Dan Lowery posted a following question: “Why the attack against realtors?” http://activerain.com/blogsview/130113/Why-the-attack-toward
In Poland where I was born we have a proverb "there is no fire without a smoke". It certainly applies well to our (agents and brokers) situation. There are many reasons (often justifiable) why people pick up on real estate professionals. The interesting question is, why now? Why now Realtors became a "hunt of the day"? Here are some reasons as I see them:
- Perception that Realtors hold a grip on the real estate market and do not allow low cost alternatives (it is irrelevant if it is true or not – the perception is out there).
- Launch of companies such as Zillow and Trulia demonstrated that there are alternatives to sometimes rude agents and brokers and uncooperative MLS (by the way – MLS feels the heat – there are many positive changes happening and the quality of MLS service is improving).
- Proliferation of Internet empowered clients and enabled them to do their own search and research
- Resulting perception that agents do less now (as clients do some of agents’ “old job”), but still charge the same commission.
- Lack of understanding of tremendous competition between for listings (and thus lower commissions) due to the influx of new agents over the period of last several years).
So, what is the solution? In my opinion – we need to do more for less. It means that we have to provide more service – beyond house search, negotiations and the closing (yes it is a lot, but let’s face it. With the tools we have now and will have in the near future, it is easier and takes less time). What service should we provide? It is up to us to define it.
Regarding the commissions, will they go down to $500? I don’t think that it will happen anytime soon. They are down to 5 – 5.1% now and probably 5 years from now the average commission will be in the range of 3.5% to 4.5%. At the same time, we will have many competent low service providers as many transactions will qualify for it, and agents and brokers who still will be able to charge 6% or more. Will their service resemble the service we provide today? In some cases it might, but I believe that to earn high commissions in the future we will have to provide more service.
What do you think?
;)
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Artur,
I believe that we have created an income model that will sustain the changes coming to our industry. I anticipate vast changes to how agents are compensated, but am entirely against the $500 (just an example) fee for MLS type of business.
Competent agents will always be valuable to the consumer, but the consumer will not pay as much in the future. I think the selling agent (representing the buyer) should be paid more than the listing agent, and our company is set up that way. Our goal is to get FSBO money into the real estate agent's pockets, and have the FSBOer still feel like they are getting a great deal.
Todd Murphy, Founder, Zero Commission Real Estate, Inc.