Excellent Rio Rancho Houses  
 

Disintermediation - Removing the Real Estate Agent from your Real Estate Sale

  
  By David B. Zwiefelhofer  
     
  “Disintermediation”. It used to mean the withdrawal of funds from an institution to invest elsewhere at a higher rate of return. (Like any of us knew that). Now it’s the new term for what the internet, or more specifically, the world wide web, is doing to distributors and middlemen.

Real estate agents are the ultimate middlemen (middlepersons?) and a revolution is underway in their industry. The web is allowing buyers and sellers to meet without the need for an intermediary.

Before the advent of the web, the real estate industry maintained its monopoly status through its choke hold on home listings. “In the 1940s and 50s the National Association of Realtors® and local associations enforced an agreement requiring all members to sell at a fixed commission rate, and established entry barriers by only allowing members to access the Multiple Listing Service.”

By keeping the MLS, the largest database of homes on the market, closed to non-realtors® they controlled the dissemination of market information and thus, home sales. If you wanted to buy a house the only place to find one was through a real estate agent.

This control of information had a predictable effect on real estate commissions. “From the 1920s to the 1960s commission rates rose from 2 percent up to 6 percent. ” This dramatic, three-fold increase is a clear demonstration of monopoly power.

With the rapid expansion of the World Wide Web to its near ubiquitous presence today the dissemination of home market information can’t be controlled by any entity. Real estate agents are purely “go-betweens” (connecting buyers and sellers but never buying or selling themselves), “their position is vulnerable if buyers and sellers develop new ways to find one another. For example, buyers and sellers can now use the Internet to by-pass traditional real-estate agents.”

For Sale By Owner New Mexico (www.FSBOnm.com) is a web site providing an alternative method of connecting home buyers and sellers in the state of New Mexico. Their rapid growth over the past year shows a clear trend toward “for sale by owner,” or FSBO (pronounced “fizzbo”), real estate sales and pent up demand for relief from high real estate commissions.

Started in early 1999 as FSBO Albuquerque by siblings Lisa Hebenstreit and David Zwiefelhofer, FSBO New Mexico enjoys a comparatively high success rate for FSBO sales. Their overall success rate is greater than 60% and peaks at over 75% during the selling season. “Our services make selling your home on your own a lot easier,” says Hebenstreit.

“The site is all about attracting home buyers and giving them the tools they need to buy a FSBO house with confidence,” says co-owner, David Zwiefelhofer. The site’s greatest asset is its database of homes for sale. “A constant stream of new listings keeps our visitors coming back.” says Hebenstreit, “but that doesn’t mean we neglect our ‘less than fresh’ houses. FSBO home sales have their own idiosyncrasies and we spend a great deal of time explaining these to our home sellers through email and phone support.”

The site is oriented toward the home buyer. The three most prominent links in the main menu are “Search Properties by… Price, Neighborhood and Open House.” Following these links takes the visitor to lists of properties that lets them quickly find homes in their target neighborhood and price range. Each property in the list shows price, address, number of bedrooms and square footage. Clicking on the property in the list page takes the visitor to that property’s detailed web page with pictures, rooms and dimensions, current tax information, schools, email and telephone contact information and whatever other information the home seller wishes to convey.

“I really wanted to make the site easy for even a novice to navigate. If I visit a site and I can’t find what I’m looking for in about 10 or 15 seconds I’m gone. I didn’t want that to happen with this site,” said Zwiefelhofer.

They’re occasionally asked for advice on renewing buyer interest if a property isn’t moving, Hebenstreit says. “We’ve developed a lot of different techniques to get buyers to take a second look.”

With mortgage providers and title companies entering the internet fray there’s more and more competition to provide transaction services to home buyers and sellers. Many of these companies will gladly provide comparables information and other data to help home sellers accurately price their homes.

And with a little guidance available from multiple sites on the web “even the paperwork isn’t a big deal,” says Zwiefelhofer. “You won’t see the demise of the real estate agent, but there will be a very significant contraction. In real estate, the internet is the great equalizer and it’s just starting.”