About the Current State of Real Estate Brokerage and Web 2.0
If you Google the words "Real Estate" today, you will be served with nearly three quarters of a billion search results. That's a lot of information by any measure. Try to pare it down with current search engine technology and you may be able to reduce your choices to several million results. Still not humanly manageable by anyone I know of.

Information overload has become a fact of life for all of us and it's apparent that real estate has been impacted by it more than any other industry on the planet. One reason for this phenomenon is everybody on the planet needs a place to live. Shelter is a basic human need and few of us are ever totally satisfied with whatever our current living or business space consists of. Therefore, at any given moment, millions of us are looking for answers to whatever our current "space requirement" issues might be.

For about the last ninety five years or so, most of the answers to your real estate questions were tucked safely away at local real estate offices and title companies in stacks of MLS books and overflowing files of plat maps, legal forms, recorded documents, title abstracts, etc. All of that data was thought to be so confidential that REALTOR'S® were instructed by their local boards that MLS books were never to be simply thrown away in the trash. Rather, we were told we must make sure they were destroyed in such a way as to be, "rendered unreadable by the general public." Over the last fifteen years or so all that formerly confidential information has been released to the internet. First slowly but today increasing at such an exponentially rapid pace that the same data is now duplicated at millions of different web sites all claiming to be the holy grail of valid real estate information.

Our True Pricing Guarantee
We've all seen the old time sales ads designed to bait anxious consumers: 

"Everything in the store 70% off today only!"

The questions is; "70% off compared to what?" Is it, "70% off the merchant's normally over-priced products?" Or, "70% less than what their competitors are charging for the same merchandise or service?"

In the recent past, most people just took merchants at their word that if the word "Sale" appeared in a store's advertising, they were getting some kind of deal or paying less for whatever they were buying then they would normally pay, or at least less then what they would pay at the store in the next town, selling the same product.
Before the Internet it wasn't easy to determine if the merchandise you wanted to purchase was really 70% less than you'd pay for it elsewhere. Today, using the Internet, you can discover in minutes whether a product or service being advertised at "70% Off" really costs less then what you'd pay at a competitor's store. Because of this, the new bait and switch word Internet advertisers use to attract your attention is "FREE."

Free, free, free, everything is FREE! . . . Really?

Of course, real estate franchise companies like Coldwell Banker, Century 21, RE/MAX, Prudential, ERA, Better Homes & Gardens, GMAC, Keller Williams, Red Carpet, Realty World, Exit, Realty Executives, Long & Foster, Real Estate One, Greenridge, Five Star, etc., the list goes on and on, have been using the word "Free" in their advertising for decades. Long before common use of the Internet as a shopping service. Use of the word "Free" in Internet advertising is now so common that the the word "Free" has virtually no meaning anymore.
This phenomenon is a significant part of what prompted us to introduce what we call "True Pricing" for our real estate services. Meaning, we won't insult your intelligence with meaningless bait & switch advertising slogans or pricing for our services that look like:

"Only $999.99!"

If saving that penny is a significant part of the criteria you're using to determine what real estate company to choose to assist you with marketing your real estate, CIDM may not be the company for you. At CIDM you will see a price like that advertised as what it is, "$1,000.00."

"True Pricing" means all of our pricing for everything we sell is in "Plain Language" and rounded up to the nearest dollar. There are no hidden fees or hidden service charges that pop-up when you, "check out" or show up unexpectedly on your closing statement at settlement. Each product or service we charge for is priced at pretty much what we pay for it plus a small profit. Of course real estate is truly one of the last "old school" marketplaces available in modern capitalism where prices really are actually "negotiable," especially in regards to the price you ultimately pay for real estate itself.

In determining how to price our products and services utilizing "True Pricing" in today's "Web 2.0" marketplace, we visited and researched literally thousands of web sites offering what's come to be known as "Flat Fee," "Flat Rate," "Fixed Fee," or "FSBO" (For Sale By Owner) real estate services and products. "Flat-Fee MLS," and "FSBO" (Or just "By Owner") seem to be the most common acronyms the marketplace has decided to use to describe these various companies and their web sites.

Almost all of these companies sell or promote the purchase of real estate products and services in "packages." In other words, they offer a basic "package" at various "entry price points" of real estate services that usually include your property being "published" for sale on at least one MLS system and somewhere on their web site. Their "basic package" may also include a limited amount of marketing equipment required such as a yard sign or a key box. They then offer other increasingly expensive "packages" that include all of the products and services in the "basic package" plus one or two additional things not included in the lower priced "package" a step below it, and so on.

Most of these companies offer 3-5 of these "packages" that may or may not include exactly what you in particular need to get your real estate sold. This creates an increasingly dizzying array of pricing and product/service inclusions that make it all but impossible for someone without a background in financial analysis armed with a computer and spreadsheet software to determine what it is they're buying, whether or not they need it, what it's actual value is, and will it save them time and money in the long run, among other things. Some sites even include pages of side-by-side comparisons of their different "packages" with tables and check marks and long explanations of elaborate pricing options. Often including complicated Buyer side commission calculations that may never come to pass at the settlement of any particular real estate transaction.

Enough.

