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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (15009)	11/12/2003 6:56:13 PM
From: Don Green	Read Replies (1) \| Respond to of 306849

Our View Realtors err in efforts to horde high commissions For more than a century, America's real estate agents have pooled the homes for sale in a specific area into a Multiple Listing Service (MLS). The listings, jointly owned by local realty firms, link buyers and sellers in a large, common marketplace. But now these same brokers have concluded that cooperation has its limits. Starting Jan. 1, a new rule by the National Association of Realtors will allow agents at traditional firms to deny listings to an innovative breed of discount Internet brokers who are slashing the average 5% to 7% commissions Realtors long have charged. The move rightly prompted an antitrust investigation last month by the U.S. Justice Department and threats of lawsuits by Net brokers. Limiting access to listings harms consumers by turning a competitive marketplace into an exclusive club rigged to preserve high fees. It also shows the failure of traditional brokers to adapt to new economic realities. Instead of learning from their upstart rivals how to harness the Internet to streamline their work and attract new clients, they are trying to erect a wall to protect an outmoded business model. The Internet brings undeniable efficiencies to commission-based industries. Web sites such as Expedia and Travelocity have slashed travel agent commissions on domestic travel from 10% to less than 1% in many cases. Similarly, stock brokerage commissions have dropped dramatically with the arrival of online firms such as Charles Schwab and E-Trade. Yet, traditional realty agents are doing all they can to prevent the efficiencies of the Internet from benefiting home buyers and sellers — or undercutting their lock on the real estate business. Internet brokers have shown that some buyers are willing to do their initial home search online so agents can spend more time selling homes at smaller commissions. Results include: • Lower fees. Detroit-based Home Quarters charges fees for listing homes that are as low as 3%, compared with a national average for traditional brokers of 5.12%. In less than 6 months, the business has grown to 60 full-time employees. Some of its top agents are selling 16 homes per month, according to CEO Kyle Hoylman. •More Information. Houston-based eRealty uses the Internet not just to post listings but also to provide data that can be used to track the market. These include neighborhood trends in prices, the average periods homes stay on the market and up-to-the-minute listings. Five years in business, it is now in 13 markets and has sold more than 1,000 homes. Traditional brokers say their commissions are justified by the personal service they offer, along with their expertise and offices customers can visit. They also say the MLS lists are valuable private property that they have compiled to use as they see fit. But the value of the MLS lists stems from the fact that local realty firms band together to create a single database of properties in an area. Denying that list to upstart firms that pay appropriate dues and follow reasonable rules only hurts competition. Regardless of whether the Realtors' effort to thwart online competitors survives a court challenge, traditional brokers have a tough fight justifying exorbitant charges in the Internet age. They would be well advised to take a cue from their rivals instead of pursuing an anti-consumer course. Cont: