[ssharp]

The MLS and agent-based system is the real culprit. Until Zillow and Trulia came around and really captured attention, that data was accessed on a few larger sites, like Realtor.com, but also a massive amount of smaller agent sites.

While Zillow is ultimately doing the same thing, I think they can eventually position themselves strong enough to start wedging agents out of the process. One of the huge issues is that the MLS listings are the go-to source for information. If you want to buy a house that's in MLS, or want to list your house for sale in MLS, you gotta play ball with agents. Since MLS is such a dominant marketing tool, they're able to maintain the archaic, but profitable, agent system. If Zillow, minus the MLS, becomes a strong enough marketplace for homes, you'll have viable competition to MLS.

There are already flat-fee MLS agents out there, where you control the commission on the buyer-side and pay a flat fee on the seller-side to get into the MLS listings. That's a decent hack for sellers right now, but it's still just a small improvement on a crappy system.

[golovast]

This is definitely on point. I've worked for a fairly large regional MLS at one point and interacted with a fair number of other MLS's and what I've found out about this business was pretty mind boggling.

Vast majority of them are stuck in the past (think 1990s) and their only competitive advantage is restricting access to information. A typical real estate agent (with very few exceptions, I'd guess <5%) is adding little to no value to the transaction and is simply taking a middle-man fee. They are in general petrified of places like Redfin, Zillow and Trulia and they do anything in their power to maintain the current business model. Generally it involves limiting access to "their" data and coming up with whatever legal roadblocks they can use to defend against other sites.

The agents

However, they are sitting on an absolute treasure trove of data which would be amazing in the hands of the right people.

[graham1776]

What if a Seller paid a broker (super small fee)just to get on the MLS, but not handle the ins and outs of the transaction? Is this possible?

[ssharp]

This is readily available by a variety of services. Google "flat fee mls" to see the options.

I sold my house using one of these services in 2011. I saw seller agents adding zero value outside of MLS, so I just paid what it cost to get on there. Buyer agents are actually a little more useful to their clients, but ironically, the seller has to pay them as well. When you do flat fee MLS, you specify on the MLS contract what % of the sale will go to the seller agent. I actually don't know if you can write in "0" or "0.5" in that box on the contract, but I know for sure you don't have to write in the industry standard 3% (standard is 6%, with 3% on the buyer broker/agent and 3% on the seller broker/agent).

In my experience, we did not need to do anything that required an agent. The paperwork is mostly prepared by the buyer's loan company and then a title agency handles the rest. Paperwork like the purchase agreement is basically boilerplate and I had a lawyer review ours just to be sure.

The lawyer cost me $50. That plus the flat-fee totaled less than $600, saving me thousands on what I would have payed if I had to send an extra 2.5-3% to another agent.

[smackfu]

The buyer's agent would probably rat you out, if the seller's agent listed on MLS wasn't actually the selling agent.