The American dream of homeownership is a journey that often feels like navigating a labyrinth with a blindfold on. While the promise of a skilled realtor can be your guiding light, the shadows of opacity persist, leaving buyers, sellers and agents in the dark. The nagging sensation of leaving money on the table haunts every seller, and even the best agents struggle to offer clarity to buyers. It's not because they lack savvy or don't care; it's that the clarity simply isn't available.
Over the decades, the role of real estate agents has evolved, from intermediaries in the late 1800s to the ethical stewards advocated by the National Association of Realtors (NAR) in 1908. Licensing laws for agents came in the 1920s and the advent of Multiple Listing Services (MLS) in the 1950s. The buyer agency movement of the 1990s emphasized consumer representation. The internet revolutionized the industry in the 2000s. All of these were noble efforts to bring more transparency and accountability to the table; however, the technology to support it hadn’t yet been created. As for agents themselves, the challenges are no less daunting. Trust is broken in the industry, not just between consumers and agents but also between agents and agents. In a recent poll Final Offer conducted, 87% of real estate agents said they do not trust other agents. Enforcing the century-old NAR code of ethics feels like chasing windmills, with no detailed records of offers, ethical breaches hard to prove, and fairness remaining a subjective concept. That is until the recent arrival of Final Offer, the only consumer-facing offer management and negotiation platform for consumers driven by agents.
In an industry with a staggering $2.2 trillion annual transaction volume, control seems elusive and far-fetched. In a world where innovation is everywhere, why is the real estate industry being left in the dark? And, how can consumers and agents alike be okay with it? Well, the truth is, they aren't okay with it, and the pent-up demand for transparency is real, both for consumers and real estate professionals. Headlines are filled with NAR, MLSs and brokerages being plagued by class-action lawsuits related to buyer agent commissions. However, is that really the core problem? Or, is it the overall lack of accountability and transparency throughout the entire real estate transaction?
This is the story of Final Offer, the only consumer-facing offer management and negotiation platform for consumers and driven by agents. It began with four enterprising individuals: Judd Hoffman, J. Danko Fatovic, and Tim Quirk, fresh from their sale of an enterprise staffing software venture, and Compass' top realtor in the Boston market, Kevin Caulfield, who has sold over $1 billion of real estate in his career. Caulfield's wealth of experience allowed him to delve deep into their discussions about transparency. As a seasoned agent, he recounted tales of clients missing out on homes due to agents' desire to keep deals private vs. casting the widest net, keeping them in-house, territorial disputes among agents, behind-the-scenes arrangements that limited the number of potential buyers getting a “last look”, and the pervasive ethical ambiguity where standards varied from one agent or brokerage to the next. The challenge was how to address the industry's long-standing issues with transparency, misconduct and trust to create a better way to buy and sell homes, one which utilizes cutting-edge technology to solve inherent problems of the traditional process.
With $8 million raised during its Seed and recently-closed Series A rounds (including 70 real estate agent investors), Final Offer is making waves in the real estate industry. The momentum is being driven by the industry's compelling need for enhanced transparency and efficiency. As innovative brokerages have signed up for Final Offer’s enterprise offering, the platform's growth is about to soar from hundreds of listings to thousands over the coming months. This rapid adoption is a testament to the platform's value in addressing the industry's true pain points.
Simultaneously, Final Offer is enabling agents to do more and reach better outcomes for their clients, as well as differentiate themselves from their peers. Besides transparency, which in itself is a clear competitive advantage, Final Offer provides tools that are not available within the traditional selling process. For the first time, every interested party gets a real time “offer alert” via text message or email every time an offer is submitted on a property, the price changes or a countdown clock has started (or is near ending). Final Offer's Certification Masterclass is equipping agents with the knowledge and strategies needed to excel using the platform. These Final Offer Certified Agents are winning listing presentations by incorporating a 90-second explainer video found on the company’s website (www.finaloffer.com) that sets them apart in the market. Resonating immediately with consumers, this powerful differentiator speaks directly to their seller's concerns. As a result, these agents are actively gaining market share and solidifying their position as leaders in an industry hungry for change.
As a technology company in residential real estate, we believe licensed agents are essential to consumers achieving their desired outcome in one of the largest transactions of their lifetime and require consumers to work with an agent to make an offer or list their home on our platform. It heralds a new era of transparency, benefiting consumers and agents alike.
How Does it Work?
For the first time ever, any interested consumer can save a search or “like” a specific property to receive real-time alerts by email or text about new listings, price changes, offers made, etc.. Consumers will also see the seller's preferred term options and the associated dollar values assigned to each. This empowers home sellers to be transparent about their term preferences and how they value each option, impacting the net value of every offer. Additionally, sellers now have the option to establish a Seller Committed Price. This is the specific price and terms “threshold” at or above which the seller commits to selling their property, unless a higher net offer is made within a predetermined time frame, or Offer Window. Think of it as a reserve price & terms. This is crucial because, currently, the typical List Price is not legally binding, making it more of an advertising number with no real function. With the Seller Committed Price, sellers can be forthright with potential buyers, stating the bottom line price and terms they're committed to accepting (if unchallenged by higher net offer during the Offer Window).
Furthermore, sellers can present yet a third pricing option on a Final Offer Listing: the Final Offer Price and Terms. This is their “Buy it Now” option. This is a price and set of terms that the seller exposes, and the first qualified buyer who clicks the button is immediately under agreement and the property is off the market. This is a significant development for consumers and agents alike, as it provides a clear path to instantly securing a property. The Final Offer can be made prior to or during an active Offer Window. Never having been available before, the Final Offer has accounted for ⅓ of all properties that have gone under agreement through the platform this year!
