The Future of the US Residential Real Estate Brokerage Industry in Light of the Internet and International Indications

Please do not quote or reference without author permission. Abstract: The US residential brokerage industry has seen real commission rates and agent incomes rise over the past several decades while percentage commission charges remained relatively stable within local markets. Access to the Multiple Listing Services (MLS) and strong industry interdependency helped to maintain this system. Yet, new open MLS listing services are starting to encourage commission price competition and break down some of the market information monopoly once held by the local trade associations. This has opened the door to a potential revolution in the residential brokerage industry that will likely lead to a more efficient industry with fewer agents doing more transactions and providing a variety of ala carte services to consumers. International commission rates and agent productivity provide some evidence of the transformation that might occur over the next few decades as new consumer options evolve. International commission rates also provide further evidence that fees in the United States are likely to come down over the next several years

A Critical Assessment of the Traditional Residential Real Estate Broker Commission Rate Structure

While real estate brokers have long set their fee as a straight percentage of a home's sale price, this formula is an anomaly and a primary reason why such fees may be inflated by more than $30 billion annually. Although competitive pressures ordinarily produce a fee structure reflecting costs, real estate broker commissions are strangely unrelated to either the quantity or quality of the service rendered or even to the value provided. Rather, this fee has been based solely on the price of the home. (It is as if divorce lawyers set their fee as a flat percentage of a client's net value, irrespective of whether the divorce was amicable without kids or involved bitterly contested custody and other issues . Oddly, not only is there no evidence that it is any more costly to sell higher-priced homes than median-priced properties, but it is possible that the opposite may be true! Furthermore, the straight percentage fee formula creates little incentive for real estate agents to provide home buyers or sellers with additional value. The article analyzes five elements of the traditional residential real estate broker rate structure, the most important of which are: 1) setting fees as a percentage-of-sale-price, 2) letting the seller's broker set the fee received by the buyer's broker, and 3) refusing to unbundle the price of a full package of services. After explaining the conditions under which such rate elements would be justified, this article finds that those conditions do not generally exist in the real estate brokerage market. Moreover, it identifies more than a half dozen harms that the rate elements cause to home buyers and sellers. For example, buyers are often not alerted to attractive homes because the rate structure leads traditional agents to intentionally avoid showing them. Meanwhile, many buyers do not even consider negotiating the fee paid to their broker because the rate structure causes them to believe their brokers' services cost them nothing. After this criticism, the article suggests that consumers would benefit most from a fee-for-service approach, combining flat fees, hourly fees, and bonuses, including percentages of extra value created, and it identifies currently available examples of some of these options. After reviewing eight reasons why incumbents are able to protect the current structure, the article suggests four questions that consumer media should teach consumers to ask to help undermine the industry's protectionist practices.Other Topics

A rule-based decision support system for real estate brokerage service evaluation

Real estate brokers or realtors are expected to possess superior knowledge of their local markets, and typically require commissions in return for their services. The evaluation of their performance is an important issue in justifying their commissions. We develop a learning-oriented decision-making process for evaluating real estate brokerage services, which concentrates on understanding the nature, the role and the interaction of the evaluation aspects of real estate brokerage service quality by integrating cognitive maps and the Decision EXpert (DEX) approach. Results suggest that this framework permits new rudiments to be considered in the realtor decision-making and sales process, facilitating transparency and understanding of realtor functions that may lead to recommendations to improve the performance and quality of these functions. Avenues for future research are also presented.info:eu-repo/semantics/publishedVersio

A fuzzy knowledge-based framework for risk assessment of residential real estate investments

Risk analysis of residential real estate investments requires careful analysis of certain variables (or determinants). Because real estate is a key sector for economic and social development, this risk analysis is seen as critical in supporting decision processes relating to buying or selling residential properties, partly due to the pressures caused by the current economic environment. This study aims to develop a conceptual reference model for risk assessment of residential real estate using fuzzy cognitive mapping. This fuzzy model allows cause-and-effect relationships between determinants to be identified and better understood, which in turn allows for better informed investment decisions. The results show that the use of cognitive maps reduces the number of omitted criteria and favors learning with regard to how the criteria relate to each other, holding great potential and versatility in structuring complex decision problems. Practical implications, strengths and weaknesses of our proposal are discussed.info:eu-repo/semantics/publishedVersio

The influence of the mandate system and the political ideological persuasion on the performance of South Africa's real estate industry

Submitted in accordance with the requirements for the Degree of PhD (Marketing) at the University of the Witwatersrand September 2016Purpose: The impact of the mandate type used and real estate agents’ ideological outlook on conflict of interests and compromising of principals’ interests together with their effect on the ultimate outcomes has largely been ignored in the South African real estate industry. The purpose of this study was to investigate the effects of dual mandate system and ideology on the outcomes to buyers and sellers of properties. This was achieved by investigating their influence on the conflict of interests and compromising the interests of the principals and how these in turn lead to suboptimal outcomes for the industry. Method: Stratified random sampling was used for information gathering. Data were collected using face-to-face filling in of the survey instrument and 204 participants agreed to take part in the study. Confirmatory factor analysis (CFA) was employed to assess the reliability and validity of the results. Findings: The results reveal that the dual mandate system and ideological persuasion of actors in the real estate industry does positively impact on conflict of interests and also compromises the interests of the principals. Conflict of interests and compromising principals interests have also been found to negatively affect the resultant outcomes for the principals. Practical implications: The dual mandate system should be reconsidered with the view of revising or changing it altogether. Also, practices of real estate agents should be closely monitored by relevant authorities to ensure that they do not disadvantage other consumers. Insights gained from this study provide the basis for future policy-making by government and for academic activity on training of new real estate agents. The findings of this study are expected to assist the Estate Agency Affairs Board (EAAB) as the custodians of licensing of real estate agents. Research limitations: The participants were all from Gauteng Province which might limit generalizability prospects to other provinces. Also, some respondents might have given biased responses by attempting to prove that they were not ignorant of how the industry operates. Key concepts: Dual mandate system, Ideological outlook, Conflict of interests, compromising of principals and Outcomes.MT201

Integration in Housing: A Plan for Racial Diversity

The Villages of Park Forest and Park Forest South are concerned about the possibility of racial resegregation. The four parts of the plan are as follows: Part I, Why we value integration; Part II, Policy- what we can do to promote integration maintenance; Part III, A discussion of the housing forces which contribute to racial resegregation and; Part IV, A history of housing integration in Park Forest and Park Forest South

Eugene B. Lynch, Trustee, Harold Perkins v. Utah State Tax Commission : Brief of Appellant

PETITION FOR REVIEW OF AN ORDER OF THE UTAH STATE TAX COMMISSIO