CIDM has been offering "Unbundled Real Estate Services" since its inception and Carl Schumacher, the broker at CIDM, has been promoting the benefits and advantages of unbundled real estate services since entering the real estate profession over 25 years ago. Decades before many of today's so called "Flat Fee MLS" companies existed and in some cases, years before many of the owners of these companies were even born. We have more experience with "Flat Fee MLS" (Or whatever trendy label is currently being used to describe it) then every other company in the marketplace. 

So in keeping with our "True Pricing Guarantee" we only offer one basic, low cost, ($98.00) "package" of services that includes the primary service every seller of real estate needs most:

Access to the MLS system.

Access to the MLS system may be all you need from a real estate brokerage company in order to sell your real estate for top dollar, in any market, (Buyer or Seller Market) within a reasonable amount of time.

Lets face it, some real estate, particularly in a "Sellers Market," is so desirable to nearly anyone able to purchase it, that simply placing it on the market and getting the word out that it's available to buy, is all the marketing that's needed to sell it.

Meaning, that whether you're selling a $50,000.00 doublewide or a million dollar estate on a private lake, it's all about "desire" when it comes to marketing your real estate to potential Buyers. The more unique, exclusive, rare, and desirable your property is in the market where it's located, the easier it is to find a Buyer for it in a reasonable period of time on the market. Of course, that's assuming it's priced attractively enough to entice a Buyer to make an offer for it. Therefore, publishing your real estate for sale on the MLS for a total cost of $98.00 may be all you need to spend on marketing to sell your property regardless of its "current market value."

In a word, Syndication. As recently as 10 years ago there was essentially only one property database system called the "Multiple Listing Service" (MLS) that nearly all real estate owners desiring to sell their real estate used to market their property to potential real estate Buyers. (See, "What Is The Multiple Listing Service?" below for more information). Today, in addition to the MLS system, there are approximately 35 major national and international database type real estate web sites called "Real Estate Search Portals" that contain similar subsets of the data contained in the MLS system along with "For Sale By Owner" (FSBO) type property listings used by property owners desiring to sell their real estate without the assistance of a REALTOR.

Studies have continually shown that today over 80% of all people interested in purchasing real estate now begin shopping by using the web based MLS system or the real estate search portals to look for properties listed for sale. The percentage of people using the Internet to browse properties available for sale has been increasing exponentially each year to the point that, based on these studies, it is increasely evident that in the very near future, 100% of all people will primarily use the Internet to sell their real estate and to find real estate to purchase. As a result, the traditional methods of marketing real estate are no longer effective.

Avoiding Fragmentation significantly reduces your total real estate marketing costs and saves valuable time
Data fragmentation occurs when your property isn't listed on your local MLS and/or only appears on one or two real estate search portals. No one can predict what real estate search portal a potential Buyer of your real estate will use as an entry point in their search to purchase your real estate. Therefore, in order to ensure maximum exposure to every potential Buyer in the market to purchase real estate at any given moment, it is absolutely essential in today's competitive real estate marketplace that the property you want to sell appears on all of the relevent major real estate search portals. However, if you're "going it alone," you will have to first find every relevant real estate search portal that your property should appear on, then enter your property listing information manually multiple times at each site you find. having your property appear on each real estate search portal web site is that each of these sites have different rules, requirements, data display's, costs, and fees associated with using them. Not to mention the investment of your time required to re-enter the same property data at each portal upon intiation of your marketing plan, and the exponential amount of time required to re-visit all of these sites from time to time to keep your property listing updated to reflect any required changes or adjustments to your listing data during the marketing period.

The Solution to Fragmentation - One & Done
The solution to Fragmentation is CIDM's, "One & Done Real Estate Marketing System." Our system allows you to enter your property listing data just once at our site for a nominal fee. Once your data is in our system, all of the essential data and marketing content of your property listing is automatcally syndicated to every *relevant real estate search portal on the Internet that a potential Buyer for your property might use as their entry point in their search for real estate to purchase. After your data is published to our site once, if you ever have to edit or adjust your property listing in any way, you can simply return to our site, update or edit your listing, save the changes and your listing is automatically updated at every real estate search portal web site where it appears. One & Done!

In addition, the costs and the traditional commission or "fee" based structure used to pay for real estate marketing services are no longer effective.

The problem is that real estate owners desiring to sell their property

Some real estate brokerage companies like ours, are using Sellers who traditionally paid thousands of dollars in real estate commissions to market their home are now more often questioning whether such a large portion of their equity allocated to getting their property in front of eager Buyers is really necessary. This phenomenon has led to the establishment of literally thousands if not millions of new web sites where Sellers are enticed to pay a small fee or even nothing to list their property for sale on the Internet without representation by a professional REALTOR. These sites are commonly called "For Sale by Owner" portals or just "FSBO" (Pronounced "Fizz Bow") sites.

