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Charles Schwab vs. Flat Fee MLS Pioneers
 
In 1971 Charles Schwab incorporated First Commander Corporation and in 1972 he bought out his partners and renamed it Charles Schwab and Company.  In 1974, Schwab had the good fortune of an SEC pilot program that deregulated some brokerage transactions and in 1975 the SEC mandated negotiated commissions for stock trades.  At this point most brokerages raised their fees.  Schwab in contrast started what he called a discount brokerage.
Schwab’s discount brokerage was really an unbundling of trading and advice much like Flat Fee MLS Listings are an unbundling of marketing and transaction management.  This meant that instead of Schwab supporting a force of trained advisors that demanded high pay, he could use back office staff to place the trades and investors would be free to do their own research.  For investors that wanted research and advice, he offered separate services.
To understand how this compares to Real Estate, one has to examine the different structure between the stock brokerage industry and the real estate brokerage industry.  Stock is largely national.  The National Association of Securities Dealers (NASD) is a trade group that is closely supervised by the Securities and Exchange Commission (SEC).  In contrast the National Association of Realtors ... more

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