Tonight Leslie Stahl's interview regarding an alternative real estate model of discounted brokerage commissions mentioned that the State of Illinois is one of the states that has imposed a law making it harder for discount brokerages to offer their discounts.  In fact, this is absolutely true.  The implication was that full service brokerage firms are conspiring to undermine the discounters.    It is unfortunate that this one-sided discussion failed to mention why the law was enacted in the first place.

This law, which obviously affects all homeowners and property owners in the Chicago metro area, the Northern Illinois real estate community , as well as buyers and sellers of homes in Chicago's North Shore and Northwest Suburban areas, might lead one to conclude that it was designed to limit consumer options.  In fact, this law actually resulted from consumer complaints to the Illinois licensing authority, the Illinois Department of Financial and Professional Regulation (www.idfpr.com).  

Numerous instances of consumer dissatisfaction were brought to the attention of the licensing entity regarding the lack of services provided by some of those whose business model embraces the discount profile.  In an effort to assure that this dissatisfaction was addressed and resolved, Illinois enacted a law that required a minimal level of service be provided by those offering real estate brokerage services.  This was done not to undermine discounters and not to limit consumer options, but rather to assure  that consumers received a minimal level of service, a level expected based upon their complaints. 

Stahl's interview additionally failed to examine or highlight the benefits of full service brokerages and neglected to share the statistical data that shows a much higher average listing to selling price ratio for those who utilize full service brokers.  Had this been explored, it would have been clear that despite higher costs of sale in the full service brokerage model, there is an associated higher net on average that typically companions that cost and results in an overall higher net profit in the end.  Stahl failed to focus upon the most important issue which is ultimately what puts more dollars in the consumers pocket at the end of the day! 

For more information on this subject , read the Blanche Evan's  Realty Times article of May 11, 2007 which further explores this current controversial topic.  Blanche Evans is a highly respected, experienced and well known real estate journalist whose in-depth article can be found at http://realtytimes.com/rtapages/20060621_banksnewspapers.htm.

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