Everybody Loves Real Estate

Real estate is a topic that never goes away. The upcoming New York Times Magazine is a special issue dedicated to real estate, and Dubner and Levitt’s column explores the plight of the modern-day real-estate agent. You might be surprised by what they have to say. (As always, there will be a page posted on this site with bonus materials.)

The Times Magazine is clearly not the only media outlet interested in real estate. Levitt and/or Dubner are scheduled to appear on the following shows in the next few days:

Morning Edition (NPR), Friday (Hear the segment here)
The Wall Street Journal Report with Maria Bartiromo (CNBC), Saturday
The Joan Hamburg Show (WOR), Monday
World News Tonight (ABC), tbd

Check local listings, and check the Times Magazine late Saturday night to read the new Freakonomics column.

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  1. jimkimmons says:

    As you can see at one of my blogs, http://www.transformingrealestate.com, I’m not a defender of the real estate brokerage system or of compensation unearned.

    I totally agree that commissions will come down, and very definitely the flat rate structure for marketing a property will become the norm over time. On that side of the transaction however, the real estate person can still provide value in helping the seller to weed through the many “find your property’s value online” sources and determining the true market value of a property. It’s not the death of real estate brokers, but it will cut the numbers dramatically….not a problem with me and I am one.

    However, I just listened to your interview on NPR and find that there is too much attention being placed on the listing side of the real estate transaction by yourselves and the media, while the buyer side will very likely be where future real estate practitioners will still provide value and earn compensation relative to that value.

    Granted, compensation structures there will change also, and less money will be made. However, I shudder to think what some of my buyer clients would have experienced in my market if I had not been on top of the process and problems associated with local ordinances, title company errors, other brokers’ lack of professionalism, lender-to-title co. communication problems, and the list goes on.

    Don’t pronouce the real estate broker’s demise yet. I just believe that there will be a 180 degree shift from the old “listings are where the value is” to development of a buyer client services offering that results in contractual buyer representation at a pre-determined fee or percentage. After all, it’s really never been free to the buyer anyway. The statement that the seller pays the whole commission only means that the property price was raised to cover it. Thus, the buyer pays the commission.

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  2. jimkimmons says:

    As you can see at one of my blogs, http://www.transformingrealestate.com, I’m not a defender of the real estate brokerage system or of compensation unearned.

    I totally agree that commissions will come down, and very definitely the flat rate structure for marketing a property will become the norm over time. On that side of the transaction however, the real estate person can still provide value in helping the seller to weed through the many “find your property’s value online” sources and determining the true market value of a property. It’s not the death of real estate brokers, but it will cut the numbers dramatically….not a problem with me and I am one.

    However, I just listened to your interview on NPR and find that there is too much attention being placed on the listing side of the real estate transaction by yourselves and the media, while the buyer side will very likely be where future real estate practitioners will still provide value and earn compensation relative to that value.

    Granted, compensation structures there will change also, and less money will be made. However, I shudder to think what some of my buyer clients would have experienced in my market if I had not been on top of the process and problems associated with local ordinances, title company errors, other brokers’ lack of professionalism, lender-to-title co. communication problems, and the list goes on.

    Don’t pronouce the real estate broker’s demise yet. I just believe that there will be a 180 degree shift from the old “listings are where the value is” to development of a buyer client services offering that results in contractual buyer representation at a pre-determined fee or percentage. After all, it’s really never been free to the buyer anyway. The statement that the seller pays the whole commission only means that the property price was raised to cover it. Thus, the buyer pays the commission.

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  3. PSD says:

    Just a random thought:
    can’t the same real-estate commission concept from Freakonomics be applied to car salesmen?

    By this I mean, if real-estate brokers are more keen to make the sale than to make the sale for the highest price (since added commission is negligible vs just making the sale), then wouldn’t car salesmen also have the same incentive?

    It seems to me that car salesmen would be equally likely to just maximize volume. I wonder why negotiating with them is so cumbersome.

    Feel free to point out if I’m over-simplifying, or if their pay structures are not so similar.

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  4. PSD says:

    Just a random thought:
    can’t the same real-estate commission concept from Freakonomics be applied to car salesmen?

    By this I mean, if real-estate brokers are more keen to make the sale than to make the sale for the highest price (since added commission is negligible vs just making the sale), then wouldn’t car salesmen also have the same incentive?

    It seems to me that car salesmen would be equally likely to just maximize volume. I wonder why negotiating with them is so cumbersome.

    Feel free to point out if I’m over-simplifying, or if their pay structures are not so similar.

    Thumb up 0 Thumb down 0