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... Eventually, I'd like to see us get to where things are in Europe -- where the buyer and seller can take care of business with a single page at the courthouse...
I wouldn't hold my breath. Yes, information wants to be free -- but -- George Stigler won the Nobel Prize in Economics for demonstrating, among other things, that government laws & regulations exist to protect the regulated (in this case, all the "remoras" you referred to earlier.) Any move towards the European style to which you refer would immediately be countered with massive lobbying efforts by the remoras to protect their income streams - all in the name of "protecting the consumer."
I wouldn't hold my breath. Yes, information wants to be free -- but -- George Stigler won the Nobel Prize in Economics for demonstrating, among other things, that government laws & regulations exist to protect the regulated (in this case, all the "remoras" you referred to earlier.) Any move towards the European style to which you refer would immediately be countered with massive lobbying efforts by the remoras to protect their income streams - all in the name of "protecting the consumer."
We're already AT that phase. An industry doesn't spend more than 1 trillion on congressmen for nothing.
Anti-tobacco people were right all along, just took awhile for the truth of "cigarettes cause cancer" to break down the walls built with tobacco money. I'm sure the Realtors see what's coming. They're just doing everything they can to delay the inevitable.
Won't work, though. Once everyone in America knows someone who has purchased a house solo -- or someone who has picked up a RE license* and bought a house -- the tide will turn.
* I went this direction. It took me three days and a few hundred dollars for the license. (The exam is a JOKE. They don't ask anything that could possibly be useful to help a client.) Then I had to join GLVAR, which was another joke. We literally watched clips from Mayberry RFD -- again, all the info presented was "how not to discriminate" and "how to be honest."
And people trust their life savings to a group that needs honesty lessons.
So I joined a discount brokerage, bought a house, and then put my license on inactive status. It did it's job. Even with the fees, dues and exams, I saved about $10K -- not bad for a couple weeks of my life and a background check. Thing is, I could have skipped all the licensing baloney -- they really hammer "how many feet in an acre" into ya -- and just persuaded the listing agent to reduce his listing fee from 6% to 3% on top of the price concessions I was able to get from the seller.
EDIT -- For people who are interested, you can take a real estate course online. (You don't even have to be in Nevada to take the course.) The course supposedly takes two weeks, but most people can finish it in a couple days. Then take the exam over at PSI on Flamingo. But you'll have to join the Realtor's cartel at GLVAR if you want to buy anything other than new construction. So that's a wasted afternoon in a big hall watching TV clips and learning more about anti-discrimination laws. Then you pay several hundred for Realtor dues. Then you have to find a broker -- find one that takes a flat amount off the top (or a small percentage). Just tell the broker what you want to do, and see if he or she will go for it. It's basically free money for them.
Finally, go house shopping. Give the listing agent your license number as soon as you see him or her. (Big difference in the way they try to "sell" you the house, by the way. Huge.) Put in your offer and then collect your "commission" after you close. No big deal.
Naturally, it makes no sense whatsoever to do this for an inexpensive property ($100K or less). In my opinion, once the savings goes above $5K, the time and effort is worth it.
What, exactly, could the average person do with the internet in 1996?
Jack squat.
We're still in the middle of this social revolution. Be patient, it's nowhere near finished.
You have a valid point.
I think what you are *really* arguing is that the "value add" to you of a real estate agent is substantially less than the 3% paid to the buyer's side through the transaction. If the "remoras" provided all the services they provide today at a cost of $XXX (fill in the blank) you would find the "value add" fairly compensated and you would gladly use them.
***
15 years ago I needed low-hanging tree branches trimmed on my property - it was a fire hazard & I received a letter from the fire department (about a dozen trees). I received bids from several companies to do the work. They were extremely expensive -- they wanted an arm and a leg. SOOO... I educated myself about tree trimming using the internet & the library, and for about $75 I bought a low-end chain saw & did the work myself. It took much longer than I thought - most of the day (including chopping the wood into manageable chunks & carting it off).
