This industry allows for many different business models. Ranging from 100 percent commission models to traditional broker/agent splits, brokerage business models have evolved over the years. Now, these models even extend into technology. Redfin, for example, has an Internet-based business model that prioritizes customer service and savings over networking and building clientele, and it compensates its agents with salaries rather than commissions.
Earlier this year, Koenig & Strey announced mandatory buyer-broker agreement of $250 for all its buyer transactions, and immediately, agents voiced their opinions, some in favor of, and some skeptical that it would stick.
The majority of agents applauded Koenig & Strey for making the change to its business model. “Buyers have, for far too long, been able to take advantage by ‘using’ the agents,” Alec Hagerty, a broker in Ohio, commented on CA’s story when the fee was announced. “A true ready, willing and able buyer will be willing to search and interview agents, then make a viable commitment to that agent.”
On the other hand, some people are comparing these new fees to baggage fees that many airlines are now charging to check bags. These have become mainstream – even airlines that allow people to check a bag for free charge people who check more than one bag. People don’t balk at those fees anymore – is that what buyer agreement fees in the real estate industry will become?
It’s still too early to see if Koenig & Strey’s model will pick up steam, but it’s not hindering its business either. Check out our cover story on page 10. What do you think will happen?