Online Real Estate Brokers vs. Traditional Agents: Is This War?
- May 29, 2008
As part of the settlement announced Tuesday in an antitrust case between the Justice Department and the National Association of Realtors, non-Internet-based brokers will now be allowed greater use of multiple listing services, according to the New York Times.
Online brokers felt "that the industry’s practices have denied them the chance to make full use of the multiple listing services," the Times said.
It seems that wasn’t the only complaint online brokers had about the industry.
Today–while perusing the Internet for my daily housing news fix–I stumbled across this press release from ForSaleByOwner.com, in which the site offers data "to provide a pricing comparison between homes being sold by its customers and those being sold by real estate agents."
That URL shouldn’t be unfamiliar to anyone in the real estate industry–the site is becoming a growing threat to agents as home prices decline and sellers look for a way to make more money off the sale of their home.
Cutting out an agent commission is becoming a more popular choice, and sites like ForSaleByOwner.com give sellers a way to do it.
Buyers and sellers, of course, lose some things in the process–agents’ regional knowledge, a personal touch–but there’s no disputing it: Do-it-yourself home buying and selling sites are picking up steam.
According to ForSaleByOwner.com, the median price of homes it sold during the first quarter of 2008 was $267,900. The National Association of Realtors–as the release says–estimated traditional agents’ median home selling price to be $196,300 and ForSaleByOwner.com’s to be $180,000.
"For too long, interest groups representing real estate agents have flooded the marketplace with questionable data on ‘for sale by owner‘ homes to discredit this method of selling a home and protect agent
commissions," Greg Healy, the site’s vice president
of operations, said in the release. "The truth is that homes in a wide range of prices are sold ‘for sale by owner‘ because all consumers want opportunities to save on paying commissions."
It’s understandable that the NAR wouldn’t want sites like ForSaleByOwner.com to cut into its agents’ client base; and sure, ForSaleByOwner.com is going to stress that the economy is weak, and that the site feels it can save consumers money.
But could the site’s median selling price for the first quarter–in which no housing data we read was really uplifting–be more than $70,000 higher than NAR’s agent-based selling price?
If NAR is wrong and the site actually did sell homes for a median price that was $71,600 higher than real estate agents did, well–that is a big difference.
The ForSaleByOwner.com selling price also significantly higher than the $202,300 median price that NAR said homes were selling for in April.
Who knows? But one thing was clear from the press
release–there’s a big divide growing between traditional real estate agents,
who are in the midst of a troubled market, and ForSaleByOwner.com,
which is going after that market.
Who do you think will win?