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Contrast the BuySide model with the average real estate agent whose primary goal is to get you to buy his listing, listings with the highest commissions, and/or listings with the highest prices.

In the NAR model, given the enormous housing inventory glut, some sellers have resorted to upping already absurd commission rates. I have even seen this advice offered as a tip by Realtors in many articles. Of course those agents are then all too happy to show higher commission generating houses first. "This is just another symptom of a business model broken beyond repair." said Fox. "In contrast, our model is based on service, customer satisfaction, and trust."

The key word in that sentence is trust. How can there be any trust in a model where someone can hop to the front of the showing line simply because they are willing to offer the listing agent a higher commission? A home buyer in the existing NAR model always needs to keep this fact in the back of their head at all times.

Another distinguishing feature of the BuySide model is pre-approval, not just pre-qualification. Before scheduling a private showing on any listing in the system, a buyers must be pre-approved. If someone cannot afford a house they want to look at, it simply will not be shown.

Currently BuySide is doing business in five states: Illinois, California, Florida, Virginia, and Georgia. A person in one of those states can save a lot of money by finding a house oneself. BuySide will be rolling out additional states soon and eventually plans to be in all 50 states.

For at least 64% of the population buying a home, there is simply no reason to fork over huge commissions to a real estate agent when that person can instead pocket those commissions himself. When Buyside expands to all 50 states, that is going to result in a big dent in the pockets of real estate agents as buyers flock to take advantage of BuySide's significant improvement over the current business model.

Consider the situation from the point of view of the NAR. Many real estate agents are already stressed over declining sales and falling prices. The rollout of BuySide Realty in all 50 states is going to significantly compound the problems those commission based agents are facing. In California alone one out of every 55 working age adults is a real estate agent. Where are those next commission checks going to come from?

But the problems with the NAR model do not stop there. I will soon take a look at the sell side of the equation from BuySide's sister organization known as IggysHouse. I will have some final thoughts at that time as well. Stay tuned.


Click here to check out The Changing Business of Real Estate: Part II.