← The David Greene Show
The David Greene Show
Sell More Homes in 2026: The Exact Game Plan Top Agents Are Using I Episode 117
00:44:56
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- [00:00]
A
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS and no sales pitches. I'm David Green, and I've been doing this for over 10 years. I've seen the ups, the downs, and everything in between. This is the show where we pull back the curtain and show it to you, too. So if you want to build wealth through real estate or you just love learning about it, you found your home. What's going on, everyone? Welcome to Real Talk Real Estate. I'm David Green, joined today by Chris. Chris Lloyd. Together we are coast to coast real estate, and this is a Real Talk Realtor episode. So if you are not a real estate agent, that's okay. You're still welcome. We hope that you stay. We hope you listen. We hope you learn something. If you're waffling and you're a real estate agent, ish, you should definitely stay here. And if you are a real estate agent, you are in the right place because Chris and I are going to be talking about all the drama that's going down with Zillow. He's got the goods, we've got the information, and we're going to get into it today. So, Chris, before we start, hello. How's your week been going?
- [00:58]
B
It has been going absolutely fantastic. It's been a great week. Our agents have been incredibly productive, and we've got a couple more agents coming on board here pretty soon.
- [01:09]
A
That is exciting to hear.
- [01:10]
B
Growing, moving and grooving and loving every, every step of the way.
- [01:14]
A
I know you've been working very hard to make that happen. And you can't wait to get them into our training calls and start teaching them. I've been hearing good things about the calls we've been having. Same thing from, from you on your end.
- [01:25]
B
Absolutely. Yeah. No, our agents after the, the calls are reaching out to me saying, man, that training was absolutely fantastic. And I mean, one of the best things about this is, is they can come to you with the, you know, actual problems they're going through, like, in the moment, like, hey, I have a seller that is. We're struggling to move their property because it's so competitive. We looked at that on the call with the entire company on there, and we figured out how to work through that situation with the seller so that we can get them closer to their goals. And we had that meeting this morning with the exact tactics that we discussed and everything went forward. Our sellers extremely happy and, you know, hopefully.
- [02:03]
A
Oh, that's awesome, man. Virtual high five.
- [02:05]
B
Absolutely.
- [02:07]
A
Those are tough when you don't feel like you're equipped with the right script or the right speech or the right approach to talk about a price reduction. Or on the buy side, those are more like you're going to have to pay more than you wanted to to get this house. It could just be anxiety filled and nervous stricken conversations. People just avoid it. They'll literally get sick. They won't be able to sleep. But when you know what tool to use, what to say, how to go in there and how to frame it, it's so much easier.
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B
Absolutely.
- [02:36]
A
Yeah. Glad to hear that that worked out because I think that that person's going to get their house sold. They're just not going to get quite as much as they wanted. But from what you described to me, it's almost a negligible number in the end of the day.
- [02:48]
B
Yeah, no, the change is going to be fantastic for our seller. She's extremely excited on board and we made the adjustment today.
- [02:57]
A
All right, now let's get into today's show, which is all about Zillow lawsuits, drama, the real estate industry in general. I know, I don't know if you're prepared to talk about it today, but there's been kind of like a battle going on between Zillow and Compass. Have you been following that?
- [03:14]
B
I have a little bit. Not too closely though.
- [03:17]
A
Maybe we'll do that next week. We'll talk about kind of the back and forth between Zillow and Compass. But what it comes down to is there's a big battle going on between if agents will be able to market a property as for sale before it goes into the mls where everybody can see it. So there's a contingency, I don't remember which side is which, that says no, the minute you have a listing, you have to put it up for everybody to see. And then there's another contingency that says, hey, if you want to try to sell this thing on your own before putting it on the mls, that should be fine. One side says, it's not fair if everybody can't see it. So that's not fair to the consumer, meaning the buyer. The other one says, hey, if the seller's okay with it and they give me permission, why do I need to worry about what the MLS says? I'm a fiduciary to my client, the seller, and in many cases the sellers like this because if the agent can find a buyer on their own, they don't have to pay as much of a commission. So the Sellers feel like, hey, it's in my best interest if he can double end this thing. But the people who are managing the mls, which I imagine is going to be Zillow's portion in this, say, no, no, no, no, no. Everyone needs to see it if you get it. We don't like anybody keeping secrets. I've never brought this up with you, but do you, do you have a dog in this fight? Do you have an opinion that you think is the way it should work?
