I thought his analogy was dead on. There will always be a segment of the population that will value the services of a professional agent. As I said in an earlier reply to Glen, I’m rather hoping this disintermediation of data will drive out the 20% effor agents.

Also, I do admit to adding the “dodo” remark to spark some feedback. I’m actually a little more optimistic about the future for those agents (like Ardell and I’d like to think “me”) who treat their job as a profession.

Honestly, we couldn’t see how one person could manage doing it by themselves, at least as a full time job, without getting support from someone else (i.e., money to live on) through the whole process.

I agree that there is a big gap between full-time and part-time agents in terms of professionalism, with many part-time agents giving agents in general a bad name because they don’t have the motivation to be very professional – it’s not their main job anyway.

As to whether RE agents will go the way of the dodo, I would say no, simply because of the dollar amounts and the complexity involved. Any time you have a complex situation involving big numbers, there’s an industry available for people who are willing to guide the general public through the jungle.

With travel agents, the dollar amounts have come down so much (usually only a few hundred) that it’s not that big of a deal if you get a slightly worse deal than a travel agent could get you. But with real estate, you’re talking thousands of dollars, not just in commission but in extra holding costs.

As for “limited service listings” (just stick it in the MLS for a flat fee), I think there may be a place for that for some homeowners who are bolder, who have more experience with real estate, and who (most importantly) have the time and patience to deal with buyers directly.

But I think a significant number, probably the majority, of people just don’t have the time to manage the sale of their own house, despite what they may think the first time they go FSBO or limited service listing.

We live in an age of specialization, and when a lot of people work 50+ hour work weeks (do you know anyone working 40?), they just don’t have the time or energy to also take on the job of selling a house.

I’d say the combination of big dollar amounts (thousands), complexity, and the emotional factor of selling one’s home and buying another one, combine to ensure that there will continue to be a market for full service agents for some time to come.

I wouldn’t be surprised, though, if one or two percentage points got squeezed out of full service agent commissions due to technological advances that make those agents’ work more efficient, and through the power of competition of some of those efficiencies get passed on to homeowners.

To those who say I charge you $40,000 because the first three were free, I say does that mean if the first client pays $40,000 the next three are free? Baloney!

I think it is more likely that some pay a little more because some pay a little less. I like to make between $6,000 and $12,000 per sale. $10,000 is good. Sometimes I make $14,000 to make up for a $6,000. I spend a good part of 30 days with my clients. 200 emails on average. Lots of hours and a month’s work by and large. Not too many at the same time or I can’t focus on their interests and needs. I do a lot of first time buyers because I’m good at it. I don’t need a $40,000,000 listing, to make me feel important, that never sells. I’m certainly not going to charge my first time buyer more money so that I can advertise a high priced listing for a year.

Whoops…I think you hit a nerve there, Russ

The Real Estate Cafe’s contract is on our web site, and Option 1: Hourly Fee for Service clearly states:

“Professional Consultation includes but is not limited to: showing properties, travel to showings and appointments, e-mail, telephone discussions, faxes, MLS searches, Internet searches, TREC licensed software use, market analysis and other due diligence efforts by TREC.”

Switching agents has never been a problem for us, as the contract language for hourly fee clients gives them a compelling financial incentive to complete the transaction with us: “Any Buyer Agent fee provided by seller will be rebated, in it’s entirety, to Client.”

Although it has never been a problem in more than a decade, Ardell is correct to note that there is a theoretical risk that some clients may not buy. My colleague Douglas McCarroll spells out the risk and rewards of each fee option on the matrix on his page (which we coauthored). What we’re beginning to see is buyers who are delaying or extending their searches and beginning to make inquiries about converting from a straight hourly fee to the hybrid plan we introduced about six weeks ago. Under that option, the client chooses their own hourly fee which sets their rebate.

http://www.douglasmccarroll.com/buyer_contract_options.html

“Also, if you switch agents, you have to pay them up to that point, where now if you switch agents, you owe the first agent nothing.”

This, I think, is a very important statement. Certainly, THAT buyer does not owe anything to the dropped agent. However, I have been told by many agents that they make such large commissions in order to pay for all of the work that they do “for free.” If that is the case, then THAT buyer really IS paying for the right to switch, at a macro level. Looking at the value proposition for agents at the micro level can be deceiving. I think a better approach is to analyze the value proposition as it relates to the market of buyers and sellers as a whole.