Editor’s note: Inman News Publisher Bradley Inman wrote an interesting blog about the real estate industry’s elephant in the room. We’d like to hear your comments on his observations. Please see the comments section of the blog to add your thoughts.

Every few years, Realtors and their commission structure come under siege. It is happening right now. Why?

1. Zillow’s coming-out party in February prompted the popular press to peel back the onion on the industry with tough questions. Do you need a Realtor? Do you need to pay 6 percent? Zillow launched a free home-valuation service, offering online access to value estimates and data on some 60 million houses in the United States.

2. The Justice Department lawsuit against the National Association of Realtors has brought heat on the industry, turning attention to commissions. The DOJ’s Antitrust Division has accused the NAR of being too restrictive about the display of online property listings.

3. Some strange industry events such as real estate veteran Steve Ozonian moving to a discount firm has prompted people to question the tried and tested model. Ozonian in January was appointed CEO and chairman of the board for Help-U-Sell Real Estate, a flat-fee real estate brokerage network.

4. Flat home prices and squeezed equity due to non-stop borrowing raises the economic question of what is an affordable commission in this environment.

5. Brokers have been complaining way too much and for too long about their business model being broken, begging the question that the pricing structure itself is in need of reform.

6. Fast-moving houses with fast-rising commissions, based on inflation not performance, has raised the “fairness” and the “greed” charge.

7. Sensitivity to price has never been higher with price-busters like Wal-Mart setting a new standard.

8. The Web has opened the debate, introducing alternative models and giving consumers more control. When we do more ourselves, we expect to pay less.

9. The industry is getting way too defensive; there is usually some truth when people get overly sensitive.

10. Realtors have been whipping boys for at least two decades, since David Mamet’s 1984 Pulitzer Prize-winning play “Glengarry Glen Ross,” a merciless satire of the profession. And every group needs one group it feels better than. Real estate agents have always suffered low rankings in the respected profession lists.

In the past, such storms have not led to significant changes. Most people still want a full-service broker and are willing to pay 5-6 percent. Is this a case of the elites being out of touch with what people ultimately want and will pay for? Are things any different now? What do you think?

Leave your comments at the Inman News blog by clicking here.


What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

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