AEI weighs in on ABM’s in RE

October 9, 2006

2006-10-09_15-39-48-234.pngWeighing in at an impressive 77 pages and 394 footnotes, Mark S. Nadel’s recent tome on real estate commissions is not for the faint of heart. Since I’m skeptical about anything written about real estate by the Freakonomics economists I decided to ignore their advice and read Nadel’s piece about alternative business models (ABM’s) in real estate (RE) anyway.

I often find it best to use a grain of salt when digesting content from any potentially biased source — be it the conservative American Enterprise Institute-Brookings Joint Center (which hosts, and presumably sponsors, Nadel’s research) or the liberal Center for American Progress.

While Nadel is quite critical of NAR itself, he has a refreshing absence of the extreme anti-Realtor vitriol so common in writings of this type. His proposed solution to the problems he sees with today’s real estate industry is not, as one might expect of a conservative commentator, simply “let the market take care of it.” On the other hand, he does not propose, say, nationalizing the industry.
In all, it’s a good read when you’ve got some time on your hands. Starting here, I’ll post some thoughts on what he has to say.

Nadel’s hypothesis is pretty straightforward:

The traditional, straight percentage-of-sale residential real estate brokerage commission does not serve the interests of either home buyers or sellers.

His solution leads me to suspect he’s been reading Greg Swann’s blog:

The foundation of a new fee structure should have buyer’s brokers setting their own fees or negotiating with buyers, not relying on standard, default commissions set by sellers’ brokers in the MLS.

More thoughts later…

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Written by Kevin · Filed Under Alternative business models, Commissions, Disintermediation, For sellers, Freakonomics, Mark Nadel, Real estate 

Comments

2 Responses to “AEI weighs in on ABM’s in RE”

  1. Pinocchio made flesh: Crafting a real business from the splintered ruins of the real estate industry . . . | BloodhoundBlog | The weblog of BloodhoundRealty.com in Phoenix, Arizona on October 15th, 2006 7:16 am

    [...] I had email late last night night from Mark Nadel, author of the AEI-Brookings Joint Center white paper on real estate commissions that has been cited lately by the Freakonomics blog and by weblogs all over the RE.net: Greg, [...]

  2. kibearricle on November 12th, 2008 1:46 pm

    Спасибо за пост! Добавил блог в RSS-ридер, теперь читать буду регулярно..

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