Bill Cherry, Ph.D., Realtor
A long time ago, in graduate school, I studied economics as it pertains to the international banking exchanges.
But to more simply describe my course of study, it was to learn how the US economies deal with commerce when more than one country's money is involved.
In the course of study, a rather innocuous term, disintermediation, cropped up.
Disintermediation primarily defines what happens when commerce bypasses a middle-man.
In this flow chart, (a) is the traditional method of producing and selling goods; (b) is the disintermediation of wholesaler in a production and selling of goods; and (c) is the disintermediation of all middlemen, i.e., the producer sells directly to the consumer
Amazon is a hybrid disintermediator similar to (b).
In finance, disintermediation occurs when the rate of return on savings deposits at banks become substantially lower than projected returns on investments in equities and mutual funds. Deposits fall and thus, loans the banks can make reduce.
No one seems to be talking about it, but disintermediation is occurring in the traditional real estate brokerage business.
In the past, we primarily were affected by For Sale By Owner sellers/buyers. Realtors were disintermediated -- the listing agent for sure, and often the selling agent as well.
For whatever the reason, two additional disintermediators have been added to our equation, apparently neither has a real estate license. First, there are the Truilas, Zillows, Hubzus.
Second, there are the flippers who are sending out mass mailings encouraging those interested in selling their home, to contact them first, inferring a quick sale with no real estate commissions to be paid by the seller. No real estate license is required of flippers, yet they are infringing on brokers.
All of these are examples of disintermediation. The traditional Realtor buyer agent, seller agent combination are, in someway, disintermediated.
Disintermediation, when successfully applied, quickly becomes cancerous to a business. It is metastasizing the real estate business now.
Within the past week, Thw Wall Street Journal wrote a voluminous piece about current housing markets and their future. Their expert sources were those identified as staff economists for Truila and Zillow, not the economist for the National Association of Realtors. The NAR's representative made a brief guest appearence toward the end of the article.
One only wonders why our industry has cooperated with disintermediators rather than challenge them.
This time, disintermediation is not innocuous.
BILL CHERRY, REALTOR