Death to the 6 percent

Burnham’s Beat has a great post about the walled gardens that are most under siege in an open, searchable, post-scarcity, edge-controlled world. They’re all the classified categories — real estate, jobs, stuff-for-sale, personals — that technology took away from newspapers. I’ve long contended that this was only a temporary move: expensive, monopolistic, and inefficient marketplaces (newspapers) were replaced by cheaper, more efficient marketplaces (, eBay, et al). But they’re still centralized marketplaces in a decentralized world. Search, Google Base, microformats, structured blogging, and so on will slay the monsters that slayed newspapers’ businesses.

: The one category that has been less open than the others is real estate: the most irksome, closed, anticompetitive, quasimonoplistic, overpriced service out there. What they do is simply not worth 6 percent. But because brokers control access to the multiple listing pool, you’re pretty much screwed without them.

When I started working on the internet a dozen years ago, I predicted that would be one of the first walls to fall. I was wrong. But I think it’s teetering under constant barage from community (see: CraigsList), would-be competitors, technology (see, again: Google Base and, and customers eager to be set free.

The New York Times writes today about banks trying to fight the huge lobbying power of Realtors to offer competition. Factoids:

The association’s power has swelled during the heady days of the real estate boom. Its ranks have grown by more than 500,000 in the last five years. With almost 1.3 million members, it is the largest trade association in the country. One out of every 203 adults is a dues-paying member, according to August statistics from the association and the United States Census.

The boom has enriched many brokers. With the average cost of a home reaching historic highs, consumers paid roughly $61 billion in brokerage fees for residential real estate in 2004 as some 6.8 million homes changed hands. Last year, the industry was on track to sell almost 7.1 million homes, according to estimates in December.

I have no idea what percentage of real estate sales people belong and so this calculation is suspect, but if you divide those numbers and then give the brokerage half of the take, it works out to $23,400 per. After the boom and the invasion of all the new market factors above, that is bound to shrink.

I’ll be that you’re going to see a lot of former Realtors as competition and openness encroach on their turf.