In 1975, stock brokerage commissions were deregulated. Prior to that, the industry catered to large institutional investors and offered pricing that made it very difficult for individuals to get into the market. It often cost hundreds of dollars in commissions to buy or sell even small quantities of Blue Chip stocks.
When deregulation came, most of the large brokerage houses did what many expected they would do: they raised fees. But one small company that did not even have an office in New York, went the other way. Charles Schwab took the opportunity to become the first Discount Broker and the first to cater to the consumer, not the institutional investor.
In a few short years, he was not only competing with the big guys, he was beating them.
As the Internet matured, so did Schwab's marketing and service philosophy. He empowered consumers by giving them easy-to-use online tools for research and analysis of companies and stocks. Previously, this kind of information was only available to brokers.
At the same time, he changed the way he charged for services. He did away with percentage based brokerage commissions and started charging a flat fee: $15 per trade. With that, the revolution in stock brokerage was complete. The consumer was king and the playing field shifted to one focused on how low flat fee brokerage houses could go without sacrificing service.
In 1976, Don Taylor, the founder of GreatNest set out to do the same thing in the real estate industry. Prior to that, percentage based real estate commissions of 5%, 6%, 7% and even 10% were the norm. Realtors had all of the information about houses for sale and horded it under lock and key in big silos they called the Multiple Listing Service. Big fines and even license suspension could result when an agent shared this closely held information with consumers.
Taylor changed all of that. First he knocked down the industry norm of percentage based commissions and, like Schwab some years later, instituted set fee pricing: everybody in a specific market place paid about the same thing to sell property. Then he focused his company on empowering the consumer with information. His idea was to give people all the information they needed and help them make a good decision.
But this is where the history of Charles Schwab and Don Taylor diverge. Unlike the stock brokerage business, the real estate industry didn't jump to embrace consumer empowerment and fair pricing. Because the prevailing real estate business model was (and still is) completely dependent on charging lofty percentage based commissions, the industry dug in and held on. The old line realty firms did whatever they could do to silence Don Taylor and his upstart company: GreatNest.
But the cat was out of the bag. Not only did Taylor have a better idea, he also had thousands of delighted customers attesting to the fact. Growth was swift and offices opened around the country.
Today GreatNest is alive and well. The mission remains the same: empower consumers with information and save them thousands of dollars with set fee pricing. It made sense then and it makes sense today. Here is a short video that explains how GreatNest low set fee pricing works, why it makes so much sense, and how much a typical consumer can save.
We'd welcome the opportunity to show you how we can help you with your real estate project and how much you can save.
To find out more about what we do, how we can save you thousands, and to get a free market analysis for your home, please contact us here.