2019 Mar 21st

Stop Posting Hoboken Homes on the MLS?

Welcome to the new order.

Here comes REX.  We’ve seen discount brokerage models before – remember Exit Realty?  Back in the day, they didn’t last.  Then along came the new technology, the dominance of Zillow and, eventually Redfin.  Many consumers are so enamoured of Redfin’s search site they don’t realize that Redfin, unlike Zillow, is actually a brokerage.  Many sellers think Redfin is a great deal because they can list their homes for cheap(er) than a traditional brokerage.  Redfin offers a 1.5% listing fee.  What they don’t advertise is that you then have to pay a buyer’s agent 2 to 3% on top of that.  Purplebricks advertises that it will sell your home for a low fixed fee.  In Hoboken, on a $1,000,000 sale, the fee is shown as just under $5,000 as opposed to $25,000 would there have been a 5% commission.  Now REX has come along to shake things up yet again.

REX proposes to sell your home for a total 2% fee.  That includes the sell and buy sides.  Wow, that sounds very attractive.  What caught my eye is that they say they do it by NOT listing your property on the MLS.  The MLS is the central data base on which just about all homes are listed so all buyer’s agents can search for the right property for a buyer.  So REX will reach buyers how?  Through their own website?  No buyer’s agent involved?  No buyer’s agent to compensate.  Here is what they say on their site:

We create custom digital campaigns that target specific buyers and then send them to your home’s landing page. From Zillow, to Facebook, to mobile apps, and more. REX online marketing is doing the work, so you don’t have to.

So they will put your property on Zillow, Trulia, Facebook and their website.  But – if a buyer sees the home on Zillow, let’s say, and is working with their own agent, the buyer would have to pay that agent!  Still, this is a game changer and a very bold move.  REX is betting that Zillow can actually do away with the need for an MLS!  Wow.  That’s a bold position to take.  But they may just be right.  Only time will tell.  I do know that today’s young, educated buyers have a sense that they can do it all themselves because they have access to the data.  (What they don’t have is the experience of having done hundreds of deals and having seen thousands of homes.)

REX claims they’ve been in business for 4 years – they are not yet in Hoboken but they are in Jersey City.  Here is a REX listing for a $1.5million mulit-family on Barrow Street in Downtown JC.  There are others.

What’s in it for the REX agent?  They state that they pay a “competitive salary with an equity state in this fast-growing tech company”.  Interesting that they pitch themselves as a tech company rather than a real estate company.  Also interesting that they seem to be treating the agent as an employee rather than an independent contractor.  That makes for serious changes in employer liability for worker’s comp, unemployment insurance, health insurance benefits, etc. which the traditional model brokerages have long skirted.  I wonder what they consider competitive given the vast range of incomes made by agents.  I’ve been told that Redfin agents make about $3,000 per deal.  Here in Hoboken, I would estimate that a decent sales agent makes closer to $13,000 for an average sale.  That would mean you’ve have to do some heavy volume to make a living!

One thing is for certain – we are on the brink of some major changes in the way real estate is bought and sold.  Be prepared!

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