patrick.net

If competition could be restored to the home buying process, transaction costs could be greatly reduced which would connect more buyers and sellers with deals. This claim to 6% ownership of all real-estate causes the market to be sticky, fewer transactions occur as a result. More sales would occur if there wasn’t a 6% barrier between the seller and the buyer, and the purchase price would be lower for the buyer as well.

The housing market would recover faster if home deals could omit this expensive middle man. People should not revert to realty offices when thinking of buying or selling homes. Individuals need to default to internet sites like Zillow.com or other housing sites in order to reduce the market collusion from realtors. The internet is a great device for competition! Now people need to realize that websites can be used to organize home buyers and sellers just like Amazon, Craigslist, or Ebay, without the expensive middleman.

Many people argue that buyers do not pay the fees to the realtor so they should not care if the realtor gets paid. Well due to the fungibility of money, the buyer could have bought the house for 94% of what they paid because that is what the seller was willing to accept for the house. This makes it obvious to see that the seller nominally pays for the realtor fees, but the buyer, in real terms, pays about 6% too much for the home. Not realizing that a realtor’s 6% could be negotiated is a flaw that must not be overlooked.

#housing