- [04:33]
B
I do. Now in my opinion, I think that what drives a lot of thinking behind how this should play out within the industry is we have a lot of agents that believe that every single time the highest and best interest of the seller is to get the most amount of money. If that is the objective of the seller. In most cases, going to the MLS and putting it all over the place for maximum exposure is definitely the right call. However, I don't believe that that is the best interest of every seller because if a seller comes to me and says, hey, I need a quick cash offer on my property, we can't do showings, I need to be out of here within a week. I've got these medical bills that are coming up or whatever their excuse is. They might value time more than they value money. And the time that I'm going to spend putting everything together, getting into the mls, continuing conducting all the showings, I may have completely just jacked up their entire timeline. So I believe that you need to listen to your clients objectives and come up with a plan to satisfy what their goals are. Because it's not always getting the most amount of money, but it's not always selling it in the least amount of time. Most people want to make the most money on the sale of their home, but it depends on their situation.
- [05:55]
A
Yep. So what you're saying is there may be a delay in getting all the paperwork together and following the MLS guidelines to get it on the mls where it would then populate for everyone to see it.
- [06:05]
B
Absolutely, absolutely. And plus, sometimes they don't want a million people going through their home. If you're in a really hot market, they just want a quick, easy sale. They value taking a, you know, lower price in exchange for that. The reason why I'm going into all this is some sellers may prefer that the age or that the listing is kept in house with the company so that they can save money on, you know, say the buyer side commissions. Right. Or they can cut down on the showing volume, you know, for whatever their, you know, reason is. I think that what is in the seller's best interest is what the seller says they want given. And here's, here's my caveat, that the agent explains all potential routes. Right? This is what a cash offer looks like. This is what it looks like when we sell it in house. And this is what it looks like if we go to the mls. As long as the seller is presented with all their options, I believe it's the agent's job to accomplish the goal of the seller. When they see that right in front of them.
- [07:04]
A
I think that's a solid explanation. In 99% of cases, I would say going to the MLS is your best bet. Getting in front of as many people as you can is almost always the best bet. As far as a fast sale, as far as getting the most money that you can, as far as even. No, you don't even really know what the market would have given you or not given you unless you put it out there.
- [07:27]
B
Yeah.
- [07:28]
A
But I've always believed if you want to reserve the right to be stupid, this is America. And gosh darn it, you should allow to be stupid. If you want to do something that's not in your best interest, like you said, and it's disclosed, these are your options. And you're more worried about saving 1% or 11 1/2% or 2% or whatever you're going to save by not having to pay a buyer's agent. And you're hung up on that. You're going to step over dollars of pinch pennies. I don't think we have a right to tell you you can't do that. I think it is explained that way. But what it really comes down to is Zillow doesn't have as much value if you can sell a house without putting your property on their platform. So it looks to me from the information I've seen so far, I want to add that because I don't have all the information and personally my opinion changes as new information comes out. I don't like to be locked into one thing that I thought at one point in time. And my pride won't let me say I'm. From what I see right now, Zillow doesn't like this because they're losing leverage in this game and buyer's agents don't like it because they can't put someone under contract if they can't see the house in the first place. And so Zillow and companies like that go put pressure on MLSS and then the MLS's go put pressure on the brokerages. And the brokerages go put pressure on the agents, and that's where we end up with this big battle. Absolutely. Yeah. You know, the same thing happened to me when I was in production in California. Now I have other agents that, like, help me with when I have, like. We actually have a person that came to us in California to sell a house in Fremont, and we're going to be putting that on the MLS pretty soon here. But I have another broker basically helping me put that one on the market. I remember that I used to have a strategy where I would tell my seller, here's what we're going to do. You're going to pay for a home inspection, a roof inspection, and a pest inspection out of pocket. They're each going to cost you about 400 bucks. Sometimes we get the roof inspection for free. We are going to present it to the buyer so they don't have to pay the money themselves. But with that, we're going to be able to say, hey, there's not going to be an inspection contingency. Don't write an offer on this house if you want one. And then they would say, well, why? Why can't I have one? Do all your inspections now. You don't have to be in contract to do it. What is it you think you're going to inspect that you can't inspect? Now, you've been given all the paperwork. You can call the home inspector right now and you can ask them something. And if you really want to get another inspection for whatever reason, you could get one. You just want to have a contingency. You would just lose your deposit. Theoretically, if that's the case, and if they said they didn't like it, I'd say, then go inspect the house now. It's not under contract. Go pay for someone. It wasn't the normal way of doing it. And that's what agents didn't like. They didn't like that. It isn't traditionally what they expect. And so they would get into this, well, that's wrong. It's wrong because you can't do it that way. It's not wrong. It's not illegal. You don't have to. Another thing in California is people typically fill out disclosures before they put their house on the market. But you don't have to. You're legally required to give it to the other side within three days of going into contract. You do not have to give it to them ahead of