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New Math On the Old Commission
The do-it-yourself approach was "a complete disaster," says Dan Kilcoyne, with his wife, Shira, and daughter, Madeline, at their new home.
(By Ricky Carioti -- The Washington Post)
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More than 67 percent of real estate agents said the biggest impact on their commission rates last year came from discounters, according to a national poll of 1,000 agents released last month by Inman News, a real estate news services.
But times are changing. The market is softening.
When that happens, sellers turn anxious, said P. Wesley Foster Jr., chairman of Long & Foster Real Estate Inc., the largest brokerage in the Washington region. They want open houses, fancy brochures, tough negotiators. Paying discounters who post their houses on the multiple-listing service for a few hundred bucks, then walk away, sounds less appealing to them.
"When the market is hot, the discounters come out to play, but when the market is slow most of them go away," Foster said. "We're feeling less pressure from discounters this year than last year."
Traditionally, sellers are the ones who pay commissions to the brokers on both sides of the deal. The brokers then keep a portion of the money and pay an agreed-upon share to the agents.
Brokerages can set a commission level or range to list homes for sellers. Still, consumers can haggle over those rates. Agents can negotiate a more lucrative split for themselves. As discounters gain momentum, both are doing so more often.
"The agents are saying: 'Give me more. Give me more,' " Foster said. "The clients are saying: 'Don't charge as much. Don't charge as much.' "
And buyers are saying: Does any of this affect me?
It does because the commission is reflected in the asking price of a home. The higher it is, the more money buyers fork out.
That's where another segment of discounters see a moneymaking opportunity: Web-based rebaters.
Those firms operate similarly to their flat-fee cousins. Generally, they keep their costs down by doing as little of the legwork as possible. Then they give the customer a portion of the commission that the company receives.
BuySide Realty Inc., a Chicago-based firm, gives 75 percent of its commission to buyers who find their own homes. Instead of scouting for houses or driving clients around, BuySide focuses on scheduling appointments for clients who want to view properties and walking them through the offering and closing process via e-mail and phone.
