Community Choice in Real Estate

by Russell Shaw

Mega-Producing Realtor

Author website

“Interested” wrote:

What would be the disadvantage of listing a home with a Realtor who charges a flat fee based on services provided?

Brian Brady responded:

I’d like to take stab at this question:

It’s economics. There is a school of thought that suggests that Realtors are clerks; some are. It has been my experience (as a Lender working with Realtors) that you really do pay for pricing expertise when you hire a Realtor. If you hire a Realtor for a flat fee, it may remove the incentive she may have to negotiate upwards.

I have been a fan of incentive-based compensation that would actually raise the net fee to the Realtor if pricing and timing points were met.
http://activerain.com/blogsview/22686/Pay-For-Performance-A

If you’re selling your home to your cousin, you don’t really need a Realtor; you could hire a real estate attorney to insure that the state disclosures have been met, and contracts are compliant with state laws. Just accept the fact that you really didn’t try to get the “best price”.

There really is only one way to get accurate pricing and that is from a Realtor who knows the local market.

I liked Brian’s response so much I posted it here – instead of leaving it in the comments section.

__

Then “allen greenspan” wrote:

So let me get it right. If I don’t believe realtors are worth 30k + to sell my home, and if I sell my home myself (like I have several times) then I am making the world a bad place? Do I follow your logic? Saving myself 30k dollars = breeding hate and contempt.In that long list of tasks you do for your clients can be done by anyone with an ink jet printer and a telephone number of an escrow agent. But we don’t want the public to know that! Why does the Justice Department say that NAR is the last Cartel? their words not mine, is the justice department breeding hate or breaking up a cartel?

Yes. The Justice Department (along with the FTC) IS breeding hate. That is exactly what they are doing. I really don’t give a crap who you list your home with or how much they charge you. If you can sell it yourself, more power to you – and no I do not believe you (or anyone else) is doing something “bad” by getting a lower fee or selecting any Realtor or any method of your choosing to get your home sold.

For a division of the United States government to allege some sort of Realtor price fixing in an industry that is so overloaded with competition that it almost defies belief IS breading hate and contempt. Its simple, the individuals at DOJ and the FTC directly responsible have antisocial tendencies. They aren’t “protecting” anybody from anything with regard to Realtors – there isn’t anything to “protect” the public from.

The very fact that the NAR has to litigate this issue at all says there is at least ONE person at the FTC or DOJ who IS an antisocial type.

Please don’t think I am in love with everything the NAR is doing. But if the NAR is “doing something bad” then Justice and the FTC need to get right on this one: H.R. 111, the Community Choice in Real Estate Act. They need to investigate the 110th Congress and all the fine folks who signed off on this bill. Here is the background on the bill from NAR. I guess it is okay for a Realtor to be a loan officer but not for a bank to be a Realtor. That is just “anti-competitive”. My God, if big banks got into the real estate business they could just take over the industry! What would prevent them from offering a low fee (or even free, no cost) listing to their client in order to get the loan? Nothing is the correct answer. Nothing would prevent them from doing that. So naturally, the bill is called the “Community Choice in Real Estate Act” instead of the real point – KEEP BIG BANKS OUT OF REAL ESTATE. Somebody want to see something wrong? Look THERE!

But that is the American Way. Buy influence. Too bad it is for sale.

I say let big banks or anybody else who wants into the real estate business get in the real estate business. I don’t see that big banks do that great a job of running big banks – and the ONLY thing they have as a weapon is LOADS OF MONEY. Endless truckloads of money to throw at the problem. Right now they use “secret sites” like this to try to sway congress and public opinion. Like that site, their “PR handlings” are mostly stupid – even the “hearings” with the ever lovely Mike Oxley (now retired). I don’t know that Bank of America actually paid him – but if anyone ever looked and acted exactly like a paid whore it was Mike Oxley.

I think federal regulation of our industry would be horrible but letting the market decide which companies they wanted to do business with – I think that idea is wonderful. How is this for an idea? Let the banks in. What if the Realtor community DID shrink by 80%? Is there really anyone (who doesn’t get their money from “association dues”) who is loosing sleep over the idea that there would only be 200,000 – 300,000 Realtors in the United States? And as I personally find the folks who complain about how “high” their dues are and they hate having to pay the “high dues” in order to be a Realtor – those people who aren’t quite in the business anyway – RAISE THEM. You read it right. Let NAR raise the dues so they still have enough money to do that fantastic advertising and buying favor with the important folks in Washington. If 80% of the current Realtors left the business right away (they eventually will anyway) and NAR raised the dues 5X – they would still have the same amount of money and the agents who stayed would all be MUCH better off. I believe the public would too.