Conflicts of interest in the real estate market

The real estate market fascinates me. Not only is real estate often the largest holding of many people, but the lack of liquidity, lack of transparency, and vested interests of various players tells us much about people and markets.

For instance, while some observers may balk at the idea that corporate managers would purposely fight transparency, we see much evidence of the same behavior by real estate brokers who fight to maintain their competitive advantage that the lack of transparency brings.

For instance, from the NY Times:

"The Internet has radically changed the way consumers buy books and airline tickets, trade stock and learn news. But the real estate industry has resisted change -- and protected its commission structure-- by controlling the information on its Multiple Listing Service database of properties for sale.

“You can find out more on the Internet about an eBay Beanie Baby than you can about a $1 million house,” said Glenn Kelman, chief executive of Redfin, a licensed broker in Washington State and California.

The M.L.S. is the only place that contains nearly all the homes for sale in a community. Only brokers can post there, but agents can also display selected information about a listing on their own Web sites and on Realtor.com."

Of course it is changing, albeit slowly (e.g. Zillow lists prices of most homes), but it sure is taking longer than many so-called experts would have expected.