The next day I woke up with excruciating pain -- wicked "tennis elbow" from hours of squeezing the handles of the chainsaw. It put my right arm pretty much out of commission for months and it took years to fully recover (I refused to have surgery).
The bids were "an arm and a leg"; by doing the work myself I got it half-price: only an arm.
There is a reason that many people prefer to hire others to do work that they can, strictly speaking, perform themselves. At the end of the day, many people would rather spend their time doing something else than developing the necessary knowledge & expertise.
We're already AT that phase. An industry doesn't spend more than 1 trillion on congressmen for nothing.
Anti-tobacco people were right all along, just took awhile for the truth of "cigarettes cause cancer" to break down the walls built with tobacco money. I'm sure the Realtors see what's coming. They're just doing everything they can to delay the inevitable.
Won't work, though. Once everyone in America knows someone who has purchased a house solo -- or someone who has picked up a RE license* and bought a house -- the tide will turn.
* I went this direction. It took me three days and a few hundred dollars for the license. (The exam is a JOKE. They don't ask anything that could possibly be useful to help a client.) Then I had to join GLVAR, which was another joke. We literally watched clips from Mayberry RFD -- again, all the info presented was "how not to discriminate" and "how to be honest."
And people trust their life savings to a group that needs honesty lessons.
So I joined a discount brokerage, bought a house, and then put my license on inactive status. It did it's job. Even with the fees, dues and exams, I saved about $10K -- not bad for a couple weeks of my life and a background check. Thing is, I could have skipped all the licensing baloney -- they really hammer "how many feet in an acre" into ya -- and just persuaded the listing agent to reduce his listing fee from 6% to 3% on top of the price concessions I was able to get from the seller.
EDIT -- For people who are interested, you can take a real estate course online. (You don't even have to be in Nevada to take the course.) The course supposedly takes two weeks, but most people can finish it in a couple days. Then take the exam over at PSI on Flamingo. But you'll have to join the Realtor's cartel at GLVAR if you want to buy anything other than new construction. So that's a wasted afternoon in a big hall watching TV clips and learning more about anti-discrimination laws. Then you pay several hundred for Realtor dues. Then you have to find a broker -- find one that takes a flat amount off the top (or a small percentage). Just tell the broker what you want to do, and see if he or she will go for it. It's basically free money for them.
Finally, go house shopping. Give the listing agent your license number as soon as you see him or her. (Big difference in the way they try to "sell" you the house, by the way. Huge.) Put in your offer and then collect your "commission" after you close. No big deal.
Naturally, it makes no sense whatsoever to do this for an inexpensive property ($100K or less). In my opinion, once the savings goes above $5K, the time and effort is worth it.
Hi Scoop, great to hear purchasing your own home worked out for you. I agree some are capable and willing to go the DIY route but, that does not mean it will work for everyone. I believe the field of the RE Agent will, in the future, scale back in numbers as the free flow of information allows those who choose to do so to purchase their own homes without the use of an Agent.
I do not, however, believe this will ever completely negate the necessity of RE agents in general. If anything it will simply weed out the sub-performers.
I can easily replace my own furnace, perform plumbing in my house, fix my own car, etc which I do on a regular basis. This does not mean that everyone can or would even choose, to do so. I've worked for decades in Motorsports and auto restoration and can perform just about any repair - body or mechanical - and have the facilities at my disposal to do so. We still send the wife's car to a mechanic as I often do not have the time to spend performing repairs. I do however generally repair my own cars as I enjoy doing so.
Personal Finance and Investing are another field similar to your RE Agent analogy. Investing (mainly for retirement) is a field ripe with corruption, dishonesty, and people with no fiduciary responsibility towards the client who work at odds with the consumers best interest. With some study (and NO licensing whatsoever) anyone can buy stocks, set up their own Retirement account, and manage their own investments. Many people have the competency and with the advent of the internet the ability to study and learn on their own the necessary skills to properly evaluate different investment options, re balance their portfolios, etc and (much more importantly) develop the personality required for long term investing. Over the course of one's investment lifetime (say, mid/late 20's until retirement) managing your own portfolio will save the average investor tens of (or hundreds of) thousands of dollars in lost interest (compounded) on the loss of capital through brokerage fees, commissions, etc. This is real money realized every week you put money towards retirement - not a three or four times a lifetime activity like purchasing a house.
