Charles Schwab vs. Flat Fee MLS Pioneers

By
Real Estate Agent with Avar Realty, LLC

 

In 1971 Charles Schwab incorporated First Commander Corporation and in 1972 he bought out his partners and renamed it Charles Schwab and Company.  In 1974, Schwab had the good fortune of an SEC pilot program that deregulated some brokerage transactions and in 1975 the SEC mandated negotiated commissions for stock trades.  At this point most brokerages raised their fees.  Schwab in contrast started what he called a discount brokerage.

Schwab’s discount brokerage was really an unbundling of trading and advice much like Flat Fee MLS Listings are an unbundling of marketing and transaction management.  This meant that instead of Schwab supporting a force of trained advisors that demanded high pay, he could use back office staff to place the trades and investors would be free to do their own research.  For investors that wanted research and advice, he offered separate services.

To understand how this compares to Real Estate, one has to examine the different structure between the stock brokerage industry and the real estate brokerage industry.  Stock is largely national.  The National Association of Securities Dealers (NASD) is a trade group that is closely supervised by the Securities and Exchange Commission (SEC).  In contrast the National Association of Realtors (NAR) has little or no oversight.  State Real Estate Commissions have power over licensees but little power over National, State or Local trade associations.

Schwab got his start in a nationally (or even internationally) regulated medium.  Flat Fee MLS Pioneers, immediately came up against the wrath of local Realtor® associations.  Schwab was free to grow without persecution where Flat Fee MLS Brokers were taken out back and tarred and feathered.  Sellers were told by local brokers (and still are as of this writing), you can’t List in the MLS for a Flat Fee; that’s illegal.  Sellers were told by traditional Realtors® (and still are as of this writing) if you list with a flat fee firm, we won’t show your listings.  Perplexed sellers asked….Why?  We are still offering you a 3±% commission?  Traditional Realtors® rarely have a response.  However, Realtors® did not count on one major change; Realtor.Com.  Realtor.Com empowered buyers to begin telling Realtors® what they wanted to see.  Realtors® were no longer picking the houses.  This was the gateway that opened for Flat Fee MLS Listings

 

Ava Terry Broker with Avar Realty  and www.HuntsvilleFlatFeeMLS.com are Members of the Chamber of Commerce, National Association of Realtors and North Alabama MLS Service. We are the premier flat fee discount brokerage for Huntsville and North Alabama. For more information contact one of our flat fee agents. Sell your home with state of the art Flat Rate MLS marketing concepts.  Our method saves you thousands without scarificing quality.

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Rainer
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Ava Terry
Avar Realty, LLC - Huntsville, AL

Craig

Thanks for the comment.  We keep teaking our program to give the best service for the most efficient pricing. We have added services and dropped others to fine tune the needs for this market place.  Thanks Ava....

Jul 28, 2009 04:36 PM #1
Rainmaker
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Celeste Chism - Fairfield Glade TN Fairfield Glade Real Estate and More
RE/MAX Premier Choice - Crossville, TN
Your

HI Ava,

Great post. I recently changed my business model to a Flat Fee MLS brokerage and I am the first in our area. What a challenge and adjustment to my competitors. I am passionate about this way of operation and I tell everyone, I'll never go back to traditional real estate again.

I especially enjoyed your closing thought on saving thousands without sacrificing quality! Best wishes & much success to you!

Sincerely,

Celeste Chism, Broker Choice Realty of Tennesse, LLC - Crossville TN

Sep 13, 2009 09:10 PM #2
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