time. You'll have agents that scream that you didn't do your job. Because there's no disclosures to give their clients. It's not true. Another thing that the MLS would get mad at me for. When we would put a house on the market, we would say, we're going to be presenting offers 14 days after I put it on the market. So I pick a date, and I'd say, offers will be presented on this day. This is when the market was really hot. And then all the agents would want to wait for day 14 before they submitted their offer. They would all tell their clients, okay, we gotta wait. Not smart, but this is what they would do. The smart agents would call me and say, hey, David, what do we got to do to get it now? And I'd say, oh, well, it's not really my choice. It's my seller's choice. However, if you wrote me an offer that we couldn't refuse, I'm legally obligated to present it to them. And I would tell them, based on my opinion as their fiduciary, if they should take it or not. And they would say, well, where would we have to be? And I'd say, it'd have to be so good that they would think that there's no way that all the other offers could come close to this one. And then they throw out a number. And I'd say something like, if you gave me that number, I would tell them that I think they should take it. Now, I haven't made it a choice. I'm not the one who's selling this house. I'm offering my advice, but I'm telling the other agent, if you wrote me at that number, I would tell them to take it. And that agent knows, if David Green tells you to take it, you're going to take that offer, Right? I would routinely get my clients significantly more money than if they'd waited for the lottery. And the reason is nobody wants to pay more than they have to. So when you just take the lazy road as an agent and say, highest and best. Highest and best, Like a parrot on the shoulder of a pirate, no one really writes their highest and best. No one ever does it. Because they all think, what if I wrote higher than I needed to? What they want is this. Guarantee certainty. If I write at this number, I'll be able to get this house. And then we would go under contract way more than what anyone thought we ever could have. There would be no contingency to back out. I would negotiate the appraisal before I accepted the offer. So we both know how much they agreed to Pay over asking price. If the house didn't appraise, it was almost impossible for it to fall out of contract. Well, what do you think happened? All the agents that didn't get the house would call the MLS and complain, and they would say, it says, he's presenting offers on this date. He can't take an offer first. And then the MLS would call me and they'd say, hey, you can't do that. And I would say, here's the bind you're Putting me in, Mr. MLS. If I listen to you, I can't be a fiduciary to my seller. My seller agreed to review offers on this date. My seller got an offer that would have been stupid to say no. I presented the offer to my seller, and my seller said, I want to take it. Nothing stopped those other agents from doing the same thing. They just didn't want to. So if I obey you and all your regulation, I'm hurting my client, which I am not allowed to do as a fiduciary. So if I obey you, I'm going to end up in court with my client. And if I obey my client, you're telling me I can't put my house on the mls? Well, how does that help the buyers that are trying to buy a house that they don't ever see? And they were stuck. There was no answer for the. It was just agents whining, which, if you are in this industry long enough, you become very accustomed to. It's a high wine ratio working with real estate agents, and I just wish more agents would stick their ground like I did. You're a fiduciary to your client. If your client wants to do it, as long as it's not illegal or unethical, you can do it. And the MLS and the Zillows and different companies will try to pressure you because they like to think they have the power, but you got to remember, they don't. They don't own that house. They have not been making mortgage payments on that house for 15 years. It's not their blood, sweat and tears, and it's not their name on the title. Your client owns that house. You are representing your client. The MLS is a tool that you can use to get them a good offer. You don't have to get bullied by them. So I'm curious to see what happens with Zillow and Compass. I went on a little bit of a monologue there, but was there any thoughts you wanted to add to that? No.
- [14:25]
B
I will say that the resistance to change within the real estate industry is strong. We have seen this multiple times over. I mean, we saw it with the commission lawsuit that happened a couple years back. And then also just even on a local level, we have multiple MLs in our area surrounding southeastern Virginia. And oftentimes if you are trying to show a home in the another mls, you'll actually get pushback from the listing agents. If you are not a member of their MLS and can't easily use their own key boxes, you'll get pushback from people in other MLs. If you aren't using their MLs's purchase agreement, it is your job as a listing agent to figure it out and get your client the best deal possible. And the fact that we have had resistance showing homes in different MLs from listing agents whose fiduciary duty is to sell that house for as much as possible as quickly as possible for the seller blows my mind. But it's because they're resistant to change. They're resistant to anything different. They don't want to read a different purchase agreement. They don't want to make accommodations to get someone else in the door. You know what we do with our listings with coast coast to coast, we have a contractor's lockbox on every single one of our listings so that if someone that isn't in our MLS has a buyer, we can get them in the door at their convenience and make sure that that's not a hold up. And we will take any contract, we'll review it, we'll review it with our sellers. At the end of the day, it's our job to get that thing sold.
- [15:59]
A
What are your thoughts on if you're a buyer and your agent gives you advice, such as they're presenting offers in two weeks, let's wait till then, or I don't know, something about the way that the contract is going to be written. Is it okay for buyers to go to their agent and say, you know, I'd really like you to call and say, what price could we get it for now versus just listening to your agent tell you what should be done?