With the arrival of web 2.0, the Internet is rapidly changing the way real estate brokerage companies do business.

within a maximum of 72 hours depending on how often each portal receiving our data feed updates their database at their web site. 

had to meet very strict membership requirements including being licensed to provide real estate services in at least one State within which an individual company is doing business, maintaining membership in good standing with the National Association of REALTORS (NAR) and pledging to uphold their strict code of ethics, being a member of the State Association of REALTORS in each State within which an individual member company does business, and being a member of at least one local association of REALTORS organized to administrate all of the local property data gathered by local real estate brokerage company members in their regional service area and distribute it to the rest of its member companies and their agents. In other words, the MLS was purposefully designed to restrict access to the data it contains only to REALTORS. To summarize, in the past, whether potential Buyer or Seller, if the general public wanted access to MLS data they had to utilize the services of a REALTOR to get it.

Since its inception, the MLS has successfully defended its right to remain closed to the general public through nearly continous legal challenges by individuals and businesses wanting access to its data. The general consensus by courts as high even as the Supreme Court of the United States has been that the data contained in the MLS was collected, assimilated, and distributed, by REALTORS for REALTORS and paid for by member brokerage companies through their strict membership requirements, and as such, MLS's were not required to allow the general public to access the data it contains. As a result, most owners of real estate wishing to sell their property and nearly all people desiring to buy real estate contracted with real estate companies in order to find each other in the most efficient way possible.

As the Internet has evolved over the last fifteen years or so, more and more member companies and individual agents of those companies wanted to be able to display not only their own listings on their individual web sites but all the listings of other member companies as well. In response to its membership's desires, through the NAR, REALTORS created an opt-in system to facilitate this using a technology known as the "Internet Data Exchange" or "IDX" for short. IDX allows member brokerage companies to choose upon data entry whether or not they grant permission for each listing to appear on other brokerage companies and their agents individual web sites, local MLS sites, Realtor.com, and any other real estate search portals they administrate or subscribe to.

Soon what's come to be called "Real Estate Search Portals" or "For Sale By Owner" (FSBO) web sites began springing up all over the Internet. These alternate MLS type web sites claimed to be able to duplicate the services and benefits of a local MLS service for a fraction of the cost of utilizing the services of a traditional real estate brokerage company. FSBO type web sites in particular claim to offer all the exposure to potential real estate Buyers that a real estate Seller would get from listing their property for sale in the REALTORS MLS and thereby eliminating the need for brokerage services and the costs that accompany them entirely. However, this claim is an exaggeration at best and at worst completely misleading.

Eventually, a new kind of search portal called "HomeGain.com" arrived on the scene. Homegain took a completely different approach to competing FSBO real estate search portals because the creator of the original site was a licensed real estate broker. Homegain's business model is to try to lure Buyers into registering at their site and then resell their information to REALTORS for a hefty 25% to 35% referral fee paid to them if the Buyer referred to the REALTOR closes a transaction with them. REALTORS are also required to register on the site and pay a yearly membership fee in order to be considered for Buyer referrals. You would think that most professional REALTORS would avoid this site like swine flu. And frankly most professional REALTORS do. A professional REALTOR has no need to pay someone else for clients. However, 10 years after its inception, Homegain is still out there deceiving Buyers into thinking that their site provides some sort of value to their real estate transaction and they have enough weak REALTOR and agent members paying their way to continue in business.

The moral of the story: If you want to be assured that you'll pay full retail (Or more) for any real estate service you contract for with an agent or REALTOR with the least amount of skill available, then Homegain and any other real estate web site that exists solely to collect your information and resell it to REALTORS is the site you want to use.

There are now millions of FSBO and other types of real estate search portals on the web. And lets be clear about why they exist. Most real estate search portals were conceived of and created to address the perceived dissatisfaction of real estate Sellers with the value (Or Seller's perceived value) of compensating REALTORS and agents through a commission type fee arrangement based upon the sale price of the Seller's real estate, and paid upon the successful sale, closing, and transfer of ownership of the Seller's property. In other words, the sites are marketed primarily to Sellers in a way that suggests that Sellers can avoid the cost of paying real estate commissions by simply listing their property on a particular search portal's site for a nominal fee, thereby saving a substantial portion of the equity in their property that would otherwise be spent on the services of employing a REALTOR to help sell the Seller's real estate.

So here's the $64,000.00 question: Does it work? Or perhaps, is it working?

The answer is not as simple as yes or no as you might expect of such a question. In brief; it is working for about 15% of the Sellers out there. The problem with that answer is, that even with hundreds, thousands, or even millions, of options currently being offered to property owners from real estate search portals wishing to assist with selling their real estate, that figure is historically unchanged in the last 10 years from the previous 90 year history of the real estate brokerage business. Or at least as far back as studies analyzing the percentage of real estate sold with and without the services of a REALTOR go. So if the question were asked this way, "Have more Sellers been able to successfully sell their real estate themselves and avoid paying real estate commissions in the last 10 years vs. the previous 90 years," the answer (Based on current trends) would have to be "no."

Of course, the answer "No," begs the obvious question, "Why."

