Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Wednesday, October 19, 2005

Are Real Estate Agents in a Dying Profession?

With computerized MLS listings of real estate and computerized buy-sell offer forms and computerized registries, will real estate agents become a thing of the past? Some apparently are sufficiently concerned that they have lobbied to have feather-bedding type legislation passed to protect their jobs.

Dave Friedman writes about the profession:
I've often wondered why the middleman persists in real estate and I suspect it has something to do with both the complexity of real estate law and its history in English common law. As I understand it from a layman's perspective, real estate law is much more steeped in arcane historical artifice than are other areas of law, and therefore there is an argument to be made that real estate brokers possess a body of knowledge and skill that individual homeowners do not have. (This is a questionable argument to make, if only because it implies that real estate lawyers, not brokers, possess the specialized knowledge required to successfully pass title from one person or entity to another.)

Even if we are to ignore that argument's inherent weakness, it is not a satisfactory explanation for the persistence of non-disintermediation. One would think that the pressures of the free market would be such that real estate transactions would become vastly more simple as technology improved. Witness how much easier it is to sell stock now that internet trading has become commonplace. And, certainly, investment is another highly complex area in which special expertise has proven itself to be very valuable.
Two notes:
  1. Ten years ago I was talking with an agent about how internet MLS listings would be very helpful to consumers. She was aghast. She said, "But I'd be out of a job then." Probably agents with that attitude will struggle; those who succeed will be those who provide services not available over the internet.
  2. When I wrote my intro text, we settled on "intermediary" and "intermediation" as gender neutral terms for "middleman" and the services they provide.
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