Why Real Estate Agents Have Good Reason To Fear The Web

from the marginally-useful dept

There have been a number of stories lately about real estate professionals lashing out against online real estate services like Zillow and RedFin, which are seen as threats to their traditional business. A new study done by two economics professors sheds some light on why they might be feeling embattled. In an examination of the housing market in Madison, Wisc., the pair found that homes sold using brokers did not fetch sellers any additional profits after commissions were taken out. What makes Madison interesting is that it has a thriving website of for-sale-by-owner homes, so sellers there don't have to do much legwork if they want to sell on their own. This means that real estate agents may still add value in communities where such services aren't popular, but it's value that could disappear as services like RedFin startt to take hold. Thus the agents' fear seems to have a legitimate basis, and their behavior conforms nicely to the rent-seeking tactics exemplified by similarly organized professional groups.

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  1. identicon
    Withersteen, 8 Jun 2007 @ 3:06pm

    I believe the economic point for Realtors to heed is that their monopoly on information is coming to an end. The average homeowner can do as good a job as the average Realtor, IF they want to. This competition, if allowed, will drive down the average Realtor's commission. Realtors, so far, are trying to attack the new realities of the market, rather than accommodate those market changes. Not a recipe for long-term success in my opinion. Just to highlight the disconnect of the MLS to the realities of the changing market:

    “We’re trying to tell the public that they pay 16 percent more if they use us?” said an exasperated David K. Stark, owner of the Stark Company, one of Madison’s largest real estate firms, when asked about the national association’s claims. If that were true, he said, “all buyers should shop FSBO.”

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