The answer to that question (In CIDM's humble opinion anyway) can be summed up in one word: "Fragmentation." With the advent of the first real estate search portal excluding the REALTORS MLS (It's anyones guess who or what site that might have been) all real estate search portals small and large eventually come to the realization (What CIDM calls the "Wall") that in order to succeed in assisting Sellers with marketing their real estate to potential Buyers, they first need clients (Owners of real estate wishing to sell) to list properties for sale on their web site. Without lots of properties listed for sale on their site, Buyers (Who invariably are mostly interested in searching for and browsing through listings of properties available for sale) have no need to visit their site for any reason. So without lots of listings, portals are limited to only offering real estate advice (Usually free reports to download that require registration on the part of the potential Buyer in return for their contact information that the sites owners can then use to market other products to them) or click through advertising to generate the necessary revenue required in order for the site to pay for itself. So the problem became, "How do I get real estate owners to list their properties for sale on my real estate search portal so I can attract millions of potential real estate Buyers to my site, so I can convince Sellers to pay me a fee for listing their property on my site because so many Buyers are here looking for real estate to Buy, instead of or in addition to listing their real estate for sale with a traditional real estate company?"

Got it? See the problem? What comes first, the chicken or the egg?

Now if there were only one or two options for Sellers other than listing their property for sale with a REALTOR on the MLS this wouldn't be much of a problem. The Seller wishing to avoid paying a real estate commission could simply list their property on one or both of the other two sites and Buyers would have to go to those sites in order to see if they might be interested in purchasing one of the properties listed there. But what if there are a hundred sites where the Seller needs to list their property in order to ensure that it's being exposed to all of the available potential Buyers out there? Or a thousand sites? Or a million? Or more? . . .

Enter the big players.

For the entire history of the real estate brokerage business there have always been individuals and companies who have made it their business to try to convince owners desiring to sell their real estate that they don't need to employ the services of a real estate brokerage company in order to successfully sell their property. On its face, that's a true fact. You can sell your real estate yourself without a REALTOR. It's just not as easy as it may appear on the surface and you may lose far more of your equity to additional interest, tax, and insurance payments, expensive but ineffective advertising expenses, wrong pricing, lost time, mistakes, and mis-calculations, in your efforts then you would have ever paid in real estate commissions that you thought you were saving. On the other hand, utilizing the services of a traditional commission based real estate brokerage is expensive. Especially if your properties true value is at the higher end of the market. Using the traditional fee upon sale approach to pay for real estate marketing services can easily exceed $20,000.00 to $50,000.00 and more even for properties valued at less than $1,000,000.00. That's a lot of cash.

The big issue with paying for real estate services using a commission based on the sales price has always been the difference in price between say a property sold for $200,000.00 vs. a property sold for $500,000.00. If both properties require the same amount of work and marketing costs to sell, and the real estate broker charges the same percentage of sale price for their fee, say 6%, the owner of the $200,000.00 property pays $12,000.00 for their real estate services and the owner of the $500,000.00 property pays $30,000.00 for the exact same service. Quite a difference.

Breaking it down even further, lets say the REALTOR in these respective transactions put in the same amount of time marketing each of these properties and they both sold 90 days after being listed. For simplicity we'll assume that the REALTOR incurred $0 dollars in marketing expense and paid half of the commission they received to another real estate company that procured the Buyer for each property. The REALTOR also has to pay 45% of their half of the commission to their real estate company and the REALTOR expended 30 hours of their time on each sale. The result is the real estate company on the Sellers side of the transaction receives $6,000.00 dollars in commission for the $200,000.00 property, of which $2,700.00 is paid to their brokerage company for cost of doing business, leaving $3,300.00 net compensation to the REALTOR for 30 hours work. Or $110.00 per hour of work. Not bad. However, for the exact same effort on the $500,000.00 property the REALTOR nets $9,750.00 or $325.00 per hour of work. Again quite a difference.

So the question has always been, "Why would the Seller of the $500,000.00 property agree to pay the REALTOR nearly three times more for the same services that the $200,000.00 Seller only paid $12,000.00 for?"

Once again the answer can be summed up in one word: "Risk."

Free, Free, Free . . . Everything is FREE!!!
Until closing that is. For years real estate companies have been advertising that everything they do is free. Free market analysis, free consultation, free listing, free advertising, free, free, free. And that's not exactly a false statement. If your real estate broker lists your $500,000.00 property on the condition that if it sells you pay a percentage of the purchase price to him/her at the closing, then puts in 30 hours of work trying to sell it before the listing expires and the property doesn't sell . . . you owe nothing for the services provided and are free to re-list your property with any other real estate company or sell it yourself. However, if it does sell, you owe $30,000.00 to your agents brokerage company. Essentially, a commission arrangement based on the selling price of a $500,000.00 property made between a brokerage company and the property's owner is a $30,000.00 bet with your agent that the agent can sell your property before the listing term expires. If your agent wins the bet, your agent wins big because they get paid over 3 times or more what they are actually willing to work for. You kind of win because you sell your property in an acceptable amount of time which is what you wanted; but you also lose because you pay far more for the services provided than say a $100,000.00 Seller would pay for the exact same service.

On the other hand if you win, you still lose. You continue to make mortgage, tax, and insurance payments on the property during the period of time the property is listed with your REALTOR. If it doesn't sell in that time, you're out that money plus you still own the property (not the desired result), plus you now have to start all over again with a new real estate company (Or you could re-list with the same company, essentially placing another bet with the same REALTOR for a new time period). Of course, the REALTOR loses too because they've expended 30 hours of their time and netted zero for their efforts not including costs. Not to mention the REALTOR's brokerage company who also netted zero for any expenses they incurred in the course of doing business supporting their agent. (Your REALTOR)

So in essence, your REALTOR put up $9,750.00 to your $30,000.00 that they could sell your property within a specific time frame, but either way you lose. Doesn't seem like a very good bet for the property owner does it?

