In my opinion, most home shoppers select a real estate agent based on their expertise and their overall fit with the potential client more so than based on price. For evidence of this, look no further than the many companies that started out as discount brokerages but which have reduced their discount over time, in most cases to the point where their product differentiation has become the quality of their agents rather than their price point. Brokerage after brokerage that have tried to gain market share based on offering discount services have tried and failed, because consumers don’t respond to it. The real estate transaction is too infrequent, too expensive, and too emotional for people to select an agent primarily based on price. True, there are also industry forces which make it difficult to operate as a discount brokerage; but the primary reason why discount brokerages fail is because consumers don’t choose to work with their agents.
Exactly.