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Feb

24

Why the end is more imminent for Realtors than Lawyers…

Michael CarabashAs with lawyers, the end of Realtors is often prophesized through the advent of sell-by-owner websites that cut out the 6% commission which Realtors and brokerages charge for a typical transaction. The idea behind the website is simple: allow owners and sellers to negotiate a purchase and sale agreement for property without involving the middlemen. This trend has been ongoing for some time now and there are a number of websites dedicated to squeezing out Realtors, such as For Sale By Owner.

It is interesting to note that although this trend is currently being experienced in its infancy in the legal industry (i.e. where disruptive technologies like Dynamic Legal Forms, automated document generation, etc. are making legal services more accessible, affordable, and expedient), there are many difference between Realtors and lawyers which would make Realtors in their traditional form much more obsolete and faster.

To begin, the barriers to entry to becoming a lawyer are much greater than they are to becoming a Realtor (which does not require years spent at university, articling, etc.). Second, there is a real access to lawyer problem: affordable lawyer specializing in certain legal areas are somewhat hard to find (e.g. Lawyer Referral Service? YellowPages? Friends and Family? Who do you turn to?). There is no such access to Realtors problem: everyone and their uncle knows of a realtor they can turn to in order to sell their home or help them buy a new one. Moreover, Realtors spend an exuberant amount of money advertising their services in a cut-throat market. Third, lawyers must often specialize in certain complicated legal areas which take years of experience and know-how to develop expertise in. For the most part, all Realtors can provide the same basic services – whether it be assisting clients in buying, selling, or leasing a home, commercial office, farm, etc. If there is specialization in the real estate industry, it is likely confined to geographic areas and types of homes; this doesn’t take away from the fact that all Realtors are capable of doing the same thing (i.e. filling in paperwork, negotiating, and finalizing a deal). These three differences reveal that lawyers – particularly those who specialize in a complicated legal area such as tax litigation or commercial law – are and will continue to be in high demand and, as such, safe and secure from disruptive technologies that will take business away from other types of lawyers.

Overall, given the low barriers to becoming a realtor, the market prevalence and accessibility to Realtors, and the fact that they can all pretty much perform the same services to assist clients, I envision the end of traditional Realtors happening on a wider scale much quicker than it would for traditional lawyers.

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