So why do property owners agree to this arrangement year in and year out? There are several reasons but in this firms experience it can all be summed up in two words: "Free," and "Trust."

1) Property owners have been bombarded with advertising for years by the exact same real estate marketing community they are seeking to employ in the sale of their real estate, that the services they receive are "Free" if they list their property with any company and it doesn't sell within a predetermined time period. Even so this is kind of a misnomer no matter what happens during the time period your property is listed for sale. The services provided are only "Free" if you don't have a strong desire to sell and you own the property free and clear. Meaning, you're not paying principle, interest, taxes, insurance (PITI) or maintenance for the property during the marketing and sale period. This is rarely the case.

2) Most people don't buy or sell real estate on a regular basis. A person or family may only buy real estate as few times as twice in their entire lives. Therefore, it's extremely unlikely you will be using the same REALTOR or even the same real estate company for real estate services you contract for over the course of your lifetime. Therefore, there is little opportunity to create a lasting, trusting, relationship with one REALTOR. So each time you come to the marketplace most people know little about their REALTOR other than what the REALTOR tells them, and may know little about the company any particular REALTOR is associated with other than what they've read in advertising or seen on television.

What typically happens is a Seller comes to the market looking for real estate services and contacts several real estate companies. To make it simple we'll say the owner owns a property they want to sell valued at $100,000.00 The agents for the companies make appointments with that Seller to show what marketing services they and their company can provide. Two of the REALTORS offer pretty much identical services for the customary fee based commission arrangement and promote their services as "Free" unless the desired result is obtained. (The property sells and successfully closes) The third REALTOR tells them it should only take about 30 hours or so to obtain the desired result and offers to provide the same services for $100.00 per hour capped at 3.5% of the final selling price of the property if the real estate company also procures the Buyer, or 6% of the final selling price of the property in the event the Buyer is represented by their own REALTOR. Meaning, the Seller will pay as they go but if it winds up taking say 40 hours to sell the property and the Buyer is represented by their own REALTOR, the listing side REALTOR will still only receive $3,000.00 total compensation regardless of the agreed upon hourly fee. If the listing side REALTOR also represents the Buyers side of the transaction, the Seller still only pays $3,500.00 even though their REALTOR expended $4,000.00 worth of effort.

In the first example there is no advantage to the Seller because the buying side REALTOR is entitled to $3,000.00 in compensation. The selling side REALTOR loses because they expended 10 hours more than they anticipated but they are still compensated for their time at the rate of $75.00 per hour instead of $100.00 per hour. Using the same example lets say the market is pretty hot for sellers at the time this transaction takes place and it only takes the selling side REALTOR 10 hours to sell the property. In this case the Seller realizes a modest savings of $2,000.00 added to their net equity at closing. Not bad. Now lets say the selling side agent only expends 10 hours of time selling the property and also represents the Buyer of the property. In this event the Seller realizes a more substantial savings of $4,500.00 or a 75% reduction in the commission paid to their agent. The Seller is happy because they saved a substantial amount of money over what they would have paid had they contracted with one of the other brokerage companies they interviewed. The agent is happy because they've been compensated for what they perceive their value to be and the Buyer probably would have been happy either way. Everyone wins! In addition, the higher the initial value of the property being sold, the more the Seller saves in marketing costs. Using the same example except with a property valued at say, $500,000.00, the Seller would save a whopping $28,500.00 in real estate commissions or a 95% reduction in commission costs! That's a lot of cash by any measure.

So why don't more Sellers agree to a marketing plan like the one stated above? It is this firm's belief that it's because it isn't "Free" and the Seller assumes a lot of the "Risk" in the marketing of their real estate with someone they don't know very well (Trust). In other words, in this type of compensation arrangement, the Seller pays as they go and the REALTOR receives their compensation even if their efforts don't result in a sale of the Sellers property. There aren't any refunds. In addition, the Seller typically has no idea how long any particular marketing task performed by their REALTOR takes. So when they receive an invoice for services rendered, they have no idea if they've actually received anything of value for the money they're exchanging for the service. (Trust) Finally, in the event it takes far longer to sell their property then they were originally quoted, most people (Even those with million dollar homes) don't have easy access to $30,000.00 in cash to pay their REALTOR with if things don't go as planned.

For these reasons and many more, it is unlikely that the current compensation method for real estate companies offering the traditional bundle of services is ever likely to change. Real estate owners simply prefer to let their real estate broker assume all of the risk in the marketing of their real estate and then gulp in astonishment when they see their $30,000.00 of equity being paid to their REALTOR for marketing services on their closing statement.

