May 22, 2007 9:33 am US/Mountain
Web Sites Challenge Realtors' 6 Percent Commission
Written by Vicki Hildner, CBS4 special projects producer
by Jim Benemann
DENVER (CBS4) ―
New real estate Web sites are offering home sellers alternatives to paying the traditional six percent commission to agents. People who have used the Web site services have realized more than $10,000 in savings in some cases.
With the real estate market cooling, most sellers are starting to think twice about the best way to get a house sold, quickly and at the price they want.
And that question has led some sellers to challenge the traditional commission.
Ask top Denver realtor Laurie Erb whether the six percent commission is dead or dying and there will be an instant reply. "No, absolutely not," she said.
Ask Erb's counterpart, Alex Elliot of helpusell.com and people get a very different answer. "People aren't willing to pay six percent any more," she said.
When Ann Fuller decided to sell her beautifully renovated historic home in Washington Park, she turned to Erb. She priced the house in the mid $600,000's. She will take a six percent commission on the sale.
"I can defend that commission," Erb asserts. "A top agent who charges a top commission is going to have a huge amount of experience, great negotiating skills and they're going to do everything they can to increase the bottom line of that client."
At Ann Fuller's house, Erb made suggestions for decorating changes to stage the house for sale. She marketed the house with a brochure and on the Internet. Fuller has every confidence that Erb knows what she is doing.
"I've sold a number of houses and I know the value of a good realtor," said Fuller. "They're probably worth more than six percent."
But will the traditional realtor turn into a bit of history because of the Internet?
Eighty-five percent of buyers now shop for a new house on the Internet. Web sites like Red Fin and Homekeys offer to save sellers thousands of dollars by selling a house online.
But for sellers who aren't comfortable trying to save money on the sale of their house online, top Highlands Ranch realtor, Elliot at helpusell.com offers a middle ground.
"We are a full service real estate company," said Elliott. "We do everything traditional brokers do except we don't charge the high commissions."
How does Help U Sell work? If someone sells a house for $300,000 with a traditional six percent commission, the broker will take $18,000 in commission.
Sell the same house with Help U Sell and sellers will pay a flat fee as low as $2,950. If they find their own buyer, that's all they will pay, saving $15,000. If another broker brings in the buyer, sellers will be asked to pay a commission of 2.8 percent to that broker.
When Highlands Ranch homeowner Cathy Theisen had to sell quickly, she considered a traditional realtor and then reconsidered.
"That six percent is daunting," she said laughing.
So Theisen went with Elliott at Help U Sell. Alex priced the house in the mid $600,000s. Theisen held her own open houses. One month later, the house is under contract.
"We saved at least $12,000 doing it this way, compared to a traditional six percent realtor," she said.
Erb concedes that fee based realtors like Help U Sell and the Internet are clearly challenging the sacred six percent.
"Commissions are negotiable. Some people charge six percent, some people charge five percent, some people charge seven percent," she said.
But both Erb and Elliott agreed on one thing: they believe that buyers and sellers will always want to deal with a real person--a realtor--and not buy a house with the click of a mouse.
Additional Resources
- The housing market is getting sluggish, and many experts predict it will get a lot worse for sellers before it gets any better. So what can you do to buck the trend and get your home to move? Get some resources that could help in our CBS4 Guide: Selling Your Home In A Slow Market.
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