Are Hybrids another Fad or the Future?

There’s been a lot of discussion this year on commission rates and compression and we’re seeing several alternatives being tested out in the market.  Now, “Hybrid Brokerages” seem to be the latest threat to the traditional way of selling real estate.

Discount brokerages have been popping up all over the country and as we reported earlier this year in our story “California Sees Surge of Discount Brokers and Listing Services” some California brokerages are offering rates as low as 1% commission.

Now, hybrid brokerages are positioning themselves as offering traditional RE agent services while offering some discounted services. Redfin is an example of a hybrid brokerage that still embraces some traditional practices like hands-on agent service.

Redfin is leveraging many technologies that consumers like including: Property and neighborhood search websites, transaction, task and contact management systems, instant-offer and showing-scheduling tools, 3-D home tours, property search websites, online lead generation, automated valuation and comparative market analysis (CMA) tools, digital lockboxes and interactive education resources.

Redfin charges sellers a listing fee of 1.5 percent and recommends clients offer a standard commission split to brokers for bringing a buyer to a sale. So sellers who work with Redfin usually pay 4 to 4.5 percent in commission, compared with the going rate of 5 to 6 percent.

Others like SOLOpro offer part of the buyer’s broker’s commission split back to the buyer in the form of a refund.

We’re also seeing, many traditional brokerages adopt technology and business practices from hybrids. Traditional brokerages are watching the hybrids closely to see what works and what doesn’t and they quickly jump on the features that resonate with buyers and sellers. Traditional agents have also experienced firsthand that these hybrids don’t always hire experienced agents which makes them work harder in managing a sale to closure.

In a seller’s market, discount commissions tend to pop up but if the market turns this could quickly change.

What do you think?  Are hybrids the future or just another fad!  We’d love to hear from you.