Over the course of 25 years in the real estate brokerage business, we've seen hundreds if not thousands of other types of broker compensations plans designed to assure the Seller of real estate that they are obtaining absolute value for their commission dollar. Other than the plan we're promoting on this site, they have all failed to attract more than a handful of clients at best. In 2006, a guy named Mark S. Nadel wrote a fairly comprehensive 63 page study examining the historic criticisms of the traditional brokerage fee structure and suggested a number of possible alternative REALTOR compensation plans that may or may not provide more value for services rendered. It's not an easy read but if you're interested in reading it you can search its title on the Internet and find a copy of it to read. The rather lofty title is; "A Critical Assessment of the Standard, Traditional Residential Real Estate Broker Commission Rate Structure." Of course, since the publication of the study, the topic of Broker compensation has been even more hotly debated than ever, spawning seemingly endless compensation plan ideas from every corner of the real estate business. All of which so far have proven to be "Much ado about nothing." In reading the study it is clear to this brokerage company that in his research, Nadel completely failed to take into account how real estate Sellers feel about assuming some or all of the risk in the marketing of their properties. In other words, you can come up with all the compensation plans you want, but only an idiot broker would make an investment of their own money in a real estate marketing plan and not expect to be compensated if the desired result is obtained. (A successfully closed transaction) Until or unless property owners are willing to relieve brokers of some of that risk using their own money, nothing is likely to change and in fact, based on current studies, hasn't changed one iota and won't for the foreseeable future for all of the reasons stated above.

The bottom line is this: The United States Federal Trade Commission (FTC) and people like Nagel fail to comprehend what drives real estate brokerage compensation. It isn't the real estate companies that are determining how to charge their customers for their services. It's the owners and buyers of real estate contracting for services from those companies that are determining how and what they want to be charged for real estate marketing services. In other words its the classic "demand side" vs. "supply side" economic argument. Based on studies like Nagel's, the FTC believes that it's the real estate companies that are the driving force behind keeping the traditional commission based marketing fee structure in place. In reality, it's the consumer's of those marketing services that keep the traditional "fee on condition of sale" pricing structure in place. The FTC believes that real estate marketing service consumers are being gouged by as much as thirty billion dollars a year for services they are over paying for because real estate brokerage companies refuse to offer and price their services in any other manner. They also believe that through NAR, REALTOR owned MLS's try to discourage so called "real estate brokerage discount companies" from becoming members of their respective local boards in order to protect their traditional commission based compensation plans. (Anti-Trust) Wrong again. What they are referring to is the MLS's requirement that a Buyer's side agent be notified in advance of what they can expect to be paid for bringing a buyer to a seller. MLS's require that fee amount to be published along with the listing information as a condition of inclusion of the listed property in the MLS. The FTC asserts that, that requirement doesn't allow a so called "discount broker" to discount their fee to the Buyer's side of the transaction. The fact of the matter is; First, it's impossible for a profit based company to discount from zero, which is what Buyers typically pay for real estate services if they purchase a property listed on the MLS. Second, cashed strapped Buyers who are required to pay as much as 20% down and an array of questionable fees and points supposedly for services delivered by lenders in order to even be able to purchase real estate, generally don't have an additional $3,000.00 or $15,000.00 or more to pay their broker a "fee conditioned on purchase" for real estate services. That's why the Seller typically pays a "finders fee" to Buyer brokers through the Seller side real estate company for bringing a buyer to the transaction. Buyer's simply can't afford to. It is CIDM's opinion that the FTC should be focusing all of their attention on Banks and Mortgage Lenders and the systems that congress put in place that have allowed them to profit exponentially from the owners and buyers of real estate for the entire history of the United States before exploring further whether consumers of real estate services are being "ripped off" by real estate brokerage companies. Over the course of a typical thirty year mortgage a real estate buyer will pay nearly three times the original market price of the real estate they buy even if they only borrow 80% of the value of that real estate at the time of purchase at interest rates far below 10% annually. At CIDM, we happen to think that, that is an exorbitant amount to pay for making a bookkeeping entry each month for 30 years on a mortgage. We respectfully suggest that Washington get their own house in order before venturing out into the marketplace looking to place blame for gouging consumers of real estate services. After 25 years of dealing with mortgage lenders and the system our congress put in place to supposedly regulate their market, once again, we could write volumes of information to invalidate nearly every argument congress and the FTC puts forth in defense of the current system and who is being gouged by it. But for now we'll leave it to all the overeducated, overpaid, Ivy league economist news pundits clogging up the air waves claiming they know everything about everything . . . but of course, only twelve months after whatever it is they're analyzing occurred . . .

