If you're paying a real estate agent a 6% commission to sell your house, you're offering too much. Five percent? Still too high. And if you're parting with (shudder) 7% of the sales price, you might as well tattoo "chump" on your forehead.
Or so the growing legion of discount real estate brokerages, which promise to sell your home for fees ranging from 1% to 4 1/2% of the selling price, would have you believe.
Discount brokerages aren't new, a fact that any conventional real estate agent will quickly point out. Help-U-Sell, for instance, which bases its commission on the number of "services" it provides its clients, has been around since 1976.
And because commissions are always negotiable, savvy sellers can often talk agents down from their customary fees. Traditionally, conventional brokerages such as Century 21, Coldwell Banker and Re/Max charge commissions ranging from 5% to 7%, with the fee split evenly between the buyer's and seller's agents.
But there's nervous chatter among real estate professionals these days about a potential decline in commissions. The Internet has made information previously available only to licensed agents, such as homes for sale in a specific city or neighborhood, accessible to anyone with a PC and modem. As a result, clients are doing much of the selling-and-buying research themselves and seeking reduced commissions in return.
The lure of a discount agent is particularly enticing in Southern California's overheated real estate market, where a home can sell in one day. Some sellers wonder why they paid 6% for what seems to them like so little work.
"I sold my house for $825,000, and when you talk about 6% of that, that's too much," said Danny Bautista, who paid CataList Homes, a low-commission brokerage in the South Bay, a 3% total commission to sell his Palos Verdes Peninsula home. Because a standard residential real estate sale in the South Bay involves a 5% commission, Bautista saved $16,500.
Internet-based discounters such as eRealty.com and zipRealty offer to sell homes at a percentage point or two below the going rate in specific U.S. markets, including Southern California. And CataList Homes markets its services with billboards and other advertising that play off sellers' distaste for paying customary commissions.
"Homes in the South Bay that would sell for $300,000 five years ago are now selling for $600,000," said CataList Homes Chief Marketing Officer Michael Davin. "You wonder why agents, who were happy charging 5% five years ago, want 5% today."
