Home sellers who sold to a buyer represented by the same agent lost a combined USD 1.49 billion over the past three years, according to new Zillow research. Sellers who listed privately, not on the Multiple Listing Service (MLS), lost nearly as much.
In both cases, the agent has a financial reason to put their own and their broking’s interests ahead of the seller’s. And in both cases, the data shows sellers pay the price in what may be the largest financial transaction of their lives.
When one agent represents both the buyer and the seller, that agent’s economic incentives shift. The additional commission earned by pushing a seller’s price up is generally modest, while the potential cost of selling to another buyer and splitting the commission with another agent is significant.
That dynamic can incentivise certain agents to close a deal with a buyer they represent, regardless of whether doing so is in the best interest of the seller they have a fiduciary duty to protect.
Sellers deserve an agent whose only job is to get them the best possible price and a listing that every buyer in the market can see. When either of those things is missing, the data keeps telling us that sellers lose”, said Mischa Fisher, chief economist at Zillow.
“Buyers searching without the right connections never even see the homes they’re being shut out of. It’s a velvet rope system designed to enrich brokerages, and sellers are subsidising it,” he stated further.
The estimated loss per home from sellers in dual-agency transactions was about USD 2,165. Aggregate dual-agency losses were largest in California, where sellers in dual-agency deals lost an estimated USD 533 million over the study period. Florida sellers lost USD 217 million, New York sellers lost USD 146 million and New Jersey sellers lost USD 115 million.
The same pattern holds for off-MLS listings. Sellers who chose not to ever list their homes on the MLS, keeping them hidden from a swath of buyers, typically sold for 1.3% less than MLS-listed sellers, losing a combined USD 1.36 billion over three years. The typical loss was roughly USD 4,230.