NAR Sleeps, Uneasily and With Foreboding

Another example of the Internet as a 'disrupting' technology. The National Association of Realtors (NAR) has had a love-hate relationship with the online world since its rise in the late 90's.

On the one-hand, NAR has lobbied heavily against so-called 'discount realtors', which are primarily based online. They've spent millions to pass laws (or prevent laws from being passed) that support their substantial control on home sales.

NAR has tried to also co-opt the informational power of the Internet via websites like www.realtor.com, which (according to some studies) 75% of home buyers now visit before making a purchase.

There have been some disturbing developments of late in Realtor-land, however. The first is the rise of www.redfin.com, which is one of the first true independant online brokers. They offer to reduce the 6% realtor commission by splitting part of it with the seller. Another new site, www.zillow.com has opened a massive database of comparable home prices. The consumer now has the ability to pull up lists of comparable home prices based on address or geographic area as well as estimated real estate values. Real estate comparison shopping!

Perhaps more disturbing are sites like www.fsbo.com and www.forsalebyowner.com. These sites promise to do away with realtors completely by enabling sellers and buyers to communicate directly.

While I'm sure that Realtors will still be in business many years in the future, these developments may challenge current business models and, gradually, chip away at the standard commission rates.