With great fanfare, DeLeon Realty recently announced that it would no longer charge a buy-side commission on transactions in which its real estate professionals worked both sides of the home sale. The tone of the announcement did not paint the real estate industry in the most flattering light, and it made claims that are simply not true from my perspective.
This business practice is presented as a “most significant innovation,” but in reality, it ignores full fiduciary duty, and I do not believe that it is in homebuyers’ best interests. While claiming to solve one conflict of interest, it actually creates additional conflicts of interest. Removing the buy-side real estate professional’s commission does not eliminate these conflicts.
Buyer representation is a very complex fiduciary role and responsibility — it is not simply “the transaction.” The proper and fiduciary representation of a buyer can, at times, take more than nine months and sometimes years. The process can include education on neighborhoods, schools, commute patterns, walkable amenities, floor plans, inspections, resale values, and so on.
Furthermore, the buyer-to-fiduciary relationship is based on knowledge, experience, and trust. These are not attributes achieved through a discount. They are achieved primarily through earning a client’s trust. In fact, knowledgeable and experienced real estate professionals often save buyers more than 2 or 3 percent by understanding property values, using savvy negotiation and communication skills, and handling the intricacies of inspections. This is not something that a brokerage with inexperienced or undercompensated real estate professionals can accomplish.
“Teamwork, Trust, and Innovation” are the pillars of the Pacific Union brand. They are three words that are easy to say but very difficult to execute with consistency. There is an interdependency between these core values. Innovation will not happen without teamwork, and teamwork is impossible without trust. These are also the principles we promote with our clients and those by which we are measured. Our results in the marketplace confirm these principles.
We admire the ethics of most other brokerages, and we aspire to continually raise the standard-of-care expectations as fiduciaries in our industry. When it is time to make the most significant purchase or sale of their lifetime, a client wants the best in the business as their fiduciary advisor, and the best advisors are worth every dollar of freely negotiated compensation.
I welcome your comments, opinions, and suggestions.
— Mark A. McLaughlin, Chief Executive Officer, Pacific Union International, Inc.