May 8, 2006


It's always 'OPEN HOUSE' as real estate goes online (Noelle Knox, 5/7/2006, USA TODAY)

Nancy Teer-Sims's] story illustrates how the breadth of information now available on the Internet is shifting the balance of power in the real estate industry, giving home buyers and sellers more control over the deal than ever before and fueling competition among agents.

Gone are the days when real estate agents could guard the information about homes for sale in their Multiple Listing Service. Now, buyers and sellers can see all the homes for sale on 800 regional multiple listing services on the Web. They can see thousands of newly built homes for sale and apartments for rent nationwide. They can view aerial photos of homes and neighborhoods. They can get appraisals or see how much the house down the block fetched. They can shop for loans and compare mortgage rates. They can check out local schools and community features for towns across America. They can ask questions and get answers in online forums.

And all of it's free.

"The Internet has done what no consumer advocate could ever do: It has reduced the distance between the consumer and the real estate expert to the point where the consumer is so much more informed, they don't need the expert as much as they used to," says Art Raby, an agent for McColly Real Estate in Valparaiso, Ind.

The Internet is also revolutionizing the job of real estate agent — from the way agents attract clients to how they advertise and show properties. When a buyer walks into his office, "They've seen the inventory of homes for sale over the Internet, so I don't have to show as many homes, so I can sell faster and sell more," Raby says.

But he acknowledges a downside: "The consumer sees us not working as many hours for getting the commissions we used to get. So commissions are under pressure."

The Internet, as it turns out, isn't revolutionary, just evolutionary, dispersing information more widely and efficiently so that markets may be somewhat smarter and more efficient.

Posted by Orrin Judd at May 8, 2006 8:51 AM

The downside, according to the agent:

"The consumer sees us not working as many hours for getting the commissions we used to get."

(And are probably still getting.)

Mind you, the downside isn't that commissions are actually going down (they're merely "under pressure"), but that the consumer sees the agent not working as many hours for the same commission.


Posted by: Brian McKim at May 8, 2006 9:40 AM

Information monopolies are becoming a thing of the past. The implication for retail financial services will be even greater. The costs are coming down dramatically. How the big brokerage firms will be able to maintain the traditional level of fees and commissions is beyond me. Anyone still paying those fees is not paying attention.

Posted by: Tom C.,Stamford,Ct at May 8, 2006 11:37 AM

Has got a surprise for these folks, or what? BTW, if you ever want to know why the "housing bubble" will turn out to be more than managable, will be a big reason why.

Something about "transaction costs" going down:)

Posted by: Brad S at May 8, 2006 12:16 PM

It had always been the case that the only service provided by a real estate agent which could not be accomplished by a reasonably intelligent lay-person was marketing. All the real work was being done all along by lenders and title companies.

If one may locate a buyer, as by word-of-mouth, newspaper ad, or, now, by the internet, a fair fee for representing a seller or buyer in a typical real estate would be based on a reasonable hourly rate, not a "commission."

Every time this comes up, the real estate guys b*tch at me for saying this. Fellows, things change. Go sell buggy whips to the Amish.

Posted by: Lou Gots at May 8, 2006 2:02 PM

Mr. Stamford;

Security and stability. Most people would like to have an information monopoly on their own financial data and will pay to maintain it.

On the other hand, the fees I have been paying via a big brokerage house has been trending down and I expect that to continue. I pay attention and it tells me that if I just wait a few years, I'll get the same fees at my current institution as the discount guys have, with less risk.

Posted by: Annoying Old Guy at May 8, 2006 3:09 PM


What additional risk? Access to financial data? Please explain, if you would.

Posted by: Tom C.,Stamford,Ct at May 8, 2006 4:54 PM

Sorry, I was off line for a couple of days there.

The Internet is becoming an increasingly hostile place and I see no evidence that the trend will abate anytime in the near future. Protecting my financial data that is stored on someone else's computers requires well designed, well funded, and well maintained network security by those who own the computers.

Posted by: Annoying Old Guy at May 10, 2006 12:56 PM

Yes, so it's not safe, not that it needs to be.

Posted by: oj at May 10, 2006 12:59 PM