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List for Less:  Flat fee MLS service to help "for sale by owner" (FSBO) sellers.  We cover Massachusetts, Maine, New Hampshire. List for Less:  Flat fee MLS service to help "for sale by owner" (FSBO) sellers.  We cover Massachusetts, Maine, New Hampshire.

TALKING ABOUT A REVOLUTION

Who needs a traditional real estate agent in these days of discount brokerages, easier access to MLSs, and sell-it-yourself firms? In a down market, it's a question that more buyers and sellers are asking.

As much as Russ DiPietro relishes saving money, there are limits to what he will do in the name of fiscal conservancy. “If I need to have my foot operated on,” he says, “I’m not going to break out a scalpel.” But DiPietro has determined that selling a house without the aid of a real estate agent is not foot surgery. He sold a home in Quincy that way about 10 years ago, and last fall he listed his mother-in-law’s $899,000 Milton house on forsalebyowner.com, run by a New York company that says it has saved homeowners “billions of dollars” in real estate commissions since 1997. Forsalebyowner customers can list their properties – and choose options like customized brochures, demographic information, yard signs, and an e-book that the company touts as “the definitive guide for selling your home without a real estate agent” – at prices ranging from $89.95 a month to a flat fee of $899.

DiPietro’s Internet listing has not generated offers, but he has no intention of ringing up a real estate agent. “I won’t pay 6 percent of today’s prices,” he says, referring to the typical broker’s commission that sellers pay. “It’s not worth it.”

An increasing number of Web-based real estate companies hope other buyers and sellers will also revolt against a commission structure that has been in place for decades. These companies operate on set-fee structures or – like Seattle-based Redfin – offer commission rebates. All promise to pocket less of the proceeds than a traditional broker. Most of their pitches can be squeezed into this question: Why pay real estate fees based solely on the price of a property instead of the services provided?

Redfin, which plans to expand its West Coast business into Boston this year, aims for simplicity. Sellers pay $2,000 for marketing materials and online listings. “When an offer is made, we take over,” says Redfin’s Cynthia Pang. “We negotiate prices and draw up the paperwork.” The company refunds buyers two-thirds of the commission it receives from the seller’s side of the deal. Some other discount firms feature rosters of options longer than a T.G.I. Friday’s menu, ranging from basic online listings to personal guidance from brokers.

That doesn’t mean everyone is embracing the concept. In fact, 83 percent of sellers nationwide hire a full-service agency, according to the National Association of Realtors. Agents say people prefer to have someone else handle price negotiations, particularly in a down market. But buyers especially are spending a lot of time online – about 80 percent use the Internet for house hunting, up from just 2 percent in 1995, according to the realtors association. Technology has “changed forever the way people buy and sell property,” says Steve Ozonian, chairman of the board of Help-U-Sell Real Estate, the country’s largest set-fee real estate company, based in Irvine, California. Primarily, that’s because consumers have more access to multiple listing services, the databases of properties for sale that agents once guarded like top-secret military plans.

The first MLS database was created in San Diego in 1887 as a way for brokers to share information, and there are now about 900 nationwide. Anyone can view them, but only licensed agents who pay a fee to join an MLS can list properties for sale. Discount brokerages such as listforless.com and ownersdirectmls.com charge just a few hundred dollars to list a property on a MLS, allowing buyers and sellers to contact each other directly. Other firms offer more limited listings that are not linked to MLS databases.

David Barry, a San Francisco attorney specializing in antitrust litigation, says MLS databases are controlled “by self-anointed trade associations that tell us they know what’s best.” Barry is trying to change that through Open MLS Institute, a nonprofit that is collecting signatures for an initiative that would establish statewide MLSs first in Maine and eventually in all 23 states that allow citizens to petition to get measures on the ballot. “Anyone, not just an agent, could list,” he says. The group’s goal is to form open MLS databases across the country that cost about $20 monthly “for unlimited listing rights.”

