Why do you still need an agent to buy a home?
I'd like to see a strictly FSBO (For Sale by Owner) world. After all, escrow companies and home inspectors already do much of the heavy lifting in a real-estate transaction and add more value than most realtors while working for a flat fee. The Internet, meanwhile, provides a perfect forum for buyers and sellers to meet, just as eBay has transformed the marketplace for everything from lace doilies to Ford F250s. I understand that isn't going to happen anytime soon. Selling a home is indeed a hassle, and realtors at least offer the promise of one-stop shopping. And there's the issue of showing homes—realtors perform the legitimate service of vetting buyers and safeguarding a seller's property. Out-of-towners can benefit from a local realtor's expertise. And I've heard from sellers who have had agents who really "got" how to market a home, probably earning their commission and more.
Still, I'm hoping that upstarts such as ZipRealty, LendingTree, Foxtons (a discount broker in the Northeast), and Catalist (a California discounter) will soon blow away the traditional realty transaction model like they're Puerto Rico playing the U.S. men's basketball team, dropping total commissions on a house sale to 3 percent, or even 2, while still offering the services people seem to desire from a realtor. Certainly, most people realize that a 6 percent commission—or even 5 percent—is nuts, given that e-mail alerts, Web-based home tours, and other services can easily give buyers and sellers as much information as their realtors. It will be a painful change for the 1 million real-estate agents out there—alas, a number that is growing rapidly. But a little Darwinism is needed to thin out the herd, and when it happens it won't give me much grief.
Douglas Gantenbein is the Seattle correspondent for the Economist.
Illustration by Mark Alan Stamaty; photograph of house for sale on Slate's home page by © Owaki-Kulla/Corbis.