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 viable option in the future.

The implications for agents and brokers are monumental. As an example, agents currently selling 12 homes per year at an avg price of $750K at a 3% listing-side commission 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 either 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.  In short, agents and brokers will need to join the WITTIO movement to remain competitive and relevant.