Before joining Help-U-Sell, Ozonian held top jobs at commission-driven companies wedded to the MLS structure, such as Coldwell Banker and Prudential Real Estate. Today, he criticizes the “disparity between the amount of work a realtor puts into an average transaction and what they charge the consumer.” Ozonian’s defection to an alternative firm jolted some industry observers. Local broker Bill Wendel likens it to “Bill Gates going to work for Steve Jobs.” Wendel opened Real Estate Cafe in Cambridge 12 years ago and is considered an innovator in the fee-for-service movement. He says the Internet’s “incredible efficiencies” make it possible for alternative companies to charge less than traditional ones. Time-guzzling research that used to be an agent’s responsibility, like poring through listings, is now routinely done by buyers. “When I see someone using an alternative broker,” he says, “I think they are Web-savvy and innovative or someone who tried business as usual and couldn’t get their price.”

Wendel’s view is strikingly different from what Dick Cahill sees as president of Massachusetts’s largest independent real estate firm, Jack Conway & Co. All 45 “Conway Country” offices were built on the commission system. It still works, Cahill maintains, because full-service almost always delivers the best deals. “I’ve seen new ideas come and go,” Cahill says of discount brokerages. “What are you getting for a flat fee? And if you want something else, what’s the next flat fee?” Conway’s financial stability and half-century of experience allow it to weather market slumps better than newcomers, he says, and its thousand or so agents warrant commissions because they are skilled at accurately setting prices, marketing houses, and screening buyers. “As great as the Internet is, when push comes to shove, people come to the real estate agent because they don’t want to do it on their own.”

Or they look for a sign. DiPietro, the Quincy man who listed his mother-in-law’s house on a website, also is employing an ancient real estate tool: a “for sale” sign. “In a good location,” he says, “it’s like gold.”

Mark Pothier is a senior assistant business editor at the Globe. E-mail him at mpothier@globe.com

 

 

 


How to Bargain for a House

As Market Cools, Buyers Regain
Long-Lost Negotiating Power;
Want an Audi With That Condo?

By RUTH SIMON
Staff Reporter of THE WALL STREET JOURNAL
October 29, 2005; Page B1

Sellers can also do other things to stand out, such as offering the broker a higher payout if the property is under agreement by a certain date or offering to pay the buyer's closing costs, one month's mortgage payment -- or even the heating bill, says Pat Rioux, broker-owner of ListForLess.com, a flat-fee multiple-listing placement service in Massachusetts.

URL for this article:
http://online.wsj.com/article/SB113054740621183194.html 


When Realtors Fight About Commissions, Things Can Get Ugly

A Nantucket Broker Sues
Over a $15.5 Million Home;
Poison Ivy, a 10 p.m. Call
By JAMES R. HAGERTY
Staff Reporter of THE WALL STREET JOURNAL
December 20, 2005; Page A1

URL for this article:
http://online.wsj.com/article/SB113504294402026999.html

The stakes have been getting higher as prices in many markets soar. Even a simple chat with an agent at an open house or a drive past a few houses can result in a claim by the agent to have earned a commission. "It's one date and you're married," says Pat Rioux, a real-estate broker in the Boston area. Other disputes arise when home buyers at the last minute dump an agent who has done lots of work and then try to negotiate a lower price by telling the sellers they won't have to pay a commission.


 

 

Excerpt:  To market their condo, the Gesners turned to www.ListForLess.com , a flat-fee listing service owned by Realtor Patricia Rioux, which charged them $555 to place a listing on the Multiple Listing Service, commonly known as the MLS.  That put the details about their property on Realtor.com and the Web sites of most brokers in the area.

"We're like Home Depot - 'You can do it.  We can help,' Rioux said.

In 45 days the Gesners had sold their condo, paying only a 2.5% commission to the buyer's agent rather than the 5 percent of 6 percent commission a traditional broker would have charged.


 

Out on their own

Those who go without realtors still may opt for marketing help

By Brenda J. Buote, Globe Staff  |  September 11, 2005

After buying and selling two properties in Revere with the help of an agent, Mike DeSimone decided to cut out the middle man and close his next real estate deal on his own.
                             
''It meant more money in my pocket," said DeSimone, 35, who now lives in River View, Fla., just outside of Tampa. ''I figured there was no point in paying someone a big sales commission to do something that I could do myself."

