Housing Expert Predicts the Fall of Real Estate Commissions

Those seeking a Florida home loan have been wondering the same thing for awhile now: why must I pay such a high real estate commission?

Soon, this may not be the case. According to Brad Inman, founder of Inman News, factors beyond the control of real estate brokers will drive down their commissions over the next few years.

A few of the crucial factors behind this belief are:

• The recent launch of websites that perform many of the traditional agent functions. These new sites provide such services as home free home appraisals, neighborhood information and advice to sellers on how to market their properties.
• The Department of Justice antitrust lawsuit against the industry’s main trade association. The legal issues facing the National Association of Realtors have turned a spotlight on the industry - and its commission structure. The DoJ charges that realtors collude to prop up commission rates through such anti-competitive actions as “boycotting” discount broker’s listings and lobbying state legislatures to enact regulations against unbundling of services.
• The departures of some industry veterans for firms that practice new business models such as discount brokerages or fee-for-service models. Have they recognized that change is coming and want to be in the vanguard?

Reaction around the home loan world

Many of the responses Inman received could see his point. Others disagreed. One blogger wrote that it was all about choice.

“A buyer may choose a broker just to be the first to know when a property hits the market or even before it hits the market. Brokers know these things, not machines. A seller may choose one who has a reputation for getting the best price quickly.”

Many bloggers emphasized the skills and knowledge that experienced brokers bring to transactions and concluded that consumers are willing to pay for expertise.

But another comment pointed out that the industry is filled with brokers who merely attended an 80-hour class to receive their licenses. Vast numbers of people became agents during the past few years. How much in the way of expertise or experience do they provide to their clients?

Count Lisa Maysonet, a senior vice president of Prudential Douglas Elliman, a leading New York broker, as one who is skeptical that commissions will be forced down by the factors Inman cites.

“No veteran broker will take a listing at a lower commission,” she says. “They are doing more work than ever and sellers expect more from them. That’s especially true at the high end of the market.”

She may be right. High prices make sellers nervous. When the stakes grow, they need the reassurance of dealing with an experienced pro.

In the end, the choice is yours to make. Do you wish to go through a professional for the best deal on a Florida home loan? Can you really sign online and receive all the real estate information you need? Due to the ease and affordability of the Web, it’s probably worth a few hours of your time to explore it and see what’s out there. Florida real estate agents can wait.