Most people, however, choose not to do so. They feel comfortable working with a broker or adviser, and said individual deserves to be compensated for their work.
The RE Agent is in the same situation. It is certainly DIY capable for some but, that does not mean it is DIY for everyone. I'm sure with research and study the wife and I could have purchased our own home without much incident. In this situation we chose to work with someone who works in the field full time. We are happy we did so.
... Anti-tobacco people were right all along, just took awhile for the truth of "cigarettes cause cancer" to break down the walls built with tobacco money. ...
Back to professor Stigler (my mentor when I was in grad school) & the economics of regulation... Recall that cigarette advertising on TV was quite legal until the late 60s (it was prohibited beginning the day after the Superbowl in winter of 1969). If you're old enough, you remember TV jingles such as "Winston Tastes Good, Like a Cigarette Should", spawning millions of letters from elementary school classrooms chastising them for the grammatical error (correct grammar would be "...AS a cigarette should...")
Leading up to the ban on cigarette advertising, there were many hearings in Congress. Testimony sort of went like this: "We don't want to unduly influence minors, so we agree that Congress should ban tobacco advertising on TV." Medical groups concurred, as did nascent activist groups.
Tobacco execs jumped on board - they said they wanted to be responsible corporate citizens.
But if you look at what actually happened - it went like this. Tobacco companies realized that TV advertising was the only effective way to take - or protect - market share, but that it did little to increase the size of the overall market for cigarettes. So, everyone spent money advertising like crazy -- and as a result, the share of the pie didn't change much, and the pie got no larger. The big TV networks "won" because they were the recipients of the advertising dollars.
So... behind the scenes, CBS, NBC & ABC lobbied hard to keep cigarette advertising legal on TV, while the tobacco companies lobbied twice as hard to "outlaw" TV advertising of tobacco.
Look at the profit margins of the tobacco companies and the networks before and after the TV advertising ban -- the results, historically speaking, are obvious.
****
Never underestimate the ability of Congress to do the wrong thing.
I also remember people saying "with computers, offices will be paperless"
I wouldn't count on either happening any time soon.
I was on the Xerox task force on "paperless" offices in the late 60s early 70s. We reached a strong concensus that it the "paperless" office would be the best thing that could happen to Xerox and we were pretty much correct.
I worked with some people in the 80s considering the RE application. We correctly concluded the systems would go to the RE boards...
Personal Finance and Investing are another field similar to your RE Agent analogy. Investing (mainly for retirement) is a field ripe with corruption, dishonesty, and people with no fiduciary responsibility towards the client who work at odds with the consumers best interest. With some study (and NO licensing whatsoever) anyone can buy stocks, set up their own Retirement account, and manage their own investments. Many people have the competency and with the advent of the internet the ability to study and learn on their own the necessary skills to properly evaluate different investment options, re balance their portfolios, etc and (much more importantly) develop the personality required for long term investing. Over the course of one's investment lifetime (say, mid/late 20's until retirement) managing your own portfolio will save the average investor tens of (or hundreds of) thousands of dollars in lost interest (compounded) on the loss of capital through brokerage fees, commissions, etc. This is real money realized every week you put money towards retirement - not a three or four times a lifetime activity like purchasing a house.
I compared RE agents to stockbrokers upthread somewhere. Luckily, my wife is quite good with investing, so I leave that all up to her. I seem to have a knack for picking out property, so I buy the houses. (We're diversifying right now. Picking up some investment property because it makes sense for us at this point to do so. I won't even reinstate my license. I know enough to get the price I want without having to take more classes and pay more dues. This is NOT rocket science. It's just buying a house.)
I completely agree that anyone who has the smarts to invest for their future should ALSO have the smarts to learn enough to do it themselves. The cost savings is likely in the hundreds of thousands of dollars -- and the security of knowing that nobody is trying to ***** you out of your retirement cannot be measured.
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