So What Does All This Have To Do With Real Estate Search Portals?
Plenty. It is the above commission gouging argument promoted by the FTC and others, coupled with the lack of MLS data access by the general public (non-members or non-REALTORS) that prompted most of the real estate search portals to believe that real estate Sellers and Buyers would flock to any web site offering data publishing and access for a nominal fee vs. paying real estate commissions to real estate brokers for access to the MLS. In the early 2000's, companies such as Homegain.com sold venture capitalists on the idea that if they invested in their concept at least 40% and eventually the vast majority of all real estate Sellers would choose to list their properties on a real estate search portal vs. through a REALTOR member of a local MLS in order to avoid paying what they considered to be unreasonably high fees for access. They argued that in time, the real estate brokerage business would eventually be replaced by Sellers and Buyers dealing directly with each other effectively eliminating the need for real estate brokers altogether. They reasoned that if Sellers were allowed to enter their property information at their web site themselves for a nominal fee instead of using a broker to access the MLS, all the Buyers would naturally flock to their site instead of flocking to the MLS where all those nasty real estate brokers and their outrageously high commissions were waiting to "pounce" on innocent consumers. They also promoted the idea that if all the owners of real estate in the world were given the choice between contracting with a typical traditional real estate broker for real estate marketing services and access to the MLS serving their particular property's location, or providing their property information to their particular web site for the same nominal fee instead of paying an expensive real estate commission, they would have the data they needed to attract all the Buyers to their sites provided by their Seller customers, not just for "Free" (Theres that ugly word again) but the owners of that real estate would actually "pay" them for the privilege of providing them with their property data. Buyers therefore would have no where else to go on the Internet to look for real estate to buy. Then after they eliminated all the real estate brokers from the real estate transaction process, they would be free to sell additional advertising on their sites where all the eager eyes of all the Buyers and Sellers of real estate would have to be to look at it.

Seems logical doesn't it? Historically, many industries in the United States have eventually gone the way of the Dodo Bird or become a shadow of their former selves in the name of progress. Mechanical adding machines come to mind. Or any product associated with the general public relying on horses as their primary source of transportation. Blacksmiths and such. Why not real estate brokerage too?

There are so many holes in the theories that real estate search portal sites promote about what consumers want and how to give it to them that it would take another boring book on real estate economics to put forth all the possible reasons that their theories are just that; Theories. And likely to remain nothing more than theories for as far into the future as we can currently perceive. So in the next section we'll cover just the most glaring differences between a well run MLS system and a real estate search portal, and why the MLS system is so vastly superior to a real estate search portal.

1) Probably the most glaring difference is "conditioned membership." Meaning, it costs a lot of money each month and each year to be a member of an MLS system. The membership fees generated by the membership requirement are used to administer all the property data in the MLS and to enforce all the rules required to keep the data timely, accurate, and up to date at all times. Members who break the rules face hefty fines or in the most severe instances of fraudulent behavior, banishment, if their use or mis-representation of the MLS is determined to be detrimental to their client or the general public at large. Real estate search portals have no such membership requirement other than perhaps a registration process. They also don't have a way to enforce rules requiring "data integrity" meaning, they have no way to insure their customers provide accurate information, keep it updated in a timely manner or to insure property owners using their service are promoting "good will" towards other members of the public accessing the provided data.

2) MLS systems have literally an unpaid army of hundreds of thousands of REALTOR members across the country adding to or updating the property data they contain literally every minute of every day, including nights and weekends. There is no public, private, or governmental entity yet conceived of that can provide that kind of data accuracy with that kind of consistency for "Free" to the general public. And there probably never will be. REALTORS maintain their expensive memberships in MLS systems in order to "create an orderly marketplace" for real estate transactions to take place transparent to the general public. Since the general public's need for access to a real estate marketplace is such a rare occurrence, perhaps as little as "once in a lifetime," there is no way that a real estate search portal will ever be able to sustain itself on access to data alone without resorting to attracting commercial advertising income to its web site to support its database. There is no better evidence supporting this fact than the very nature of real estate itself. Real estate is one of the naturally occurring results of the Earth's 3 most common elements which are in a constant state of flux. Therefore, real estate is also in a constant state of flux. That is, constantly changing, therefore constantly in need of being updated to accurately reflect its current state of condition at any given moment in time. Consider this: A home sitting on a lot carved out of the prairie in middle America worth say $100,000.00 at this moment. One moment later a tornado rolls through, scattering the home into a million little pieces. Has the property data changed in that moment? What's that real estate worth after moment number two? Lets take the example a step further. Lets say that the owner of the property in the example had it listed for sale on a real estate search portal. After the tornado, how high up on the owners priority list do you think getting the data updated on the real estate search portal site he/she used is? Lets take it yet one step further. Lets say that prior to the tornado the owner had been negotciating with a potential buyer on the east coast through the real estate search portal web site. The buyer has determined that in order to feel comfortable purchasing the property they must see it in person first. So they make arrangements to use some of their vacation time from work and buy some plane tickets specifically to go visit the Sellers property before making an offer. Unaware that the property has dramatically changed 5 days previous to their departure, they fly to the closest metro area near where the property is located to have a look at it. When they arrive they discover that their dream home no longer exists. The tickets are no longer refundable and they wasted their precious vacation time. Oops.

Ok, we'll admit that the story is a bit of a stretch but here's the point; Had the owner listed their property on the MLS with a REALTOR, even if the REALTOR's home was also destroyed in the tornado, we'd be willing to bet based on 25 years of membership in MLS's systems in various locations, that either the REALTOR or someone else in the REALTOR's company would have had the data regarding the destroyed property either updated or withdrawn (Canceled) in the MLS within no less than 48 hours and more likely 24 hours. Secondly, if the Buyers were working with the same REALTOR as the owner or another REALTOR they were referred to in the property owners town, by yet another REALTOR working in the Buyers home town, it's very possible they would have saved an enormous amount of time, money, effort, and hassle because their REALTOR would have immediately notified them of the situation at hand prior to them getting on that plane. That's how the system is supposed to work; that's how it does work most of the time, that's why the dollars spent on commissions can be far more valuable then the actual marketing services provided by a REALTOR, and that's why real estate search portals will never be able to compete with REALTORS or MLS systems dollar for dollar no matter how much they spend on advertising trying to convince you otherwise.