And the payoff?

DeSimone accepted an offer within the first two weeks. A young couple bought the townhouse for $296,000, just shy of his asking price of $299,900 and considerably more than the $205,000 he paid for it in 2003. After paying the couple's agent a 2 percent commission, he walked away from the settlement table with a tidy profit: $85,080.

Tales like DeSimone's are causing some sellers to question the need to pay an agent a commission to peddle their property. Each year, about 6 percent of the 70,000 Massachusetts residents who sell their homes do so without an agent, according to John Dulczewski, spokesman for the Massachusetts Association of Realtors.

At a time when some sellers are spending big bucks to hire experts to primp, prune, and paint their homes to ensure a quick sale, others are choosing to go it alone. This plucky group is putting its marketing and negotiating skills to the test to avoid paying a broker the traditional commission of up to 5 percent.

For a home worth $364,900 -- the average price of a detached, single-family home in Massachusetts -- that could translate into a savings of $18,245.

It may seem like a good money-saving strategy for those who can't afford to pay an agent or have little equity in their home, but sellers should tread carefully. Experts in the real estate business, and not just the agents and brokers who have sales commissions at stake, are quick to point out that selling a home involves a lot of work.

''Getting top dollar for your home in any market requires brains, creativity, and hard work," said Bruce N. Hahn, president of the American Homeowners Foundation, a national nonprofit group based in Arlington, Va. ''Many sellers don't have the requisite time or inherent marketing skills to market their own home effectively."

Those with full-time jobs or many other responsibilities might want to take the traditional route and hire an agent, Hahn said, because sellers face tough questions when they put their home on the market: How do I know the buyer is qualified? How much of a deposit should I require? Who should hold the deposit? How do I market my property? What should I include in my sales contract to protect me?

With so many questions to answer, and so much at stake, sellers who forge ahead without the help of an agent might be wise to consider hiring other experts -- an appraiser to determine the right price for the property, a handyman to make necessary repairs, and a real estate attorney to review contracts.

Savvy sellers are turning to the Internet to market their properties and seeking companies that will put their homes on the Multiple Listing Service, the database used by all real estate agents, for a flat fee.

''We've put together a listing sheet with a detailed description of the home and photos of its best features -- the vaulted ceilings and renovated kitchen -- and put a bunch of 'For Sale' signs around the neighborhood, but even with all the foot traffic that comes through this area, we thought that might not be enough," said Megan Cronin. She and her husband, Paul, are trying to sell their two-family home in Salem, by the House of Seven Gables, for $589,000. ''So we paid a broker to list our home. We saw it as a way to expose the home to a large audience, and still save on commission."

In Merrimac, Helen Hodgdon owns and operates the You Decide Realty Coop, a company that places properties on the multiple list and provides assistance to sellers for a flat fee of $699.

'We help with the transaction, look over the contracts, and act as escrow agent if the seller asks us to," said Hodgdon, who has been a real estate agent for 21 years. ''The only thing that we do not do is show properties. We leave that to the owners."

You Decide was the perfect fit for Elyse Simmons, 47, who was wary about selling her two-bedroom Peabody condo on her own, but didn't want to pay a hefty real estate commission. ''I can call Helen at any time, and she advises me. She even pre-qualifies people, so I'm not wasting my time showing the condo to people who aren't serious about buying."

Several sellers in the region who chose to go it alone said getting their properties placed on the Multiple Listing Service and publishing detailed descriptions and photographs of their homes on the Internet were key to successful sales.

''I believe our condo sold because of Pat's program," said Karen Pesa, 30, of Wakefield, referring to Pat Rioux of listforless.com, a company that charges sellers a flat fee of $555 to place their homes on the multiple list and market the properties on real estate websites. ''The couple who bought our home had seen it on the Internet.

''Some full-service realtors will insinuate that people need them more now because of the recent slowdown in the market, but that is not true," said Rioux. ''No matter what the market is doing, a home will sell if it is a good value for the money."

DeSimone's advice: ''Make the house as presentable as possible. Do your homework and price it right. In the end, it's all about patience and timing."

© Copyright 2005 Globe Newspaper Company.

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