Real estate agents serve a necessary function in a real estate transaction. The BLS, a government agency, points this out in certain terms.
A real estate agent’s job description is defined by the BLS (Bureau of Labor Statistics.):
One of the most complex and significant financial events in peoples’ lives is the purchase or sale of a home or investment property. Because of the complexity and importance of this transaction, people typically seek the help of real estate brokers and sales agents when buying or selling real estate.
Real estate brokers and sales agents have a thorough knowledge of the real estate market in their communities. They know which neighborhoods will best fit clients’ needs and budgets. They are familiar with local zoning and tax laws and know where to obtain financing for the purchase of property.
Brokers and agents do the same type of work, but brokers are licensed to manage their own real estate businesses. Agents must work with a broker. They usually provide their services to a licensed real estate broker on a contract basis. In return, the broker pays the agent a portion of the commission earned from the agent’s sale of the property. Brokers, as independent businesspeople, often sell real estate owned by others; they also may rent or manage properties for a fee.
You can find the remainder of the Nature of the Work of a Real Estate Agent here.
At first blush, this doesn’t appear to be a position that can be replaced by a “rating system” or a “customer satisfaction bonus.” Movies are given star reviews. So are kindergartners. Oh, don’t forget that Amazon and Apps for the iPhone also use a community based rating system which works quite well for the community and the product. Real estate agents are not a product. Furthermore, an agent is not “supposed to help you” they are your agent!
If the function of a business is to remove the human element, there must be an excellent reason for the automaton. Why would you want a robot helping you with an investment such as a house? I don’t even own a vacuum that functions on its own, though I do think it is a good idea. But an automated vacuum is quite different from a person assisting you in a major transaction.
Buying a home is not an impulse buy. A book or a 1.99 App for your iPhone is; hence, the five star rating system. Rating agents like this is dubious, at best.
One more problem I have with the model:
Its underlying premise is: real estate agents are not going to give you the best deal because they work for a commission. This is entirely untrue. In so many ways. It implies that all agents were to blame for the housing crisis—which is not true—at all.
Buying a home, as the BLS so keenly points out, is a one of the most complex and serious events in peoples’ lives. That is why you need an agent’s help. Even if they do make a commission.
Some things are worth a little bit more money.