Saturday, September 02, 2006

The End Of Real Estate As We Know It?

From the New York Times:

The Last Stand of the 6-Percenters?

Redfin and other innovators, including ZipRealty and BuySideInc.com, are using technology to reduce costs and to save time for their brokers. Agents don’t find and recommend homes — customers do that on their own, using Internet listings — and that enables agents to charge less for the services they do provide, chiefly handling the paperwork and negotiations.

The Internet has radically changed the way consumers buy books and airline tickets, trade stock and learn news. But the real estate industry has resisted change — and protected its commission structure — by controlling the information on its Multiple Listing Service database of properties for sale.

“You can find out more on the Internet about an eBay Beanie Baby than you can about a $1 million house,” said Glenn Kelman, chief executive of Redfin, a licensed broker in Washington State and California.
...
Traditional agents still firmly control the M.L.S., which allows all participating brokers, including Redfin, to view almost every home for sale in a particular area, even those being offered through competitors’ agencies. But the typical 6 percent commission, paid out of the seller’s proceeds and split between the seller’s and buyer’s agents, is under attack because, as economists note, it does not serve consumers well.
...
In many cities, real estate agents have tried to restrict access to M.L.S. information or to limit its use on the database. Some have asked state legislatures to pass laws forcing brokers to offer certain levels of service, a move that Mr. Kelman sees as intended to squeeze out discount brokers. “It’s a thousand tiny shackles on innovation,” he said.
...
The Justice Department and the Federal Trade Commission have fought these tactics in Texas, Kentucky, Tennessee and Oklahoma, among other states, and the department is suing the National Association of Realtors, the powerful trade group of agents and brokers, over what it calls anticompetitive rules.

“Where it comes to our attention that significantly anticompetitive state laws or regulations are under consideration, we approach state officials to advocate that they take into account the benefits to consumers of a more competitive approach,” said J. Bruce McDonald, deputy assistant attorney general for the antitrust division of the Justice Department.
...
Buyers also enter details of their offers — the price they want to pay, the size of the deposit they are willing to put up and, for example, whether they will pay for the termite inspection. Then they click on “Submit.” A Redfin agent checks everything with the customer before passing along the offer to the seller.

“It took eight minutes,” said Perry Webster of Des Moines, a suburb of Seattle, who bought a new four-bedroom house through Redfin. “But it didn’t really matter that it was online. We just liked the business model.” He asked, “Is it really worth $10,000 to ride in a real estate agent’s Lexus?”

11 Comments:

Anonymous Anonymous said...

Real estate agents are a waste of time you ask for one thing they show you something completely different. This article is right with the internet most people do the work themselves, why should we give away money to agents who do nothing but read from the description of the listing that you have already read. Plus with questions that you have for them, like about what association fee covers on a townhome, or what town ordinences are (yes its there territory they should know). Plus you wouldnt have to deal with these scam artist real estate agents who say everyother area is dropping but theres isnt. I think now a days, realators are useless. There are as crooked as lawyers and they come a dime a dozen.

9/02/2006 07:23:00 PM  
Blogger 007 said...

Just a naive question. Do I really need a buyer agent? NO?! How do I handle the paper work? Is my lawyer going to handle it? Would I be in a bad position as the seller has their agents?
No, I am not going to buy now. Wait for 2008. Bob, is 2008 okay?

9/02/2006 08:06:00 PM  
Anonymous Anonymous said...

MLS should put complete address and specific details of every homes for sale listing.

Then, we could ZILLOW the said property for sale and compare it to other homes in the area.

It`s time to change every MLS OUT THERE !!!!

9/02/2006 08:43:00 PM  
Anonymous Anonymous said...

Are there any Pay Back Buyers agents operating in New Jersey?

9/02/2006 09:12:00 PM  
Anonymous Anonymous said...

Yes, RE agents...like most things sold to you nowadays is a created need.

Create a need, and then sell it to them. Oldest trick in the book.

Another reason not to take blood pressure meds, just go for a damn walk, and quit eating junk & drinking the soda.

;)
SAS

9/02/2006 09:17:00 PM  
Blogger jayb said...

Anonymous said...
Are there any Pay Back Buyers agents operating in New Jersey?

9/02/2006 10:12:47 PM

It is illegal in NJ for us to refund our commissions. That's why I've posted before that you should write to the FTC about how anti-competitive that law is. Although, your agent could buy you a nice flat screen or computer. That isn't cash in your pocket, but it's a way around it. Good luck finding one that'll do that.

Only been on the blog for a couple of months, but this is one of the best articles I've read so far. How great would that be, no middleman in RE? Next, you should be able to customize a car online and order it directly from the factory. You pay the freight charge anyway when you buy from a dealer.

9/02/2006 09:27:00 PM  
Anonymous Anonymous said...

It is illegal in NJ for us to refund our commissions. That's why I've posted before that you should write to the FTC about how anti-competitive that law is. Although, your agent could buy you a nice flat screen or computer. That isn't cash in your pocket, but it's a way around it. Good luck finding one that'll do that.

Only been on the blog for a couple of months, but this is one of the best articles I've read so far. How great would that be, no middleman in RE? Next, you should be able to customize a car online and order it directly from the factory. You pay the freight charge anyway when you buy from a dealer.

9/02/2006 10:27:23 PM

So I can make arrangements for the RE agent to buy me that Mustang Convertible I always wanted?????

9/02/2006 09:32:00 PM  
Anonymous Anonymous said...

Yeah whatever...

You KNOW that this won't work in the NYC area (of course because 'It is Different' here) where real estate agents & brokers have a monopoly on the market.

In the NYC area, this industry (along with used car dealers) are the most coddled and any state regulation is merely lip service.

It is hard to believe that it is nearly impossible to rent an apartment anywhere in the 5 boros or the NYC suburbs without paying a 15% brokers fee to a real estate broker in this day in age.

You cannot buy a co-op or condo without the use of the 'Corcorans', the 'Bellmarcs', 'Cityhabitats' or 'Trump'. Of course it doesn't matter if the commission is 2% or 10% because the buyer always pays even if it is buried in the price.

Go peddle this idea out in California or in the rest of the country west of the Delaware River.

9/03/2006 12:34:00 AM  
Anonymous Anonymous said...

it COULD work in NYC if accompanied by a pair of $300 jeans...

9/03/2006 08:50:00 AM  
Blogger grim said...

WWSD.. What would Spitzer do?

9/03/2006 09:47:00 AM  
Anonymous Anonymous said...

9:50:

Please be advised that jeans have officially been upgraded to $350 per a motley fool piece [p. 2] that was posted by another here.

["The motleyfool.com people are usually pretty much on the level and they have joined the bubble-camp"

http://www.msnbc.msn.com/id/14608814

-cs ]

Kindly refrain from any attempts to undercut [bootcut?] pricing on this item.

Pat

9/03/2006 08:42:00 PM  

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