Competition in the Real Estate Brokerage Industry - #8

No surprises in the FSBO web site paragraphs. It's a basic description of services offered by FSBO sites and other services/links they might provide. These include links to inspectors, sample forms, insurance companies and title companies. There aren't any pro or con statements in the FSBO paragraphs.

It's pretty much the same in the paragraphs explaining broker referral networks. Rebates are mentioned twice, and the final sentence includes this quote: "...new business models are “about unleashing brokers to have the ability to use new methods and tools to expand, to succeed and to succeed in this market that is competitive.”

This quote in this section is perplexing. It may help some brokers to pay a portion of their commissions to a referral network for sending them business, but how does adding yet another middleperson help the consumer? It would seem that the commission fee structure would need to be kept higher in order to free up the referral fee paid to the network. The only recommendation for the brokers on the network is their agreement to pay the referral. The fact that some lure the consumer with a rebate only compounds the problem, as there are now an agent, middleperson network and a rebate to pay.

This is not to say that this model isn't working, but it seems that others that get the broker and consumer together without a referral fee would free up more for a rebate and/or fund better services to the consumer. It seems that the only value of the network is their ability to utilize the referral fees to market in the internet and capture the consumer early in the process. So basically, the cost of the network is pure marketing expense, with no added value to the consumer.

Entire series: #1, #2, #3, #4, #5, #6, #7, #8, #9, #10, #11, #12, #13, #14, #15, #16, #17, #18, #19 & final