by Nancy Salem
The Albuquerque Tribune Commissions are a touchy subject among residential real estate agents.
Federal antitrust laws prohibit them from getting together to set a standard rate. They are allowed to charge anything a consumer is willing to pay, and that fee should be negotiable. But real estate commissions nationwide generally are 6 percent to 7 percent of a home's sale price, or about $13,000 on a $200,000 property.
To some people, that's steep.
Stephen Brobeck, executive director of the Consumer Federation of America in Washington, D.C., said he believes it's more than a coincidence that commission rates are so standard nationwide. He said the real estate industry is "a cartel that overcharges homebuyers and sellers more than $10 billion a year."
U.S. real estate agents charge double what their counterparts do in Canada, Britain, Australia and New Zealand, and often get higher hourly pay than lawyers and doctors, Brobeck said. He said commissions are so uniform that the quality of service often has no relation to the fee paid.
While most agencies charge the seller 6 percent to 7 percent, some companies offer lower commissions, typically 3 percent to 5 percent.
Larger agencies say their low-cost rivals don't offer the same level of service.
"Everyone is free to choose the method they want as far as having someone market their house, from for-sale-by-owner all the way to a full-service real estate broker," said Doug Vaughan, CEO of The Vaughan Company in Albuquerque, N.M. "But you get what you pay for. Selling a home today is the single biggest financial transaction 70 percent of the public will make. Today's real estate transactions are more complex than ever before, and Realtors offer so many services. You don't want to get the low bid in parachutes, elevators or real estate companies. It doesn't make sense with such a big-ticket item."
But the owners of lower-commission agencies say they provide what it takes to sell a house. "People assume if you pay less you get less, but that's just not true," said Jack Burkett, owner of Belleflower Realty in Albuquerque. "If you take away all the things you really don't need, it cuts the fees down."
Belleflower is strictly a listing agency. Sellers pay the company about a 3 percent commission.
"I think 7 percent is a lot of money to pay," Burkett said. "The statement I make every day is that paying more commission doesn't change the value of the house. If a property is priced right, it will sell."
Most homes listed with Belleflower are not placed in the Multiple Listing Service. Burkett uses $600 of the commission to advertise a home in the newspapers and on two company Web sites. Owners do their own showings and can field questions from potential buyers who see ads or the yard sign. Belleflower handles contracts, inspections and paperwork through closing when a house sells.
"Our system is user-friendly for the buyer and seller," Burkett said. "The buyer can go to the house and ask the owner a question. Most of our listings sell in-house (without a buyer's agent) because prices are right and people work harder."
If an agent from another company brings a buyer, the seller can decide whether to pay that agent's fee or leave the house on the market, Burkett said. "That doesn't happen very often," he said. "Buyers generally come to us directly. Most people buy because they drive neighborhoods and see signs. The best buyers come off the signs."
Another Belleflower service is handling the contracts and other paperwork on for-sale-by-owner transactions for 1 percent of the sale price.
Belleflower gets 15 to 25 calls a week and generally has 60 to 100 listings at a time, Burkett said.
(Distributed by Scripps Howard News Service, www.shns.com.)
Resources Consumer Federation of America (CFA)
CFA is first and foremost an advocacy organization, working to advance pro-consumer policy on a variety of issues before Congress, the White House, federal and state regulatory agencies, and the courts
Consumer Federation of America (CFA)
Website:
www.consumerfed.org
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