The real estate industry is facing many challenges through discount brokers and new technology. The model predicated on information hoarding and control is now forced to face that the consumers are empowered in ways that never have been seen before. Yet the commission and cost structures have barely changed.
One reason why this is true was discussed in Kenneth Harney’s article today, most state regulation committees are dominated by real industry members. While it is crazy to think that regulation organizations should be devoid of industry members, being dominated by industry members can stifle innovation and opportunities for consumers. Instead what we find is that innovation is squelched to protected vested interests.
So if you are looking for real estate innovations like broker rebates coming out of state regulatory commissions, look again. They will be working hard to maintain the status quo.
The CFA examined the structures and membership of regulatory commissions in 47 states. As of April of this year, 79% of all real estate commissioners were either real estate agents, brokers or licensees, or individuals who otherwise earn a living through real estate transactions, such as closing attorneys or title agents.
Four states — Idaho, Louisiana, Mississippi and Nevada — require that all commissioners be real estate brokers or salespeople. Another 11 states — Colorado, Kentucky, New Mexico, Ohio, Utah, West Virginia, Georgia, Indiana, Missouri, Oklahoma and Washington — require at least four-fifths of commissioners to hold real estate licenses. Only two states — Rhode Island and Pennsylvania — prohibit licensed real estate agents from constituting a majority of commissioners.
Illinois, California and Minnesota are the only states that appoint “professional regulators who work full-time to oversee the real estate brokerage marketplace,” the CFA says. via KENNETH HARNEY
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