Real estate marketplace inefficient, but works

Every morning in the tiny fishing village of Pichidangui on the central coast of Chile, local residents line up and await the arrival of the morning catch. The boats dock; the fish are cleaned, sold and wrapped in newspaper. Within an hour, the small crowd dissipates. The value chain in Pichidangui is simple–fishermen distribute fish to residents–an efficient and cost-effective marketplace with no middlemen or intermediary costs. Far more complex, the U.S. real estate value chain is also more expensive–10 percent or so of every sale. Nevertheless, sticking to the same analogy, imagine Google, MSN, Yahoo!, AOL and newspapers being the sea, packed with home buyers. Trolling every day to net the catch are the big boats of Cendant, RE/MAX, Homestore, HomeGain, Service Magic, Agent Connect, Prudential and few others who haul the fish to dock, selling them to real estate brokers and agents, who select the right buyers, then take them to a local restaurant where they sel...