Wikipedia says that the real estate industry is "Still in progress (due to legal or structural obstacles)" of being disintermediated. Is it right? What would happen if 90% of the real estate agents retired in the next six months?
Would housing prices go down?
Would the 'time on market' go up?
Would transaction costs (commissions) go down?
My first reaction is that housing prices would not decrease. Time on market may actually decrease because with the lowering on transaction costs people would be less concerned about losing money if they needed to sell sooner than anticipated. Real estate investments will be considered more liquid.
So that leaves me wondering, would service levels experienced by consumers go down?
The average 'top agent' handles at least 10x as much business as the average mediocre agents do. Does the service levels provided by the industries top agents meet or exceed the service levels provided by our mediocre agents?
An absolutely excellent and timely question. One we would all do well to study and be prepared to offer an answer.
There is no doubt that "flat fee" or "limited-service" brokers are here to stay, and we will always have to deal with their affect in our respective markets.
The onus on our industry (and I'm speaking to premium, full-service brokers/agents here) is to do a better job of justifying our existence and creating more demand for the viability of our services. Differentiation Selling.
The problem is that too many times we short change ourselves. In our willingness to compete, we devalue the level of our services and force ourselves to do more for less.
Yes, top agents get the job done, right. Getting a home sold is not just about the cost. It's about getting it sold right the first time, on time and without issues that will come back later to haunt someone.
Leslie, I don't really think agents have anything to worry about. At least in the short run. What I am contemplating is whether or not the industry, how it is set up now, is the best for the consumer.
Could it work differently? Better?
Kristal recently wrote addressing the issue.
Rich, I agree entirely with your comment! Although the average consumer doesn't care enough about real estate commissions right now. I do sense that the sentiment is changing.
I accidentially stumbled upon this old article, although the topic itself is still very relevant and thought if anyone was still interested in the disintermediation stuff, as well as the flat fee brokerage model, then I have a place I can recommend you go for some great reading. Get yourself the latest copy (the report is published at the beginning of every year) of Stefan Swanepoels report on real estate trends. It is absolutely an eye opener. Expensive but worth every penny. Every year I read about more stuff and get more ideas from this one report than going to any number of conventions. I got my copy of his report at www.retrends.com
John
PS. By the way Stefan does not think we are going to be disintermediated. He does say we will have to change and thats the exciting part.