Real Estate Success

Like most homeowners, Mark and Lisa Alves called a full-service real estate agent when they decided to sell their home in Los Angeles. And like most agents, the agent offered to sell their house for the standard 6 percent commission.

Mark Alves did some calculating. He wanted to sell his three-bedroom house for $176,000, but he would have to raise his asking price to about $187,000 to pay the broker’s commission of nearly $11,000. Or he could stick to his $176,000 price and take a smaller profit.

“Neither of those sounded appealing,” Alves said.

After trying unsuccessfully to sell the home himself, he turned to Help-U-Sell, one of a growing number of companies that market a seller’s property for a flat fee far below the usual 6 percent commission.

“The sign went up at the end of January, and four days later my home was sold,” Alves said. He got $181,000 for the house — $5,000 more than he originally expected and more than enough to pay Help-U-Sell’s $3,450 fee.

“I saved more than $ 7,000, and all I had to do was spend a few hours showing my home to people,” he said. “Why should you pay an agent a 6 percent commission, when you can just pay a few thousand bucks and get the same result?”

A growing number of homeowners are asking the same question, and some full-service real estate brokers are worried.

Across the nation, real estate companies willing to slash their commissions to home sellers who will help with the marketing are sprouting rapidly.

Although exact figures are not available, it is estimated that about one-third of all residential sales today involve a seller who pays less than the standard 6 percent commission, up from perhaps 10 percent or less five years ago.

The number of discounters doing business today is not known, primarily because real estate companies do not have to report the commissions they charge to state regulators. But nearly everyone — from Realtors to housing analysts — agree that the number is growing.

Most of these companies offer to sell a homeowner’s property for a flat fee, typically ranging from $3,400 to $3,950, a substantial savings over full-service, full-commission brokers.

The discounters usually provide their sellers with “for-sale” signs, advertisements in newspapers or brochures and ongoing advice throughout the sale process. They also handle most or all of the necessary paper work.

However, the seller must show the home to potential buyers, an often bothersome and time-consuming task. Some discounters will perform that chore, too, although it usually costs an extra $ 500.

Discount brokers say that they estimate the value of a client’s home the same way that full-service companies do — by examining recent sale prices of comparable houses in the neighborhood. And, discounters say, they are as good at negotiating for the seller as full-service brokers.

But perhaps the biggest bone of contention between discounters and full-service companies involves the multiple listing service, or MLS.

The MLS is copyrighted information circulated only to members of the local board of Realtors. It lists homes for sale in the area, including their asking price and the commission a real estate broker would collect if the broker produced a buyer.

While full-service companies and discounters disagree about each other’s merits, they are unanimous on one point: The growth in the number of flat-fee firms is putting downward pressure on commission rates throughout the brokerage industry.

Technorati Tags: financing home, real estate