@everyone read this: http://www-siepr.stanford.edu/workp/swp07001.pdf
it is more informative than my babble.
@Joel Owens I think there is a major difference between commercial and residential. None of the residential protections exist on the commercial side and the product is more complex. I also think property managers are distinct from the sales folks. My following comments are mostly directed at the residential sales side because the transactions are all pretty homogenous.
At least in Texas, contracts are promulgated for residential. In most residential deals, agents are tour guides. They cannot:
- Appraise
- Give legal advice
- Inspect the property
- Work with the lender
- Check the title
I am not saying they are lazy and do nothing. Most agents work really hard. But the hardest part of being a residential agent is finding and keeping clients. Most agents I know spend much more effort on that than actually serving those clients. Open houses are the epitome of this. Agents do open houses to recruit clients, not to sell the open house. Half the open houses I go to are not even listed by the agent doing the open house.
The best agents are project managers. Some are much better than others of course. But even the best are not making a 6% difference. Check out this study:
http://www-siepr.stanford.edu/workp/swp07001.pdf
It shows pretty clearly that the value is not there for residential (assuming you discount the monopoly of the MLS).
Will residential agents go away or reduce commissions? I do not know. Should they? Yes, in my opinion. However, the systems and laws in place would have to adapt first and that will be slow. The public will also have to be retrained. The substantial agent marketing out there has lead to many people being afraid of FSBO.
I myself am an agent because the system is stacked against those who are not. I was at a board training meeting recently and one of the lobbyists was there. In his own words he said this: "Does anyone in here ever use a travel agent? No? Do you know why? It is because there was no one like me watching their backs." Much like real estate, there is expense and risk in travel. But only a few people use travel agents or a tour company. It is because there is now more information available about travel and the systems are in place to make transactions happen smoothly. Those systems are not in place yet for real estate largely because of the MLS monopoly and the lobbyists.
I know this post is toxic. I have steered clear of posting on it because of the number of agents on this forum. For those of you who are awesome agents, this is not about you. But even you know what I am talking about. 90% of your co-workers need a different profession. Any agent who can be replaced by a website or a security guard, should be.
