REVIEW ARTICLES: REAL ESTATE BROKERAGE RESEARCH IN THE NEW MILLENNIUM

Abstract This paper examines the direction of real estate brokerage since 1999. This paper updates the brokerage literature since that time and examines the direction of brokerage research. The paper highlights the major points of the research and summarizes important findings. Papers are divided into categories and discussions provided for each section. Areas that are examined include (1) efficiencies in brokerage operations, (2) technology, (3) performance, and (4) agency relationships. Efficiency issues include brokerage operational efficiencies, franchising, and product diversification. Technology issues include effects on income and brokerage practices. Performance issues include productivity, professionalization, gender/minority broker effects, and contract type. Agency issues include disclosure, competition, and agency relationships in general. There's a joke about real estate brokerage that goes: A real estate broker was dismayed when a new brokerage office next door erected a huge sign that read "Best Agents in Town. " He was further dismayed when a new firm opened on the other side next to him and put up an even bigger sign that read "Lowest Commissions. " At first the broker panicked but then hit on an idea. He put up the biggest sign of all directly over his office that read "Main Entrance. "1 This joke provides an excellent illustration not only of the competitive nature of the real estate brokerage business but also of the ingenuity that is often observed in this industry. In an excellent discourse on the rise of the real estate brokerage profession in the United States, Hornstein (2002a) discusses how real estate brokerage emerged as a full-time occupation in the late nineteenth century and how, by the early twentieth century, the professionalization of real estate brokerage had began in earnest in the Midwest and West. As he points out, the emergence of professional real estate brokerage reflected the cultural transformation at the time of the importance of home ownership and its consumption by the American middle class. The organization providing the major representation for real estate brokerage in the U.S. is currently the National Association of Realtors (NAR). The NAR was originally founded as the National Association of Real Estate Exchanges in 1908 in Chicago. Its primary objective was to provide unity as a way to influence matters of real estate. The Exchange's name was changed in 1916 to the National Association of Real Estate Boards. The word "Realtor" was also invented by the Association in 1916. The REALTOR trademark was registered in 1950. In 1972, the National Association of Real Estate Boards became the National Association of Realtors. The NAR became the largest trade association in the U.S. in the 1970s.2 In 1916, with the name change to the National Association of Real Estate Boards, the real estate profession began to seek legitimacy as a profession by adopting educational standards and advocating for state laws mandating licensing. They also argued that, in order to define boundaries, the profession should be organized around an established body of knowledge. This was aided greatly through research by respected economists such as Richard Ely in the then-new branch of economics, Land Economics. At the same time, the National Association began to forge political ties. The goal was to influence legislation most favorable to housing and/or homeownership (such as overhauling mortgage financing). A good example is the federal guarantees for mortgages that came with the National Housing Act of 1934. However, as Hornstein (2002a) points out, the realtor association was not some monolithic entity that steamrolled its will by sheer size. On the contrary, the Association only occasionally acted in a unified fashion. Over the period 1940 through the 1960s, starting with the post-WW II building boom, females entered the real estate brokerage business in record numbers. …