One patent-pending aspect of Final Offer is its Term Values feature, which brings unprecedented clarity to a longstanding ambiguity that previously remained hidden from buyers. This function empowers sellers to attach specific monetary values, positive or negative, to various non-monetary terms in their property listings. It offers complete transparency regarding the seller's term preferences and the financial implications of accepting or rejecting them. Consequently, buyers now gain immediate insight into how the seller assesses the worth of their terms and contingencies. For instance, if a buyer wishes to include an inspection contingency, they can readily understand its impact on their offer and compete more effectively against offers that may have waived this contingency. If a seller offers a $10,000 premium for waiving a home inspection, a $500,000 offer with a home inspection term is effectively valued by the seller at $490,000. Now you know! This feature allows apples-to-apples offer comparisons for sellers, even when the terms vary widely; and gives buyers the power to decide whether to make a net higher offer or walk away knowing why they lost - a significant piece of clarity that the industry has been lacking.
Offer Management and Negotiation:
Listings on Final Offer can be configured with any combination of the List Price, Seller Committed Price, and Final Offer Price.
- Consumers are required to work with a licensed real estate agent on both sides of every Final Offer transaction.
- Consumers register on the platform and assign their agent (or vice versa). If they don't have one, their information goes to the listing agent as a lead (included in the listing agent’s subscription price).
- Agents upload their buyers' pre-approval or proof of funds to the platform. This information is shared with the listing agent, allowing them to assess financing solidity and the buying power of each buyer.
- Any offer submitted is instantly presented to the seller and the listing agent in real-time as well as notifying all interested parties that an offer has been made. In addition to creating a sense of urgency in the buying community, this is crucial for ethical reasons, offering the most obvious level of transparency.
- Offers are registered, logged, and time-stamped. Offers are ranked "apples to apples" based on their overall net values, making it easy for sellers to evaluate them and, if the offer details are exposed, for other buyers to know how to beat the current highest (or choose to throw in the towel and move on).
- The listing agent is able to negotiate and respond to each offer not meeting the Seller Committed threshold in real-time with counteroffers. They can counter with Option A, committing to accept an offer after it is publicly exposed for a specified duration without a higher net offer; or, Option B, offering the buyer to come up in price by an amount the seller chooses to secure the property immediately.
The Broader Legal Landscape:
The real estate industry faces antitrust class-action lawsuits challenging the current commission structure. Yesterday’s Sitzer/Burnett Lawsuit verdict resulted in significant damages, potentially weakening the industry, NAR, and ultimately consumers. Federal government intervention to dismantle the commission-sharing structure is a possibility.
We at Final Offer believe that consumers receive significant value being represented and consulted by licensed real estate agents in one of the largest transactions of their lifetime. We also believe consumers finally deserve to understand how the transaction works and should have clear insight into how the offer and negotiation process is being run when buying or selling a home.
So What’s Final Offer Prepared to Do About it?
In alignment with our commitment to ultimate transparency, Final Offer will introduce fields on listings for the listing agent to disclose the buyer agent’s commission, including the party responsible for covering this cost, and any variable rate structures.
Variable rate? Yes, this is the elephant in the room. It’s widely used throughout the industry yet no one wants to talk about it publicly. Understanding variable rate commission is vital because it affects the financial aspects of real estate transactions and the ultimate outcome for sellers, buyers and their agents. It involves a potential reduction in seller commission if a buyer also works with the listing agent. For sellers, it can reduce their commission expenses when the listing agent secures the buyer directly. For buyers, it can influence the competitiveness of their offers. And yet, by not disclosing that a variable rate exists, sellers may leave money on the table and buyers may not have the opportunity to make their best offer. The transparency provided by disclosing variable rate commissions is crucial as it ensures that all parties, especially buyers represented by their own agents, have a clear understanding of how to compete effectively to win the property even when another buyer works with the listing agent. The seller gets assurance that all offers are presented and that they are getting the net best value for their home.
To expedite the nationwide adoption of Final Offer among agents and consumers, Final Offer is now offering free integration with any MLS. This integration would streamline the process for agents, making it more accessible and enabling them to provide greater transparency to their clients.
This integration means that listing agents will have the option to seamlessly use Final Offer’s offer management and negotiation platform as they enter listings into the MLS and buyers' agents will be able to submit offers directly through the MLS app. Importantly, for the first time, all parties, consumers and agents, will receive real-time offer alerts and buyers can come back to the table and better their offer before they miss out. This urgency and inclusiveness will help sellers get maximum value for their home while elevating fairness for all interested buyers.
Final Offer's Role in the Changing Landscape:
Final Offer’s solution to this industry-wide problem is elegantly simple: Final Offer is the only consumer-facing offer management and negotiation platform designed for agents' use, while enrolling the buyers and sellers in the transaction. The technology is extremely flexible, giving agents the control to utilize its features in a way that best serves each one of their client’s unique situation, even as the personality of the deal changes throughout its lifecycle. It introduces accountability, injecting transparency into the heart of every transaction. With these raised standards, and after hundreds of transactions that have gone through the platform this year, sellers are getting more money for their homes, buyers have had the clarity they needed to secure their dream property (or at least know why they lost), and agents have been held to a higher standard of fairness and transparency (and are winning more listing presentations). It's a win-win-win-win all around.
In summary, Final Offer represents a pivotal platform in the evolving real estate industry, offering a transparent, technology-driven solution in total alignment with the changing landscape. It addresses challenges related to commission structures and enhances the real estate transaction experience for all parties involved, in accordance with NAR's Code of Ethics. The real estate labyrinth is finally seeing the light, and Final Offer is leading the way.