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 (NAR) has little or no oversight. State Real Estate Commissions have power over licensees but little power over National, State or Local trade associations.
Schwab got his start in a nationally (or even internationally) regulated medium. Flat Fee MLS Pioneers, immediately came up against the wrath of local Realtor® associations. Schwab was free to grow without persecution where Flat Fee MLS Brokers were taken out back and tarred and feathered. Sellers were told by local brokers (and still are as of this writing), you can’t List in the MLS for a Flat Fee; that’s illegal. Sellers were told by traditional Realtors® (and still are as of this writing) if you list with a flat fee firm, we won’t show your listings. Perplexed sellers asked….Why? We are still offering you a 3±% commission? Traditional Realtors® rarely have a response. However, Realtors® did not count on one major change; Realtor.Com. Realtor.Com empowered buyers to begin telling Realtors® what they wanted to see. Realtors® were no longer picking the houses. This was the gateway that opened for Flat Fee MLS Listings
Ava Terry Broker with Avar Realty and www.HuntsvilleFlatFeeMLS.com are Members of the Chamber of Commerce, National Association of Realtors and North Alabama MLS Service. We are the premier flat fee discount brokerage for Huntsville and North Alabama. For more information contact one of our flat fee agents. Sell your home with state of the art Flat Rate MLS marketing concepts. Our method saves you thousands without scarificing quality.