May 11, 2005

Alternative Brokerage Pricing Models

According to a real estate industry publication called Real Trends, the average commission on a residential sale fell to 5.1% last year from 6% in the early 1990s. Given the rise in prices however, there's no fear of brokers going hungry. (The National Association of Realtors reported that the medain income for its members last year was $52,000.) The Wall Street Journal notes that the public's frustration with high commissions is resulting in the creation of some alternative business models:
* An accountant in Durham, North Carolina recently started a company that offers to list and market a property for 1% plus whatever the seller is willing to pay the buyer's agent;
* Lendingtree.com and Realestate.com hook agents up with buyers in return for an average kickback of 30%;
* A national company called Help-U-Sell Real Estate charges sellers a flat fee of $2,950 to market their homes in newspapers, online and via direct mail; a Berkshire Hathaway subsidiary recently launched a similar service on a trial basis in Iowa.
Realtor Commissions Face New Pressure [Wall Street Journal]

Posted by Brownstoner at 10:12 AM | Comments (5)
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