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Posts Tagged ‘discount real estate’

There continues to be a series of article at Inman News about the compensation of real estate agents. The latest article, entitled “6 Percent is Dead,” the owner of a web-based company chimes in with his view. A version of my response is below:

I have not read every article in this series, but the two I have read were written by an agent whose blog paints a picture of frustration who is muses for a salary; and a web-based firm which doesn’t do traditional brokerage in a market where local listing agents have to accompany every single showing (no easy feat).

Inman may get alot of chatter and mileage from these articles, but in light of the failure of Foxtons and Iggy’s House, Real Estate never had the massive Internet-fueled sea change we saw in travel, insurance and stock brokerage, which revolutionized entire industries almost overnight.

I’m also a little tired of people poo-pooing the role agents play in the home buying process. The “I saw it first on the ‘Net so I don’t need a broker” game is tired, inaccurate and obtuse. You saw it on the net first because you were on a broker’s website and they figured out how to make it play into their model. The rest of the process is so clunky, complicated and drawn out that the best brokers who do the most business drive the traffic while working at companies where they can earn the most for their expertise.

Read the rest here on my ActiveRain Blog .

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Iggy’s House has closed shop. Who were they? Basically a discount outfit that put homes on the MLS for free as a means of attracting clients for their Buyer’s Side Realty venture and their mortgage company. Gimmick? Yes, but it isn’t my place to critique how other broker’s do business; the market determines if a model works. The market has spoken, and their model doesn’t work, contrary to their claims. If something works, it is innovative. If it doesn’t, people are likely to dismiss it as a gimmick. These guys predicted their failure last year.

Discounters seldom succeed. Business models do not sell homes. Agents sell homes. If you attract better agents, your company will sell more homes and be more profitable. The better agents will not work with discounters because they can’t make as much money as they can at a more traditional brokerage. If a discounter can’t get these better agents, the will have a less than stellar staff. Sub par agents won’t be able to compete in the marketplace with better skilled and higher paid agents.  

A final thought on Iggy’s House: it takes a certain amount of chutzpah to lose money hand and fist  but still push for an IPO.

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