- [16:25]
B
No, I think that's a perfectly reasonable request. I don't remember who told me this, but as a real estate agent, you don't make decisions for your client. You are an extension of, of your client. If they say, hey, I want this, you figure out how. You don't necessarily make the decisions for them. They say, here's my objective, here's what I want. And your job as the agent is to figure out how to accomplish that goal. Does that make sense?
- [16:55]
A
Oh, yeah. And you hear talk all the time in a way that shows they don't understand that. Yeah, they'll say, I'm not accepting that offer. Well, I wasn't aware you were the owner of the house. I thought you were representing the owner of the house. That really is your client's decision. Decision.
- [17:10]
B
See that all the time.
- [17:12]
A
Yeah. So if you're the buyer, how do you know when it's appropriate to tell your agent what you want and when? You may be crossing boundaries and you're in the wrong, but you just don't know enough about how this industry works to know if you should stand your ground or listen to your agent.
- [17:28]
B
I think it's going to come down to vetting your agent before you work with them. Honestly. I think you need to have a heart to heart conversation with your agent as you're interviewing agents and figuring out who to work with, what their comfort level is, and throw a couple of scenarios that you have in mind that you think that you'll run into. For example, you know, I'm working with a relatively newer flipper right now. I am willing to go in and let him know how much it, you know, cost me to do X, Y and Z to help him with his rehab estimations. There are other agents that will say, absolutely not. I'm not a contractor, don't ask me for any types of estimations. But I let them know, hey, on my flip that I did you know recently in this area a rami about X to do this job. We can expect that in our contingency for inspections that we're going to get a quote around here. Let's backtrack it to our offer price. At the end of the day, I can help answer those questions. There's other agents that will completely shy away, like entirely from that. So understand what you don't know as a buyer and ask your agent, hey, is this something that you can provide insight into? Does that make sense?
- [18:34]
A
Yeah, I like to say why. That's a bit. I'm just a why guy. I didn't mean if that's a rhyme, but it rhymes pretty good. Like, in my mind, if you can't explain to me why either you are lying to me or you're not intelligent or you're just not articulate. Which none of those are really okay. If you're a real estate agent, you should be all three of those things if you're going to be representing clients. So when someone says, hey, we need to submit our offer on this day. And you say, why? And they say, because that's what the instructions say. It's okay to say. According to what? Is that a state code? Is that an ethical code? Is that a NAR code? Is that an MLS code? None of these are actually codes. They're guidelines that most agents are not forthcoming enough to try to figure out, why do I have to do this? Like you said, they just do the norm over and over and over, what they've always been done. You want a funny example about this, Chris? Yeah. When I first got my license, I was told when I would ask an agent, like, well, what offer I'd be interested in a house for my client? And they'd say, well, we have other offers. And I'd say, okay, where are they at? They say, I can't tell you that. They're like, well, if you don't want to tell me that, that's fine, but you can't tell me that. Yeah, that's unethical. I can't tell you. And I'd say, like, why? Everyone knows you can't disclose the price of the offers you got. And I was like, told this all the time. And I went to my broker and I said, and he's a great guy. We're going to have him on the show at some point. And I said, tim, why are they telling me they can't tell me the price? And he laughed, and he said, David, 10 years ago, it was written in the purchase agreement that unless this box is checked, you cannot disclose this number with other buyers. It has to be kept confidential. So when the buyer submitted their offer, it came with a clause that said, you can't disclose this unless I check a box which lets you do it. Then it became common practice that you never told anybody what it was, because in the offer it said, you can't do that. They remove that paragraph ten years prior, but every agent was still operating under that exact same guideline, knowing, having no idea why they were operating that way. No clue. Yeah. This is a perfect example of agents just do what's comfortable. And here's why I think that's dumb. If you gave me a number, I would go to my client and say, let's write an offer for five grand more than this. They'll probably take it now. Their seller got five grand more than they would have gotten. That's a win for them as a fiduciary, and it's a win for me because my client was given all the information and they understood, if I want that house, I Should pay this price. Everybody satisfies their fiduciary duty. If you say to me, I'm not telling you where they are. I don't know if you're at 600 or if you're at 800, I'm gonna tell my client. And they're like, I don't want to deal with that. Okay, let's find another house. That's one last couple times.
- [21:36]
B
Yeah.
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A
Do you have any stories you want to share of this exact same dynamic?
