The Great Online and In-Person Real Estate Debate
- Dec 15, 2007
According to a press release issued this week by ForSaleByOwner.com, real estate agents and brokers will collect $55 billion in commissions
during 2007–a $19 billion increase from 2000.
Really? During the housing slump?
Well, housing figures always need to be looked at twice if they’re compared to numbers from several years ago–and 2000 predates the residential boom that we’re currently seeing a correction from. So perhaps, yes, agents and brokers are up in comparison.
But you’d be hard-pressed to say they’re doing well. (Believe me–I just refinanced my mortgage, and if I even so much as made eye contact with a broker on the street, they called me about 90 times "just to chat." Times are tough out there.)
And ForSaleByOwner.com does stand to benefit if frustrated consumers believe their already-hard-to-sell-home is going to reap a real estate agent huge benefits, because homeowners are then more likely to use online selling tools. Like ForSaleByOwner.com. We’ve come full circle.
Not that the other side is touting online sales sites’ success. In November, the National Association of Realtors reported that the level of for-sale-by-owner (not involving the site) transactions was at a record low. And, of course, NAR would likely rather you buy or sell your home using an agent because that’s who makes up the NAR’s membership.
And, given the group in October said at a Senate Finance Committee hearing that 30
percent of its members lack health insurance–an astounding 84 percent of which because they just can’t afford it–I don’t expect any press releases soon from NAR rejoicing over this year’s high real estate agent revenues. (I could understand some agents opting out of getting insurance on their own, but 84 percent can’t actually afford a couple of hundred a month for something as important as health care? That is not a good sign.)
So why all this subtle, press release bickering between the online sales folks and the in-person groups? With a shrinking number of buyers, competition is fierce–and, according to a New York Times article from June, the two groups may be struggling to prove one provides better services than the other.
Homes sold on FSBOMadison.com, a Madison, Wis. for-sale-by-owner Web site, netted an average price of $175,068, according to a study based on homes sales from 1998 to 2004 in Madison, Wis. Ones sold on a real estate agent-type multiple listing service went for an average price of $173,205–when taking into
account the study’s margin of error, roughly the same amount the Times said.
So who wins? For now, no one. But I’m sure, as more studies are done and more items released on the newswires, the debate will rage on.