Realtors Beware: You Might Quickly Become Absolete

Posted on 12. Jan, 2006 by in Saving & Investing

The New York Times ran an interesting story that was picked up by the Freakonomics Blog this week about Christie Miller, 38, and her cousin Mary Clare Murphy, 51, who run the increasingly popular website FsboMadison.com. Their realty site is now responsible for a 20 percent share of the Dane County market for residential real estate listings.

The site charges $150 to list your Madison home on their site — which as of today has had 4,638,198 visitors — and they even through in a teal yard sign to boot! The site is making news around the country as the Justice Department, free-market scholars, plaintiffs’ lawyers and countless entrepreneurs are trying to make real estate more competitive and to bring down the 6% sales commissions. To do that, they propose forcing the Realtors’ association to share control of its established monopolistic listing services.

But who can blame them? Those 800+ local listing services, controlled by local branches of the Realtors’ association, generate around $60 billion a year in commissions to real estate agents and the firms that employ them. However, through fierce lobbying, litigation and legislation, the Realtors’ group has managed to keep control of their “crucial listings.” But the site is taking a bite out of the Realtors’ profits. FsboMadison listed around 2,000 homes in 2005 and said that about 72 percent of its listings sell. If those 1,440 houses averaged $200,000 per sale, the real estate commissions under the 6 percent system would have been about $17.3 million. Ms. Miller and Ms. Murphy collected about $300,000.

Seeing all the FsboMadison.com yard signs around town, Mayor David J. Cieslewicz said:

“It may be an extension of the 1960’s, when we stuck it to the man by protesting the war. These days we stick it to the man by selling our own home – and pocketing the 6 percent.”

Miller and Murphy don’t appear to be profit-driven, just fed up at the rediculous listing fees. They even offer to waive the fee for hardship cases – proving that their endeavor is more philosophical in nature. An interesting business model for sure, but will it be the wave of the future? Are realtors going to be out of a job soon? Hardly. Real Estate agents provide a valuable service that will not be replaced. However, such business models will demonstrate how outrageous the fees are becoming — driving them down to a more competitive level.

After all, accountants are still employed even with the introduction of Quicken, TurboTax, and Peachtree, right?

FsboMadison, Real Estate, For Sale, For Sale By Owner

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