- [21:39]
B
I mean, it's happened so many times, especially back in, you know, 20, 22, 2023, when multiple offer situations were happening left and right, we would reach out, be like, hey, where are your other offers at? Where do we need to be to, you know, remain competitive? Stuff like that. And they're like, you know, I can't really explain much. I have five offers on the table. You know, write your highest and best. I go back to my client, I'm like, look, this is all the information we have. Do you want to submit? And there were a lot of times where based off the previous offers we've written with that client, I knew they had a great chance at winning. And they just said, you know what? Let's just go find another house. That seller could have made thousands more. Yeah, thousands more. If we had a little bit more information to work with so that we could get our buyer to the table. And, and our buyer, he wanted the house, she wanted the home. You know what I mean?
- [22:35]
A
In California, that could be 50k more. Yeah, 80k. That not making numbers up. You list a house at 1.1, it was not uncommon to get offers at 1.4. Yeah. Some of these markets, like, and then you just discourage them from writing an offer at all. You know what I bet? I bet you they could have made up a number, pulled out of their butt. And I don't think that that's unethical either. I think that they could have just lied and said, oh, it's at 1.2, and it wasn't. Maybe it was at a million. I. I don't know for sure. And I'm not saying the agent should do this. I'm saying if they had lied, I don't know that that's wrong. It probably isn't because they're. They're lying, so to speak, to benefit their clients interest, which is where their fiduciary is. And if they had made up a number like 1.2, and I came back at 1.2 10 or 1.22 or something like that. My client still paid a price they were willing and able to pay in this, the hypothetical situation. And their seller hypothetically got significantly more money than if they say, I can't tell you and we go find, we'll go find another house that wants to sell to us. I've, I always just thought it's madness that someone's selling a million dollar asset or a three hundred thousand dollar asset and they picked an agent that's this stupid, that just can't understand that if you say to me, I'm not telling you, I'm gonna say fine, I'm not writing an offer. Why would I just throw a random offer in a hat and put my clients through the emotional turmoil of crossing their fingers and wondering if they're going to get the house, not knowing if there's two offers or if there's 12. Yep, I'm probably going to tell my client, let's just go find a different seller that wants to play ball. That's what we're going to do. And now you got nothing. So the whole intro to today's podcast agents is so you understand, don't fall into a rut and do things just because you see other people doing them. Ask questions like why? If you're a client listening to me right now and your realtor says we can't do that or this is what we do. Say why. I loved it when I would say you're going to buy an inspection and they would say why? I'm glad you asked. The average, in California, the average inspection contingency negotiation was between 8 and $20,000. That's what I would typically see. You're going to spend 800 bucks now to save a minimum of 8,000 bucks. How is that a bad investment? You're going to 10x your money in a worst case scenario. We're also making it so the house is unlikely to fall out of contract. And if it's such a big deal, such a big deal to pay that 800 bucks, I'll tell you what, we'll do. Whatever. Their highest offer comes back at will counter $800 higher and you can recoup that money there if that's what you really want. When I broke it down, they realized how silly they were actually being. But if they didn't ask me why and they just assume something, they might think I'm ripping them off. They might think I get some kickback or something from the other company. It's just such a good overall strategy to ask people why. Because if it's someone Like Chris Lloyd, he's like, I'm glad you asked. Let me explain how the industry works. And then you feel better, your tensions come down. You feel like this person has your back, they're supporting you. If you don't say why, it leaves you in trust, Phil, where you just, you're trusting, you're hoping that this person is going to give you the right information. Yeah. All right, let's get to Zillow. Break down what's going on with the Zillow lawsuit form me.
- [26:03]
B
Yeah. So this was, they expanded the class action suit. This was a. A group. This, the law firm behind the suit was behind the moral commission lawsuit, kind of the sister lawsuit to the big commission one that hit a couple years ago where they decoupled the commissions between the buyers and sellers. And at first, when they were, you know, going after this, they were saying that consumers were misled by Zillow. When they clicked the contact agent button that you see on Zillow. We've, most of us been on Zillow, we've seen the contact agent button. They believe or what they're claiming is that Zillow misled consumers to believing that they were going to get contact information to the listing agent, but instead their information was sold to buyer's agents that were signed up on their Zillow programs to receive that information as a lead and then pay a referral fee on the back end. So what they're claiming here is that when the consumer is deceived and that these referral fees are paid, there are fees that are artificially inflating the commissions that are being paid in real estate transactions. That's where this really started. They expanded it recently and said that there are also a couple of RICO claims involved here. And they're claiming that they were encouraging any of those buyers that were getting that information, any of those buyers, Agents. Excuse me, that were getting that information, they were encouraging and incentivizing them to pitch them on Zillow home loans, even if it wasn't in the client's best interest interest. We've got a couple more points, but I'm gonna stop right there.
