Their Day Is Coming

Zillow is aimed at generating profit from advertising and is not intended to put real estate agents out of work by letting home shoppers and sellers do their own research, according to Barton.

This quote was taken from an article about the new web site, Zillow.com
which launched this week. It's a new web site aimed towards the residential real estate market.

What they are trying to do is to create a site that gives people an idea of what a particular home is worth in markets all across the country.

The title of this post is--"their day is coming". That is in reference to real estate agents and the entire process of consumers paying 6% of the purchase price of a home to real estate agents, which, as the reader should know, is split 3% and 3% to the buying and selling agent.

Here is my question--Why is the commission still 6% when home prices have quintupled in the past 10 years? Has the work load of the real estate quintupled? Doubtful. It could be argued that their work load has decreased because of the internet. Oh sure, the advertising costs have increased for the agents to run a print ad in the newspaper---probably from $100 to $300, but the prices of homes have absolutely skyrocketed, so the commission of 6% is completely whacko in my opinion.

I do think the point of Zillow is to slowly erode the "worth" of real estate agents, and I do think there will be more sites in the future that chip away at the "tools" that previously were only known to agents. This will result in real estate agents, at the minimum, to decrease their commission rates to consumers.

Slowly but surely, consumers see the non commission based competitors creeping up--Red Rocket Realty is the only one that comes to mind right now. Most consumers can buy and/or sell a house now with the help of the internet.

Much in the same way discount brokers have taken over the buying and selling of equities in the stock market, I predict the same will happen in real estate in the next 10 years.

Just as full service stock brokers still have a place in the world of stock market trading, there will always be a place for full service real estate brokers as well. But, there is going to be a major shake out one day , and Zillow.com is just the beginning.

This is not original thinking, as I'm sure you've been exposed to this thought before. Why hasn't this happened sooner, might be the best "topic" to be posted.