Will this new technology kill commissions?

by Jamie Henry14 Nov 2014
It’s being billed as an innovative transformation of the online brokerage, but buyers’ agents may struggle to accept – let alone embrace – the terms that come with it.

Launched by a Redfin co-founder, the online brokerage Surefield claims to have simplified the selling process by asking potential buyers to view in-depth virtual tours before requesting in-person showings – a move the Seattle-based player says cuts down showing requests to serious buyers. As a result, Surefield collects a modest 1 per cent commission on the sale, with the buyer’s agent collecting a flat fee of $2,000.

That’s not likely to entice buying agents. Still, Surefield is hoping it will win widespread interest among buyers complaining about standard commissions.

 “The U.S. real estate industry has been operating as a quasi-cartel for far too many years — just look at the high commission rates as proof of tacit collusion,” Surefield CEO David Eraker told Inman News. “Surefield’s goal is to deliver the same level of transactional efficiency to U.S. consumers that is found in other developed countries.”

But agents in the REP forum have already voiced their opinions on the matter of cut commissions.

“Commission is not a liability or an expense, it's a marketing tool,” writes one anonymous commenter. “Commission can be like a powerful magnet or irresistible lure that attracts the most agents, the most showings, and the best and highest offers...or...it can be like a spray can of repellant that drives agents who have potential buyers away. Offering little or no commission will cost sellers money, not make them money. Offering the right commission will in fact make them money. Which is more important, how much commission you offer or how much money you net?”
Would you show a house that offered a low flat-rate commission?

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