- [27:53]
A
Yeah. Let's break this down. So, first off, this lawsuit started with the contact agent button. So assuming somebody here doesn't understand how that works, you go to Zillow, you see a property that you like, you're a buyer, there's a contact agent button that makes you think you're going to talk to the listing agent who's representing it, so you can ask questions about the House, maybe you can go see it. But. But in fact, what Zillow was doing was selling your contact information to other people that were signed up for their program as a lead. And the thought here is, you didn't know that. I don't even think they complained that you didn't know your information was being sold. There's probably, like, a little Terms of condition box somewhere that covers that. Yeah, it was more. So if I hear you right, that by selling your information to a buyer's agent, you're bringing a buyer's agent into this transaction that's now the procuring cause, which would artificially lead to higher commissions, because now two agents have to be paid where theoretically one could have been paid if they were going right to
- [28:55]
B
listing agent that, and also that the buyer's agent was having to pay 40% referral fee to Zillow.
- [29:05]
A
Oh, okay. So this wasn't like I was thinking, where you pay three grand a month and you get a bunch of leads. This was their flex program, where you get put in touch with a buyer's agent who pays a 40% referral to Zillow, which means they got to charge you more as the buyer to make up for the money that Zillow is getting that's not disclosed to you as the buyer.
- [29:25]
B
Right, right, exactly. And there was a recent discussion with NAR where they were talking about, you know, being upfront and disclosing if referral fees were being paid between agents and stuff. A couple months ago, N decided that that wasn't necessary, that disclosure wasn't necessary. However, they're saying here they're pressing forward with Zillow, saying that that disclosure absolutely is necessary. It's money that's changing hands within a real estate transaction, which would fall under the RESPA guidelines. Anytime money is changing hands with within a real estate transaction, it needs to be disclosed somewhere.
- [30:05]
A
Okay, so you also mentioned that this was tied to the Sitzer Burnett ruling that basically changed the way that commissions were negotiated to where we now have this ridiculous system where buyers have to sign up for a buyer's agent before they really get to know them that well and before they can see houses. So when that ruling came out, they immediately jumped in with, like, ooh, let's start this one, too. Right?
- [30:30]
B
Yeah, they've got the. The contact agent requested tour thing with the referral fees and stuff like that. They've it. They ran this business model prior to the settlement where they had, you know, the contact agent. They'd sell your information to a buyer's agent. Yeah, okay.
- [30:51]
A
No, no, I know you're going with that. So you started it off with the contact agent button. Then it's evolved into a situation where Zillow's having to explain their referral fee system. And now it's gotten even trickier because I believe we talked about this on our YouTube live. Zillow bought Follow Up Boss.
- [31:11]
B
They did.
- [31:11]
A
And they were able to track leads given to agents in their program that are using Follow Up Boss, which I imagine they either required or encouraged you to do. And those sales, this is probably how they made sure they got paid their referral fee. Now that I think about it, they could say, you got to use Follow Up Boss, because we want to know where the lead went and we're going to watch to make sure we got paid our referral fee. But these agents were being encouraged to tell their clients to use Zillow's mortgage company. Can you get into that part?
- [31:40]
B
Yeah, for sure. Now when, when these, these agents were given these leads, they were also, you know, encouraged to refer them out to, to Zillow Home Loans. Now, what the, what they're alleging happened was they bought Follow Up Boss, and through Follow Up Boss, they can track emails, text messages and phone calls through that CRM. And they were incentivizing and giving more leads to agents and threatening to cut agents out of the program that weren't hitting certain quotas with Zillow home loans. So if they weren't closing enough deals that closed with a Zillow home loans loan officer, they could be cut from the program. That is what they are complaining about. That was the update to the class action lawsuit.
- [32:32]
A
So not only were they encouraged to tell their clients, hey, you should use Zillow home Loans, which is a violation of respa. You can introduce your client to a lender, you can probably to a limited degree maybe advise in a way about things. The problem with agents advising on loans is they're not knowledgeable on that, they're not licensed in that they don't know a lot about it. It would take a special circumstance for your agent to be qualified to advise you on the mortgage side in the first place. But not only were they, they told you gotta get them to use Zillow's mortgage if you keep wanting to receive leads from us, but they were following up with these guys, go into their offices where they believed there was no paper trail and saying, if you don't improve your ratio of people using Zillow Mortgage, we will cut you off from our program.
- [33:21]
B
Yeah, 100%.
- [33:22]
A
Yeah. Break this down.
- [33:23]
B
The other things they put in there, and that is, you know, they have 12 confidential witnesses that claim that this happened where they traveled to the offices. And they said, hey, you need to hit these ratios, otherwise we're going to cut you from the program. You know, that is what they're alleging happened.
- [33:38]
A
Now explain to me why Zillow's not allowed to do that. If, if they're giving you a lead, why can't they tell you, hey, it's our lead. You also got to use our mortgage company.
