As most people know, home sellers can choose to use a real estate agent or sell it themselves and save the commission expense. Home buyers however, do not have the same option. They must pay for real estate services even if they do not use a real estate agent.
In the current system, the seller and the seller???s agent pay the buyer???s agent. Not only is this illogical, but the buyer loses all control over thousands of dollars in commissions. In the case of an unrepresented buyer, the seller and the seller???s agent typically keep the buyer???s agent commission. Most of this commission, if not all of it, usually goes to the agent even though no additional service was provided. In effect, the agent is collecting a bonus while the buyer does all the work. And the seller has less room to negotiate.
I believe a few simple regulations are needed to protect home buyers and sellers. If you agree, please contact your state and federal representatives -
1 - The commission a seller???s agent receives can not change because a buyer does not have an agent.
2 - The buyer???s agent compensation must be paid solely by the buyer.
3 - The buyer can add the buyer???s agent compensation to the mortgage.
There are several benefits to this change ???
1 - Gives home buyers control over which real estate services they want, if any.
2 - Lowers the cost of homes for buyers by reducing real estate commissions. This will help more people afford homes.
3 - Increases competition in the real estate industry which will help lower commissions overall.
4 - Prevents seller???s real estate agents from collecting a double commission while providing no additional services. The current system artificially inflates housing prices making homes harder to buy and sell.
CUTTING THE COMMISSIONS
MOST REAL-ESTATE AGENTS STILL WANT A 6 PERCENT CUT. BUT A FEW CLEVER BROKERS HAVE FIGURED OUT HOW TO SELL HOMES CHEAPER, BY SETTING UP WEB OFFICES.
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Will the Internet finally smash the real-estate cartel? Home prices have risen 40 percent in the past five years, yet most real-estate brokers still quote sales commissions at about 6 percent (some negotiate, if asked). The industry is using its political clout to hold down price-cutting. But consumers could win, now that prices are on the Web.
Brokers do business through the computerized Multiple Listing Service (MLS), where firms list the houses they have for sale. They work hard for their customers and know their neighborhoods. The trouble is, they trade with each other politely, at the cartel price. So a few clever (impolite!) brokers figured out how to sell homes cheaper by setting up Internet offices and letting you peep at MLS listings on your own. (These listings also go onto Realtor.com, but with less information.) A thousand flowers are starting to bloom:
Discount real-estate firms. If you're selling your house, a discounter can save you a ton of money. These brokers offer all the usual services and expertise. But instead of charging you 6 percent of the sales price, they take 4 percent or even 3 percent. That's a saving of $7,000 to $10,500 on a $350,000 house--a no-brainer, I'd say.
The granddaddy of the discounters is ZipRealty.com, in 10 states and the District of Columbia. Zip's participating local brokers charge about 1 percent less than the going rate. To attract home buyers to its site, Zip offers to rebate 20 percent of its commission. If you buy a $350,000 house, you'd get a $2,100 thank-you check.
The discounter Foxtons operates in New Jersey, southern Connecticut and New York, charging home sellers 3 percent. Brokers from other firms receive just 1 percent for finding a buyer. In pre-Internet days, they might have blackballed Foxtons right out of business. No more. If their clients find a Foxtons house they like on Realtor.com, the broker can't escape showing it. CEO Van Davis says that outside brokers are accounting for half his sales.
You can find discounters almost everywhere. Just enter the name of your city or county into a Web search engine, along with "real-estate broker," then "low commission," "3% commission" or "discount."
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