What is the one thing that stops homeowners from selling their homes on their own without using an agent? Access to buyers!
Agents have had a monopoly on buyers for the past twenty years. They have exclusive access to their local multiple listing services (MLS), and this allows them to control access to the majority of home buyers.
MLS organizations are private and are not governed by state or federal laws. It is up to each MLS organization to set their own rules for membership, access, and sharing of information.
This means your local MLS organization could decide to let homeowners list their homes directly, bypassing an agent. And they could decide to let buyers have direct access to homeowners with listings.
Why has this not happened yet?
Firstly, before the advent of the Internet sophisticated software was needed to view listings. It was just not practical to put this software in the hands of a potential home buyer, and it made complete sense to give this access to the buyers by means of an agent.
Secondly, it is safe to assume that the National Association of Realtors (NAR) has put specific restrictions on their MLS partners, preventing them from opening their systems to the public.
Since the Internet has already eliminated the first consideration (the issue of software), it is just a matter of time before the first MLS decides to go beyond the NAR guidelines. There is just too much opportunity for money to be made, and money always wins out.
Currently home sale commissions average about 6%. The biggest reason homeowners list their homes is to get them posted on the local MLS. What if they could do the same by paying just half a percent directly to the MLS? The MLS would be making far more money from this half a percent than they would from an agent’s membership fees.
Whether the MLS works with agents or directly with the public, they are essentially doing the same thing: providing a common platform for home sellers and home buyers to meet.
For the past twenty years, agents have controlled this platform. But monopolies always fall apart when a better way is introduced—and with the Internet so widely available, a better way has already been sitting here, just waiting for the public to realize it. Inevitably, this will happen soon.
Homeowners are faced with very hard economic times right now. The real estate boom has officially ended in all 50 states. Selling a home has become a very difficult task, and paying 6% hurts a homeowner a lot more now than it did just a few years ago.
Homeowners are just waiting for someone to give them the solution they are looking for. Once the first MLS decides to give direct access to the public, you can be sure this will spread across the entire USA and Canada. And when that happens, the life of a real estate agent is going to be turned completely upside down.
Ironically I came to this conclusion as I was finishing my real estate book, and that is why I stopped writing it. I realized I was writing a book for an industry that would likely completely change from the way we know it.
Let’s look at some of the new roles that are likely to be created when MLS organizations begin working directly with the public.
A new niche is going to appear for marketers who specialize in preparing the best presentations for properties for sale. These people will work directly with the MLS to sell their services to the public. They will likely charge fees rather than a percentage. They will also work with the homeowner to create professional flyers, upload the best photos and videos, as well as spruce up their MLS listing for public viewing.
The MLS organizations will likely hire people to arrange and show listings. These people will work on the cheap—think of this in terms of your pizza delivery person becoming a property presenter.
Other new niches will likely be created for people who specialize solely in managing contracts, including handling buy/sell exchanges, as well as for closing specialists.
You can see how these changes will replace the real estate agent with people who charge less but do a better job as a result of specialization in their specific niche.
This is sad because it means the end of the careers of many agents. But with that end, new careers will begin, and this will ultimately benefit the public. And this is going to happen soon—so get ready and take advantage if you can!
Jeremiah Thompson
