Realtors have had amazing success in keeping their commissions up. Whether you sell your house through a chain operation or an independent office, everyone in a given city will probably charge the same. Typically, you pay 6 percent. Now, however, the real estate business is moving toward the Web. Will that break the commission cartel, or not?
Over the years, many new players have entered the realty game. "But they wanted to join the cartel, not compete with it," says John Reed, editor of the Real Estate Investor's Monthly in Alamo, Calif.
Not that commissions are rigidly fixed. A Realtor may offer a discount to win a particular client, or cut the commission to help a buyer and seller close a deal. But that doesn't impinge on the industry's listed price.
New types of Realtors on the Web are advertising transactions for less. Two of them have national reach: zipRealty.com and eRealty.com. But their impact remains to be seen.
ERealty came under attack in Austin, Texas by the Board of Realtors, which represents all the Realtors in the area. The board tried to put eRealty out of business by denying it access to local real estate listings. ERealty won the first round in court, and the board is backing off.
Web Realtors can cut your costs in a couple of ways. First, they make more efficient use of something called the Multiple Listing Service (MLS).
Virtually every city has an MLS, managed by its Board of Realtors. When a Realtor gets a new property to sell, he or she usually lists it on the MLS, where everyone in the business can see it.
If the firm that got the original listing also sells the house, it will collect the full 6 percent commission. If the house is sold by a broker from another firm, the commission is split: 3 percent for the listing broker, 3 percent for the selling broker.
Increasingly, Realtors are giving the public limited access to the MLS, through local boards of Realtors, individual Realtor Web sites and Realtor.com, a venture partly owned by the National Association of Realtors, an industry group.
Shoppers using these sites can set the parameters they want zip code, school district, number of bedrooms, price range. The screen will show you still pictures of some plausible homes, and maybe a video tour.
Web tours save both the Realtor and you a lot of time. When you enter the office, you have already weeded out the less interesting homes.
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