In summary, without REALTORS or an unpaid army of supporters to keep refreshing the data for each real estate search portal web site, they really have nothing of value to offer Buyers and Sellers of real estate except hype and advertising that the consumers of those sites could just as easily find at a thousand and perhaps millions of other web sites on the Internet.

3) Competition Resulting in Fragmentation
The next major factor that the real estate search portals failed to consider was what effect the fragmentation of real estate data encompassing all the properties available for sale in the country at any particular moment would cause in the marketplace when the data was no longer available from just one source. As stated previously, this probably wouldn't be a problem if there were only one or two additional sites to look at. But soon well funded companies like Google, Microsoft, Yahoo, Zillow, Trulia, Craigs List, eBay, etc. all wanted in on the action. At first they thought they could just "scrape" the additional data they needed off of government web sites containing public access to real estate tax data. Only problem with that is that government can't afford to pay an army of employees to update their data either, their data usually includes only very basic information about the real estate they are taxing, not all of the data they have can be accessed through the Internet, the government doesn't know whether or not any of the real estate in their database is for sale or not at any given moment, and if they keep track of sales data for taxing purposes the appearance of that data in their database isn't a priority so it lacks specifics about the sale, how it occurred, why it occurred, what type of financing was used, etc without conducting a lot of additional research about each sold property. Governments are only interested in how they can implement fees and taxes on real estate owners and not much else and the accuracy of the data they compile for that purpose is reflected in the quality of the data in their database.

Soon the portals realized that unless they did something to attract the 85% of Sellers still choosing to list their properties in the traditional way (through a REALTOR member of an MLS system) they would be left to split up the remaining 15% of Sellers who prefer to go it alone without the assistance of a REALTOR. They also learned that when a Buyer wants to look for real estate to purchase they want to see ALL the properties available for sale at any particular moment, not just the properties that happen to appear on any particular web site search portal. And they discovered that Buyers don't want to have to visit and learn to use a hundred different web sites to evaluate all of the real estate they might be interested in purchasing. Finally, they learned what REALTORS have known for over a century of selling real estate; most Buyers only come to the real estate market once, twice, or at best a handful of times in their lives, as soon as they realize that buying real estate is far more complex then running to the supermarket for a bag of groceries, or buying an automobile, they tend to seek out the assistance of a REALTOR to help them. The REALTOR then directs these buyers to the MLS system, not real estate search portals.

So the well funded real estate search portals decided to do what all corporations do when they can't figure out a way to convince the general public that their services are a needed addition to a marketplace, or buy their way into a marketplace, (They would have to buy the National Association of REALTORS which is a non-profit trade organization and all of the 800 or so local member MLS systems in the country, also non-profit trade organizations) or find some other way to weasel into a marketplace; They convinced the U. S. Department of Justice to investigate and bring suit against the National Association of REALTORS and a handful of local MLS systems for Anti-Trust. This immediately accomplished two important things for the search portals; First it made NAR and NAR's REALTOR members look like the bad guys whose only intent was to deprive the general public of competitive pricing for real estate marketing services by monopolizing the data provided VOLUNTARILY and for FREE by their dues paying members. Second, the bill for the investigation on the search portal side of the argument would be paid for by tax payers not the complaining corporations. Of course NAR had to foot the bill for its legal defense with its REALTOR membership dollars.

Details of the case itself are beyond the scope of this site but can easily be looked up on the Web if you so desire. The bottom line result of the case was NAR settled with the DOJ by allowing any individual member or MLS member (Meaning all the participating members of a particular local board of REALTORS or MLS system) of NAR to feed their  MLS data to real estate search portals with two important conditions; The listing data appearing on a real estate search portal web site must include the company name of the real estate brokerage company and the real estate agent working for that company who supplied the data for the listing in each record displayed in a customer's search results on the search portal's site.

So that in a nutshell is why when you now search for real estate available for sale at a real estate search portal web site, you find that 85% of the properties returned in your search results are listed by REALTORS and not real estate owners. You can find all the same listings at one web site (Other than FSBO's) by simply using Realtor.com and avoiding the real estate search portals altogether.

responsible and the role of a REALTOR has changed from potential SellerGone are the days of combing through the Sunday newspaper classifieds and driving around looking for neighbohood real estate for sale signs. In the past, the vast majority of Buyers typically would look around Today most potential Buyers Whether you are looking to buy or sell a home, the web is where it’s at!

 With the advent of Web 2.0, the ability to search for properties available for sale on the Web has become considerably more difficult. (See the topic "About The Current Status Of Real Estate Brokerage And Web 2.0" on our home page)

*Most real estate search portals are geared towards people looking to purchase homes. However, some of them are geared toward certain types of real estate markets such as condominiumns or apartment rentals or co-ops, etc. So if your property is a home (single family residence or "SFR") it won't appear on sites that don't include SFR's in their databases.