to compete with real estate agents for real estate transactions. For the twelve months ending March 31, 2019, Zillow revenue, in the billions, has funded its expansion largely from fees received from real estate agents. Zillow uses listings from community based real estate brokerages to attract attention from buyers and sellers. Zillow then commoditizes the information of its viewers and sells the information to real estate agents in the form of leads. Zillow has done this without compensating real estate brokers or real estate agents, and has made billions in the process.
We believe Real Estate Brokerages are entitled to a revenue share from Zillow’s gross profits for the use of the Brokerages listings. A fee similar to the customary referral fee of 25% that all Brokerages have participated with for decades. This would allow local real estate agents and brokerages to not only compete, but to educate home buyers and sellers to the true cost of all Real Estate sales platforms. Because when Sellers are truly informed of all their options, all of our communities’ win.
We the undersigned support the above statements and goals because we believe that when any industry maintains a level playing field the consumer wins. We are signing because we support fair competition amongst real estate agents, which ultimately results in lower costs for consumers and better service from agents. We support technology and the benefit it can provide consumers but believe some technology-based companies are playing to consumers “built in” belief that “technology” always means quicker, more efficient, and cheaper. Finally, we believe that MLS and real estate brokers should not share their listings unless Zillow pays a fair revenue share for the use of their listing which helps fund the type of changes this petition outlines. We believe this will make our communities stronger, healthier, and will preserve the equity that so many homeowners have worked hard to achieve.
As you may know, most real estate brokerages, The National Association of Realtors, and all Multiple Listing Systems are currently the target of a class action lawsuit and a DOJ investigation regarding commission fixing. The allegations state that the above referenced entities colluded to keep real estate agent commissions artificially high at 6%.
Ignoring for a moment that real estate commissions have always been negotiable in all 50 US states and that the average commission is closer to 5% than the alleged 6%, I can’t help but notice that both inquiries have neglected to highlight the bad actors within the real estate community who are misleading consumers, manipulating commissions, overcharging sellers, and hurting our communities all across your state. These are the large technology companies like Zillow, Offerpad and Opendoor that sell the idea of fast, easy real estate transactions for lower fees and commissions. If left unchecked, I believe these platforms could very well be the source of our next housing crisis.
I do not use the word “manipulation” lightly. After thorough research, I am still not aware of any real estate “iBuying” platform that charges under 7% in fees. However, because these companies aggressively advertise lower transaction fees than more traditional agents, this amounts to deceptive and predatory tactics in how they sell the value of their services and representative costs. A few facts:
- They routinely charge 7% in fees, if not more. This is more than the average real estate agent or broker.
- In many instances, offers that are made to home sellers on iBuying platforms are accompanied with recently sold homes that suggest the home is worth less than the current market value. I believe this is done to get unsuspecting homeowners to sell their homes below market value.
- Offers from these companies are presented on statements made to resemble a real estate Settlement Statement, which is confusing.
- While the term “commission” is under attack, these companies have created new names for what amount to fees and commissions in a further attempt to confuse or mislead home sellers. Rather than using the term “commission” on an already confusing offer, Open Door is calling it an “experience charge” and Offerpad is calling it a “Seller Credit.”
- Sellers are being charged fees that are, in the industry, generally negotiable.
- Multiple fees are being charged as a means of further fleecing sellers that have never been part of a traditional real estate transaction.
We the undersigned ask you to Investigate Zillow, Offerpad, Opendoor (and other heavily funded tech companies that have recently entered the home buying space) regarding these deceptive and predatory tactics. These companies are expanding quickly and their business models and advertising tactics are becoming increasingly aggressive and misleading. If left unchecked, I fear they will continue to irreparably harm the citizens of your state through decreased home equity, lower taxation.
If you have any further questions or would like further assistance in investigating these large technology companies that are running fast and loose with existing State and Federal Real Estate Regulations, please let me know. Thank you for your time and consideration.