Charlotte real estate agents saw their numbers drop by 20% from 11,704 to 9,374 between 12-15-07 and 12-15-10 due to the declining activity. And here’s an even more significant trend: 52% (4,870), of the agents that were still in business on 12-15-10 were affiliated with an office that numbered 19 or fewer agents, and 45% (4,242), were affiliated with an office of 10 or fewer agents*. The reason this statistic is significant because in the present economy, agents are more likely to leave the larger national franchise offices, where they must forfeit more of their commission dollars, to start up their own broker-owner firm or join a smaller locally-owned firm where they can keep more of their sales commission.
During the same period, more Charlotte real estate buyers were seeking
exclusive buyer representation. A large firm or franchise can offer exclusive representation services to buyers, but if the buyer wants to purchase a home listed by their buyer agent’s firm, the buyer must agree to sign a dual-agency agreement, which allows the firm to legally represent both the buyer and the seller on the same property. Most of the agents who advertise on public MLS services like Zillow and Trulia are listing agents who work with buyers and whose company policies permit the practice of dual agency on in-house listings.
This opens up a big marketing opportunity for brokers who are affiliated with firms that have 10 or fewer agents to establish for themselves a policy against the practice of dual agency. But why would a broker want to do that?
Here’s why: The potential revenue gain that a broker can generate by providing guaranteed
exclusive representation to prospective buyer-clients should be more than offset by the opportunity cost of referring those buyers who decide to purchase an in-house listing another buyer’s agent outside their own firm for exclusive representation. This departure from the traditional real estate paradigm is due less from buyers contacting home sellers directly using Zillow or Trulia than it is from agents who can offer a unique competitive advantage by eliminating the risk of dual agency compromising the negotiating position of their own buyer-clients.