I would re-title this article, “Bubble adds to commissions.”

This RealEstateJournal article makes some valid points. From my reading,

1. Entry into the real estate profession is too easy; entrance standards are too low to ensure high quality Realtors.

The number of real-estate agents has grown even faster than total commissions. Membership in the National Association of Realtors, the dominant trade group, totals about 1.25 million, up 63% since 2000.

2. Relying on gimmicks for success cheapens the profession and those who rely on reputation, ethics and successful representation of their clients.

In the closing weeks of 2005, Chang-Tai Hsieh received nearly a dozen calendars and refrigerator magnets from real-estate agents eager to represent him the next time he buys or sells a home. Just before Halloween, two agents left pumpkins on his doorstep.

3. Good agents provide valuable service, advice and representation. Choosing one’s representation solely on price is setting oneself for an unsatisfactory result.

The evidence on that is mixed. Two real-estate professors … sifted through home-sales data from several Texas counties between 2002 and 2004. They found that homes listed by discount brokers were 12% less likely to sell than those listed with traditional firms but that there was little apparent effect on the prices obtained for homes that sold. The discount listings that did sell took 5% longer to do so.

Would you choose the cheapest doctor, attorney, mechanic, for what could be the single greatest transaction you will ever make? It is easy to target an entire profession; targeting specific aspects is more difficult, time consuming and less effective – generalizations are easier. More on my experience with the health-care industry later. 🙂