- [33:46]
B
Well, that's, that's part of the Real Estate Settlement Procedures Act. So at the end of the day, Zillow owns both Zillow brokerage. They also own Zillow Home Loans. And when they refer out, they cannot make it contingent on a buyer using Zillow home loans. They can say, hey, every lead that we give you can, you can at least recommend that they chat with a Zillow home loans agent. That's not the problem. What they're saying is that, hey, if you don't have X amount of people use Zillow home loans, we're going to cut you from the program. Now, for example, let's, let's, let's put that with our companies here, right? Coast To Coast Real estate agents, when we take on clients, we recommend the One brokerage. They have fantastic loan products, they do a great job and they get us to the closing table reliably. However, when you come on board with Coast To Coast Real Estate, you sign a form saying that you acknowledge that David Green owns both companies and you are not required to use the One brokerage. However, we recommend you to the one brokerage because they're often the cheapest and best option there is.
- [34:53]
A
Yeah.
- [34:54]
B
The problem is there are also allegations in this class action lawsuit that Zillow Home Loans was by far one of the worst options for the clients. But these agents had to keep referring and close a certain ratio against their client's best interest. And that is the problem right there.
- [35:14]
A
And I can see how they got these 12 confidential witnesses. I'm sure these were calls made to the State Department of Real Estate or whoever oversees the RESPA enforcement. I don't think that someone had to go looking for this. I think these agents probably complained about it because put yourself in this agent's position. You're given a lead by Zillow, they're asking for a 40 referral fee. There is no standard commission, there is no standard referral fee, but the common number that you and I have experienced 99 of the time is 25.
- [35:46]
B
Yep.
- [35:47]
A
Now you're told you got to pay 40%. You're not feeling super good about that. Okay. That reduces your flexibility with your client. Let's say you want to cut your commission to be able to make the deal work, or you really like this person or they really need the money. Whatever the case is, you want to reduce your commission, which was not as big of a deal when commissions were negotiated prior to Sincere Burnett by the seller. But now that you have to negotiate directly with your own buyer, you don't have wiggle room like you used to if you're given 40% to Zillow. So you're already not super happy about this knife to your throat that you're being given. Now they're saying, we want you to introduce them to Zillow. You're probably happy to make the introduction to Zilla Mortgage or Zilla Loan Company, whatever you called it. But what happens if they come back with a higher rate or their customer service sucks terribly? They're really slow getting back to you. Right. Like my experience, when you use agents that work for Redfin or work for a big company like Rocket Mortgage, they are terrible. You don't get good customer service when you go to Rocket Mortgage. You get a. A mercenary who's there to make as much money as they can. They do not have a reputation on the line because you can't really find anything about them. And they don't have a relationship with you. They don't care. They just want to close you. You are literally nothing but a paycheck to them. This is a conveyor belt. This is a drive through. They want to get you in there, get your money and send you on your way and get on to the next person. This sucks. When you're the agent, your client feels like they didn't get good service, they're going to call you to complain. They're going to make a deal fall apart. If you got a loan officer working for Zillow, it's. I'm sure there's a handful of good ones, but it's a tiny percentage compared to someone owns their own company. Somebody has a reputation within the community that they really want to keep squeaky clean because they need referrals coming from other agents. That person's bending over backwards to make this thing work. I own a mortgage company, so I know there's times where a lender says we can't do it and we have the choice of saying okay, and we go tell the Client, they can't do it. Or I go get Christian on the phone and he goes, like hell you can't do it. We're going to make this thing happen, and we'll figure out what we got to do. I send Achilles in there to go take care of it. Right. Like there is a difference with the effort you put into it. Just like if an offer is submitted by Chris Lloyd and the seller says no, he could go to the buyer and say, they said no. Or he could go to the seller and say, why? What do we need to do? Why would you say no? How do we need to structure it? I'm getting this thing closed. There is a difference with the effort you put in. So you're the agent and you're telling them, go to Zillow.
- [38:24]
B
And.
- [38:24]
A
And they go, I didn't like it. The guy didn't call me back. The guy was a jerk. He didn't have a good rate. I'm still waiting on a closing, a loan estimate. I haven't gotten back. They don't have a program. That's what I want to do. I don't want to use them. But, you know, if I don't get you to use them, I don't get the next lead.
- [38:42]
B
Yeah.
- [38:42]
A
How could you possibly provide a fiduciary to your client in. Under those circumstances? You're putting agents in a horrible position.
- [38:50]
B
Yeah. Yeah. And we'll see how it all plays out. I'm really interested to see how this goes, because oftentimes a lot of RESPA things that I've seen in RESPA violations have been in regards to a particular transaction, not future business. So that's one thing I haven't looked into that maybe I'll take a look at here soon, is how does RESPA apply to ongoing business relationships? Relationships.
- [39:19]
A
Yeah. Because in this case, you're not necessarily being told you have to close it to make the deal work, but you have to close it to get the next deal. That's what you're thinking.
