With the emergence of flat-fee brokerages and artificial intelligence, the real estate brokerage industry faces an inevitable bifurcation into: (1) high-value agents consistently achieving results in excess their compensation and (2) low-cost services that produce conventional results.

Why should home-sellers pay 5 or 6% to an agent whose results are comparable to that of a flat-fee service?  On a $500K sale, why pay the listing broker $12-15K, when $2K will get them the same result?

On the other hand, if an agent can sell a $500K home for, say, a 5% premium over that of a flat-fee agent, the home-seller wins ($25K premium - $15K listing-side commission = $10K net benefit to the home-seller).

Agents and brokers will ultimately face three choices: (1) become a high value agent, (2) join a super-discount/flat-fee service, or (3) exit the business.  In light of the emergence of (1) and (2), the value proposition of agents today will not remain a viable option for agents in the future.

The implications of this bifurcation for agents and brokers are monumental. As an example, agents currently selling 12 homes/year at an avg price of $750K at a 3% listing-side fee make gross commission income of $270,000.  To replace this income under a flat-fee model at $2,000 per transaction, the agent would need to close 135 transactions, or 11 times the number of transactions.

The choice is clear.  Home-sellers will gravitate towards either the high-value agent who will achieve superior results on their behalf or a discount service that will save them on commission.  Gone will be the days of relatively high payouts to agents for achieving only conventional results that could be accomplished more cost-effectively with a flat-fee service.  In short, agents and brokers will need to join the WITTIO movement to remain competitive and relevant.