The freakanomics blog has a couple of interesting posts on the devolving monopoly Realtors hold on the housing market and what that might mean. I found reading the comments enlightening here too.
The first post touches on that story about the FSBO group in Madison, Wisconsin that has taken over 20% of the housing sales there.
Perhaps the key is simply for this kind of “for sale by owner” website reaching a critical mass that makes it worth a buyer’s while not to enlist an agent. According to the NY Times article, there are more hits on this “for sale by owner” website than on the official MLS website that the agent-listed properties are on. So that critical mass has been reached.
The question now is how do Realtors respond? They can cut their rates, go from 6% to 4% or a percentage upto a fixed amount. They can offer their services piecemeal… but once you start to commodify your services the price will always bottom out. Whatever happens, I think we due for a shakeup in the realtor profession soon.
The more recent post is about how Realtors are now being sued because of its cartel like tendencies and protections. What’s weird about this is that no one thinks to sue Lawyers because they all charge outrageous fees and percentages (if you think the 6% realtor fee is bad wait till you encounter the 33% lawyer fee). I think Realtors are experiencing some attacks because they’re low hanging fruit on the tree of disliked professions.