CAARE believes that it is the primary function of a listing Realtor to sell their client’s house for the highest price, in the shortest time and in the process avoid conflicts of interest whenever possible. It would appear to us that Edina Realty’s actions will negatively affect all three of these duties.
The first rule of being a fiduciary (an agent) is to always place your clients’ interests above all others, especially your own. When you put your own interests first it is called self-dealing (a form of theft). In real estate, that means the brokerage firm should be doing everything they can to help sell their sellers’ homes and avoid ancillary business opportunities found while representing their clients – especially if those opportunities conflict with their clients’ best interests. They should also be trying to avoid conflicts of interest in the process. We don’t presume to accuse Edina Realty of violating their fiduciary duties (as we do not have their listing contracts or their disclosures in hand), however, we do not believe that Edina Realty is acting in their clients’ best interests by excluding their clients’ listings from some of the top buyer frequented websites in the United States.
Edina Realty is apparently no longer just in the business of selling houses. They are also in the business of profiting from distributing online real estate data that they collect. To prove that point they have once again made national news (read Inman News story here) for removing their sellers’ listing information from one of the top three websites in the United States, Realtor.com. That new business model appears to directly conflict with their business of selling houses. That means that buyers will not see Edina listings if they use some of the top real estate websites in the country like Realtor.com or Neighborcity.com. For home sellers who have listed with Edina Realty, that means a lot less market exposure (especially to out of state buyers) and likely less market activity which could translate into longer listing times and reduced purchase prices.
If you have your house listed with Edina Realty, in two weeks try searching on Realtor.com, Trulia.com, Neighborcity.com and the other real estate sites for information on your house. If you find it is missing, you may consider asking your agent to manually list your house on those other online sites – it is free…. And these sites are considered the most frequented by buyers (see our previous story here).
Edina Realty, as a broker, is in a unique position to profit from being in the online real estate data business. And that position directly conflicts with their clients’ best interests in selling their homes. If a buyer finds an Edina listing on Edina’s website, they will be directed to an Edina agent. If the buyer uses that Edina agent to buy the house, the commission that is designed to be split with a buyer’s agent who represents the buyer will be “hogged” (yes, it is an actual real estate term) by Edina Realty. In other words, Edina Realty will get a double commission if a buyer finds their house on Edina’s website (click here for more info on how dual agency could be primary motivation for Edina’s actions).
So we believe that if a cost benefit analysis were done that it would likely show that Edina Realty profits more from collecting a double commission than they will lose from the extra listing time and lower purchase prices that result from pulling their data from other sites. Great for Edina, not so great for sellers.
This scenario is bad for buyers and sellers for another reason. In the situation where a buyer uses the listing agent to buy the house, most buyers do not understand that doing so deprives both them and the sellers of any meaningful agent representation. By law, in a dual agency situation (double commission – click here to learn more about dual agency) both the buyer and seller forfeit their right to advice and guidance from their agents. The broker gets paid twice as much for half the work. The buyers and sellers are left to half hazard guess as to what is an appropriate way to fill out a purchase agreement. A disturbing result that causes a lot of consumers to make serious investment errors.
Realtor Association owned Multiple Listing Services (“MLSs”) around the country are punishing one online company, Neighborcity.com. Neighborcity.com actually refers people to real buyer agents who can actually represent buyers and who are not with the listing company. They also have a rating system for these buyer agents. Their business model is both innovative and a huge asset to consumers. It actually protects buyers and sellers by eliminating dual agency (double commissions) and preserving two of the top three reasons buyers hire Realtors: to help them negotiate price and terms (taken from National Association of Realtors survey)(the third reason is to help find the house). We find it hypocritical and anti-competitive that NAR is funding lawsuits against Neighborcity.com when the company is helping facilitate exactly what NAR’s surveys indicate buyers want from an agent – help in negotiating.
Minnesota is leading the way against Neighborcity.com with a lawsuit filed by Northstar MLS (owned by the Minneapolis Association of Realtors) for copyright infringement. They are claiming a copyright on the sellers’ house data when this company was using that data to help their Realtors do the job for which they were hired and will be paid to do – to sell the house. We believe that Northstar MLS is working counter to the sellers’ best interests by asserting a copyright on the sellers’ data. In essence, since Northstar MLS is owned by the Realtor Association, these Realtors are suing for the right to take longer to sell your house and for less money – all so that they can try to get a double commission (our opinion). Coincidentally, a licensing complaint was filed against this same firm by no other than the corporate counsel for Edina Realty.
We think that if we were to interview informed home sellers that we would find that most would want their online house data to appear on all the real estate websites, not just Edina’s. In fact, some of the best listing brokers in town should be having a field day beating Edina Realty out of listings by just showing sellers how their marketing plan is superior to any marketing plan Edina Realty can offer.
We are disappointed to write this story. We want to see real estate practices that are honest, competitive and benefit consumers. We do not believe that is what is happening in this situation.
by CAARE guest writer