A Short History Lesson

Date: 2012.05.24 | Category: House & Home | Tags: Buying House,Real Estate

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OK, some of you still with us? Good. Let’s discuss for a moment— and I mean very quickly—a little bit of history so you can figure out how we got to where we are today. In the 1920s, if a land owner wanted to sell a piece of property he would contact a “real estate man” who, in turn, would go out and try to find a buyer.

There were no offices and certainly no rules or regulations. What would happen is the real estate man would try to convince an owner to sell land for as little as possible, while at the same time trying to convince the buyer to pay as much as possible. Whatever the difference was, the real estate man would keep for himself.

Needless to say, real estate men got bad reputations very quickly. Fast forward to post-World War II America. By this time, laws had evolved and real estate practice had become a little more attuned to consumer interests.

Landowners would still go to real estate men—now called brokers—who would broker the deal between the seller and the buyer, but instead of pocketing the difference, the broker now only took a percentage of the final sales price—a commission.

As offices got bigger and brokers got busier, they hired people to help them. Those people would act as agents of the broker. When a broker got a listing (a property for sale), the agents would go out and try to find buyers. Any agent who was successful would get to split the commission with the broker. The unsuccessful agents would get nothing.