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Cutting Costs or Corners?

Discount brokerages take a thinner slice of a home's sales price, but critics say they offer a smaller helping of service

September 29, 2002|JEFF BERTOLUCCI | SPECIAL TO THE TIMES

To keep peace among their fellow real estate agents, and to move their clients' homes as quickly as possible, most discounters offer a standard 2.5% to 3% commission to buyers' agents.

Mike Glickman, a discount Realtor based in Beverly Hills, also sells homes for a 3% commission. But he keeps just half a percent of that and gives 2.5% to the buyer's agent.

"I work 35 to 40 communities [in Southern California], and in some of them you can offer less than 2 1/2%," Glickman said. "But if you do so in some areas, you won't have a broker look at the house."

Some discounters promise to sell a home for 1%, but, in most cases, that involves a single agent who deals directly with a buyer or who manages the transaction for both parties. "We can't post a home on the MLS and charge only 1% because you have to structure in the pay of the other agent," said Cheryl Gober, president of RealEstateRebates.tv, a discount brokerage in San Diego.

Discounters cut fees in other ways too. For instance, Malibu-based eCondo.com has a flat-fee structure in which its largest commission is $10,000 (for sales above $1 million). And Dan Dobbs, a Realtor and mortgage broker in Orange County, will sell your home free provided you retain him as your agent on your purchase--at a standard 2.5% to 3% commission.

Many conventional real estate agents react to discounters with indifference. Corporate officials for Coldwell Banker and Re/Max declined The Times' request for an interview, with a Coldwell Banker spokesman dismissing discount brokerages as "niche players."

The niche label does have some merit. Roughly 2% of home sales nationwide are handled by discount brokerages, according to the National Assn. of Realtors. And even CataList Homes' Davin said the market share for discounters has been less than 1% historically.

But many home sellers don't factor in historical considerations when choosing an agent.

"The buying and selling public looks at the importance and value of a [real estate agent's] work and probably thinks 6% is a little high," said eRealty Chief Executive Russell Capper.

One thing is certain: In a hot real estate market, a reasonably priced home in good condition will sell fast.

"Whether they list it with the best real estate company in the world or with Aunt Suzie," Glickman said, "the home's going to sell in three days."

*

Jeff Bertolucci, a former news editor for PC World, is a freelance writer in Agoura Hills.

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