As the cost of housing continues to rise, so does interest among home sellers in alternatives to the traditional agent's commission, new generally set at about 6 percent in this area.
The number of persons trying to sell their own residences appears to be climbing, if classified ads are an indication. So is the list of discount and flat-fee-for-service brokers.
Though this trend is still in its infancy, it has grown enough so that a few real estate franchisers are said to have looked into the possibility of adding this type of service.
The National Association of Real Estate Service Agencies, a Houston-based organization of about 300 low-cost brokers, reports that it has received inquiries from a Long Island-based real estate franchiser called Network of Homes Inc. and from Sears, roebuck's subsidiary, Allstate Insurance Co.
Unlike convetional or full-service brokers who charge a percentage of the sales price of a house as commission, 80 percent of NARESA's members charge a fixed fee. The average is $800.
NARESA's chairman, Edmond Wood Jr., says cut-rate brokers already may have taken an estimated 2 percent share of the residential market, particularly in the Western U.S. The Naional Association of Realtors, however, took the position at its last convention that the discounters do not yet pose a threat.
In Arizona Richard (Rick) Dural has 40 members in his franchise called Sav-Com, which charges a flat fee of $300 for assisting with the sale of a house. Los Angeles had about 30 cut-rate real estate agencies; San Francisco has 20, according to Wood.
In the Washington suburbs the number of assisted sales agencies,as some prefer to be called, has doubled to 10 in the past year. They are about evenly divided between those charging a flat fee and those charging percentage. Fees range from $300 to $1,800, commissions, from 1 percent to 4 percent. The services offered differ substantially, but they all claim to give the seller a chance to save money.
On a $60,000 house, a 6 percent commission amount to $3,600. A seller using a low-cost broker can pay less than one-tenth or as much as two-thirds of that commission, according to the literature of discount brokers. At $100,000 the potential savings range from $2,000 to $5,700, they maintain.
When "For Sale By Owner" signs and ads bear the phone number of a realtor, the agent is "assisting" the seller in exchange for a fee that is well under the going rate.
Cut-rate broker in this area tend to have smaller advertising budgets. Some advertise only in neighborhood or county papers and magazines, whereas the more expensive ones advertise in the Post and Star.
Like conventional brokers, most cut-rate brokers will hold the seller liable for a fee even if he finds his own buyer after signing a contract with the broker. About half the brokers require payment if a sales contract is signed, even if it does not go to settlement.
Even at the manimum rate, a customer can expect the broker to prepare the contract, arrange for appraisal and inspection, suggest promising sources of financing, estimate settlement costs, and give general counseling.
The wide differences in price supposedly are caused by the amount of advertising and whether the broker is expected to place the house in a local multiple listing service run by a realtors' board, provide potential buyers, escort them to the house, show them around the house and be present at settlement. A comparison of fees and discount commissions charged in the area reveals a significant disaparity in prices for the same services.
None of the low-cost brokers interviewed suggested that they were out to replace full-service brokers. They said they recognize that many people, faced with the largest single purchase of their lifetime, need all the help they can get.
On the other hand, some people move so frequently that they do not build up equity in their home and thereby actually stand to lose money after playing a 6 percent commission and all related costs. Among them are military personnel, whom some lowcost brokers in this area say are their primary customers.
Among the low-cost brokers in the Washington area:
CAC Real Estate Exchange of Alexandria, which charges $600 for service that includes occasional ads, $1,800 for advertisements and house-showing, 4 percent for mulitple listing. Ad costs are not refundable.
Commonwealth Homeowners of Vienna, which charges 1 percent plus a $75 nonrefundable fee for advertising. The seller can negotiate whether to pay an additional 2 percent or 3 percent commission if it is a cooperative sale involving another realty firm.
Discount Realty of Gaithersburg, charges a 2 percent commission if owners show houses themselves, or a 4 percent commission when the house is listed through a multiple listing service. Firm places local ads.
4-3-2-1 Realty of Faifax charges 4 percent for multiple listing services, 3 percent if the firm provides potential buyers and shows the house, 2 percent if the owner shows the house, and 1 percent if the sellr finds the buyer. The firm places ads in major newspapers.
Homeowners Realty Center of Springfield. For $575, the firm shows houses and escorts potential buyers. It charges a $75 non-refundable fee for placing ads.
Karras Realty of Columbia charges $1195 when the owner shows the house. A non-refundable fee of $95 covers costs.
McMillen Realty of Temple Hills charges $350 when the owner shows the house and charges a $100 nonrefundable fee for advertising.
National Homeowner Services of Arlington charges $300 if the owner shows the house, $50 conrefundable; and $500 if the firm shows, with $150 for regional ads nonrefundable.
Suburban Home Advisors of Kensington, charges 1 percent if the owner shows the house, including a $100 non-refundable fee for placing local ads.
United Services Homeowners Association charges $350 if the seller finds a buyer or $500 if the firm locates a buyer on transactions out of its Reston or Woodbridge offices. Its Forestville office charges $475 either way. Advertising costs are extra.
Virginia Homeowners of Springfield charges $795 if the firm shows the house and escorts potential buyers. It charges a $95 nonrefundable fee for placing regional ads.