Things are changing in the real estate business. Full-service brokerages are under attack by the Feds, the Internet, by guys working out of their second bedrooms in their pajamas (…).
The article below is about a "discount" broker – that’s a company / person who does the barest minimum of work for a seller, and collects a fee for it.
"Full-service" brokers don’t like the discount brokers. There are some valid reasons for this (discount brokers can sometimes act like ambulance chasers or the stereotypical "used-car salesperson"). However, one of the main reasons full-service brokers don’t like discount brokers is that they are putting huge pricing pressure on the traditional 5-6% commissions paid by sellers in the past!
By James R Haggerty, The Wall Street Journal
The fight shows the increasingly tough tactics under way in the civil war dividing residential real-estate brokers. The industry’s traditional model of commissions is under attack by discounters, the Internet and even regulators.
The stakes are high as housing prices soar. Last year, commissions in the residential real-estate market hit $61 billion, according to an estimate by industry publication Real Trends. In such cities as San Diego and Las Vegas, home prices have more than doubled over the past five years.
Most traditional brokers charge commissions equal to 5% to 6% of a home’s sale price, with agents for the buyer and seller splitting the proceeds. Mrs. Jebavy and other discounters are courting consumers who today demand a break on everything — from stock trades to airline tickets.
Complete article: Discount Real-Estate Brokers Spark A War Over Commissions