What’s preventing homeowners from buying and selling to each other directly? Why do we need real estate agents? (I ask as a mid 20s engineer who is probably never going to own a home)
This book covers some very valuable roles middlemen play: https://link.springer.com/book/10.1007/978-1-137-53020-2
> What’s preventing homeowners from buying and selling to each other directly? Why do we need real estate agents?
I wrote about this 8 years ago (was employed as a software engineer at a real estate brokerage at the time):
"I think that there are lots of marketplaces have sprung up via the internet, but as far as I know, the significant ones all offer products that have one of these characteristics:
* the consumer buys them often [for some definition of often] (airplane tickets)
* the product is fungible (books, cars)
* the product is relatively cheap (stuff sold on ebay, amazon)
Because a slight miscalculation in value, lack of market insights or poor salesmanship can lead to tens of thousands of dollars left on the table by the seller.
A chief problem with technically-mediated intermediaries is that rather than buyers and sellers being directly connected, they are connected through yet another, larger-scale intermediary. Amazon, eBay, and Alibaba are three such instances, and each has its own motivations and opportunities to distort markets.
Regulations, preventing the same intermediary from playing both sides of the transaction (in a pass-through mode, apparently, in the flipping case), fiduciary obligations, and of course, reporting, enforcement, penalties, and decertification for violations, are all highly useful steps.