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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Roads End who wrote (6694)	11/12/2002 10:31:46 PM
From: bobby is sleepless in seattle	Read Replies (1) \| Respond to of 306849

by embracing technology and utilizing it to its advantage, this brings opportunity to the savvy agent. Email, auto alerts to new listings, on line transaction trackers, neighborhood reviews, on-line offers...all this is fairly new to most, old news to some. The savvy agent has used technology to better serve the bottom line, the old war horse will bow to attrition, and the cycle continues. I understand your point that this could be deflationary in the long run, but commissions have always trended down over time. Commissions used to be 7%, now 6 is standard in my area or 7/3.5, other areas we are now seeing 5% or slightly less for upper end homes. Appreciation has made for built in "pay raises" for agents, especially the past 5 years or so even with commission declining. Even so, buyers and sellers have options to save money on discounted commissions based on their ability to negotiate. More often than not, agents have variable commissions if they are both sides of the transaction, as an example. YHD has broke away from the traditional MLS. They are on the cutting edge by forming their own MLS. Commission rates are higher if the seller wants additional exposure with other MLS in area. To date, I don't know if they are making money. Their cost of funding and advertising is extensive, but the business model is pretty cool. 2% Blue Edge for CB. IMO, this is much like a loss leader, a modified FSBO with variable commissions on full services program and exposure to the multiple services. If a client wants more service, they are then referred to a full service CB agent, or something to that extent and will pay higher commissions. ZipRealty offers variable programs as well. Here's a company that has broken the barrier by having employees as opposed to indepedent agents. Zip's commission rates have gone UP from 4% when it first started and is now 5% in my area. They are in debt up to their eyeballs and continue to slash benefits to their agents. But agents love the concept cuz they don't have to prospect. ZipRealty has made an effort to become more active in our area along with Sutton Real Estate (4% commissions) in the North Seattle area, yet they remain small potatoes, relatively speaking. I do think we will continue to see downward pressure on commissions. But because price of homes have an upward bias, this will only serve to offset the difference. Deflationary? With cut comissions readily available thru traditional channels, competitive pressures strong in today's environment, we are seeing record sales and oodles of bucks being paid for such services. Kick in the appreciation factor, we may continue to see the cycle of higher prices and lower commissions that result in a fatter bottom line to the assertive agent and commissions that reamin to appear high for the seller in the long run.