If you do nothing else this afternoon, go read the full editorial over at USA Today on why real estate agents are doing everything they can to thwart innovation in the market. The combination of technology and opportunity are going head to head with entrenched and politically connected protectors of the status quo and they are using every tool to protect the 6% commission.
And the sad part is with all this political muscle and money spent, they are going to lose. The smart real estate agents will recognize the opportunities presented and be very, very successful. The luddites will watch their industry get swallowed up and end up working in another industry. The following is a excerpt of the article, but please read the whole thing, especially if you are in the industry.
These questions have a common answer: because the industry is intent on keeping things that way. Through a combination of industry rules and recently enacted state laws, the major brokerage firms and the National Association of Realtors (NAR) are thwarting innovative, Internet-based real estate businesses that could bring real change to a business that is inefficient, anti-competitive and anti-consumer. And, oh yes, could bring huge savings for people who now pay ridiculous commissions to sell their homes.
These new companies, which come with such names as Home Quarters and ZipRealty, offer lower commissions for varying levels of service. If they gain a foothold in the real estate business, they could do for it what companies like Charles Schwab and E-Trade did for the stock brokerage industry – provide a low-cost alternative for do-it-yourselfers, while forcing down fees across a broad range of service levels.
While that might sound good to people buying and selling homes, full-service brokers see it as a threat. In the past two years, industry lobbyists, the NAR and local Realtor boards have used their clout with state legislatures to wall themselves off from competition. Some of their increasingly blatant tactics include: via Yahoo! News and USA Today.
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