- [39:27]
B
Exactly. And, you know, maintain the business relationship.
- [39:32]
A
Now, do you. Do you know if consumers were complaining about this? Is there any information in what you've read so far that says, like, where the origination, where the lawsuit originated from,
- [39:43]
B
all that it said we. We're using the one that was released by Real Estate News, and all that it said was the law firm that was behind the moral commission lawsuit is the one that's, you know, organizing this. And the. The confidential people that they've. They've gotten, the confidential witnesses are agents okay. I'm not as. I'm not up to speed on how many consumers are involved, if any, but it does.
- [40:09]
A
What would be juicy would be if it was Compass agents buying Zillow Leads and Compass, and we're like, hey, we need you to go complain. And it turns out at the end of the day that Compass was behind the entire lawsuit. And then Zillow goes after Compass for something, and we just watch the King Kong versus Godzilla in real estate. If you guys aren't aware, Compass is a brokerage that is funded by Wall Street. I don't think that there's a whole lot of respect in the industry for the way that Compass came into being. They weren't like a small mom and pop shop that got really good and trained agents and grew and expanded. Like, I think the way Keller Williams grew was sort of universally respected. They got so big, it's. I don't know that they have the same level of respect at this point because there's too many offices for the talent needed to sustain it. But they were known as a agent first brokerage with really good training, training. Compass basically just started buying other brokerages and agents when I was in the business. They would go recruit you and be like, we'll give you ten grand if you come here. Just pure mercenaries. So both of these are backed by shareholders at this point. Compass is backed by Wall street money. Zillow is a public company. They've got tons of money. They've got really expensive lawyers, and they are fighting hard for control over the industry. And this makes me sad. I wish we could go back to mom and pop shops. I wish that it was your local Realtor, Bob from ReMax, Mary from Coldwell Banker. And there was a little name on a refrigerator, and that's your family realtor that you call kind of like your primary care physician when you're a kid. What's a pediatrician? Right? Like, this person's the one that sold my mom and dad's house and my cousins. This is who we use. And you had that relationship where they were at your birthday parties and they would come watch you play T ball and like, instead of what it is now, that's just so gross. It's all about where the lead came from and who's getting paid and how the marketing went and shoving it in your face in social media and. And trying to buy your loyalty. And you never know if they're any good or if they're not good. You don't know what their reputation is because it's Easy to get reviews online. The whole thing just sucks. So my hope is that the people listening to this realize this is why we need you. Fighting to listen, lead, generate hard. Because if you don't get in front of that client and get the listing or represent them as a buyer, they're going to fall into the hands of one of these huge corporations that will just chew them up and spit them out and they get whatever they got and it really ruins the reputation of realtors overall, which is not very great right now.
- [42:42]
B
Yeah.
- [42:43]
A
All right, Chris, thanks for joining me today and thanks for sharing this. We'll have to have you back and we'll be talking about Zillow versus Compass for people who want to reach out to you, learn about you learn about coast to coast real estate. Or if someone's listening in Virginia and wants help with buying or selling a house, where can they go?
- [42:59]
B
You can find me at Instagram at Chris Lloyd Underscore Real Estate. And that's L L O Y D. You'll be surprised at how many people misspell my last name.
- [43:11]
A
Lloyd.
- [43:12]
B
Lloyd. I've got an LL Y O D so many times.
- [43:18]
A
Am I the only one that when I hear your last name, thinks of Dumb and dumber immediately?
- [43:23]
B
I have not heard that one yet.
- [43:24]
A
I might be the only one.
- [43:25]
B
Now usually I get the Back to the Future because the actor that played Doc was. His name was Christopher Lloyd.
- [43:33]
A
That's right, he was Christopher Lloyd. Is that what you go by, Chris, to differentiate?
- [43:39]
B
No, I just go for it by short. My name is Christopher Lloyd though.
- [43:42]
A
That's hilarious. I forgot about that. The crazy, wild haired doc. Marty's friend.
- [43:47]
B
100%.
- [43:49]
A
All right, man. Thanks for being here. We appreciate it, guys. If you would like to get a hold of me, just go to David Green24.com I've got a chat button. You can get a hold of me live. If you're a real estate agent and you want to join us, please reach out. Even if you don't want to join us, just tell us who you are, what you're thinking about. We might not be the right fit for you, but we still want to meet you anyway. And most importantly, if you are a broker or you have a broker's license, you're just. I think a lot of states refer them as managing brokers. We definitely want to talk to you because we like to bring coast to coast to estate everywhere so that all the listeners of this podcast can have a place that they can go if they want better training. So definitely reach out to me or Chris if you're in those shoes. And we will see you guys next week on Real Talk. Realtor.