New technology is one of the keys to more competitive real estate markets. In industries throughout our economy, the Internet has brought extraordinary new opportunities for increased competition, giving consumers better access to information about products and services and lowering costs and prices. In recent years, web-based business models have emerged in markets such as travel and lodging reservations, stock and insurance purchases, and book and music sales, to name a few. New competition from these new business models has been good for consumers, resulting in increased choice, lower prices, and savings in personal time and effort.
New business models can offer the same kinds of benefits for buyers and sellers of real estate, in competition with traditional "brick and mortar" office brokerages in which customers interact only through individual brokers. For example, some brokers have begun providing information on homes for sale to their customers through the Internet. Using the Internet can allow web-savvy buyers to become educated about neighborhoods and examine suitable houses more efficiently than using a traditional broker. Home buyers can research neighborhoods and houses working on their personal computers, on their own schedule, and at their own pace, before spending time with an individual broker. This saves time brokers would otherwise spend searching through home listings or showing homes the buyer has not had the chance to explore more fully in advance.
In real estate, the cost of providing brokerage services appears to have decreased. But consumers are paying more. As the U.S. home sale price has climbed, the dollar amount paid for brokerage services has climbed right alongside it, because commission percentages have remained high. In fact, from 2000 to 2004, fees paid for brokerage services grew by roughly 50 percent, to over $60 billion in 2004.
New business models can offer the same kinds of benefits for buyers and sellers of real estate, in competition with traditional "brick and mortar" office brokerages in which customers interact only through individual brokers. For example, some brokers have begun providing information on homes for sale to their customers through the Internet. Using the Internet can allow web-savvy buyers to become educated about neighborhoods and examine suitable houses more efficiently than using a traditional broker. Home buyers can research neighborhoods and houses working on their personal computers, on their own schedule, and at their own pace, before spending time with an individual broker. This saves time brokers would otherwise spend searching through home listings or showing homes the buyer has not had the chance to explore more fully in advance.
In real estate, the cost of providing brokerage services appears to have decreased. But consumers are paying more. As the U.S. home sale price has climbed, the dollar amount paid for brokerage services has climbed right alongside it, because commission percentages have remained high. In fact, from 2000 to 2004, fees paid for brokerage services grew by roughly 50 percent, to over $60 billion in 2004.
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