Stan and Gloria Wakefield are no fools. They built their three-bedroom house 12 years ago in Ponte Vedra Beach, Fla. Wakefield, a retired naval intelligence officer. What the Wakefields did next should scare real estate agents everywhere.
They decided to put their house on the market this year, and concluded that the house would sell itself. So why pay a real estate agent a 6 percent commission? They chose instead to list their property with one of the many real estate services that are challenging conventional brokerage firms, in this case, Assist2sell. This is subversive stuff. Homeowners across the United States are figuring out that they do not need to pay what agents demand and they may not need an agent at all.
At the same time, technology is giving consumers tools to nearly circumvent the agent. So, agents are doing whatever they can to keep home sellers from paying less. Anyone who wants to know how to outfox them first has to understand where they derive their power: They know the market -- or presume to know it -- and help set the price of your house. They serve as the go-between and, again presumably, know how far you can push the other side. Note, however, that agents don't always push for the best price.
Levitt, co-author of "Freakonomics," and Chad Syverson, both University of Chicago economists, found that real estate agents have an incentive to persuade their clients to sell their houses too cheaply and too quickly because a few thousand dollars more in price won't yield them a significantly higher commission. But more than anything else, agents control access to the Multiple Listing Service, where all the houses for sale in a community are listed.
Not open houses, not fliers, not big ads in the newspaper. You sell it yourself, though you would be obligated to pay a 3 percent commission to any agent who brought you a buyer -- in essence paying that agent for all the Sundays spent showing other houses to clients who never bought anything. That half-price deal is dangerous enough for a full-commission firm.
But it gets worse. In every community there are agents who open the M. They do it as a service to clients who want to buy a house -- 70 percent of homebuyers now peruse listings on the Internet, the association's most recent survey says -- as well as to cut their costs of showing clients the paper listings. Some even rebate part of their commission to buyers who do their own research on prospective homes.
But some buyers just freeload. The Internet has a way of encouraging this behavior. They can search the M. So you can see where this is headed. If agents want to protect their commissions, they have to restrict access to the M.
Local realty groups have tried suing agents or brokerage firms that put "for sale by owner" listings in the M. Those agents have countersued, charging restraint of trade. Then two years ago, the Realtors association found what it thought was a better solution. It passed rules that essentially allowed a local M. The antitrust division of the Justice Department cried foul.
This month it sued the Realtors' trade group, asserting that the rules stifled competition and hurt consumers. The Realtors changed the rules just as the federal case was filed. Bruce McDonald, deputy assistant attorney general, said that the group's policies continued to discriminate against innovative brokers and "stifle competition at the expense of home buyers and sellers.
In a news release, the Realtors association said it was "at a loss to understand" the Justice Department's legal action. View all New York Times newsletters. The Justice Department and the Federal Trade Commission have successfully fought state real estate boards that tried to limit consumer choices by imposing service requirements or forbidding commission rebates, but the fight goes on. Realtors have lobbied for and won state laws that prohibit commission rebates to buyers and require minimum levels of service, like requiring that an agent handle all negotiations or house showings.
Federal regulators can't fight that. Aaron Farmer, a discount real estate broker in Austin, Tex. The Justice Department and the F. Eight states have enacted such laws, accepting the real estate industry's argument that they are needed to protect consumers. But price wars are coming. No doubt about that. Here are a few suggestions on how to take advantage of the changing environment to sell your home with minimum services from -- and fees to -- a broker:.
Set the price Being a nosy neighbor is still the best way to know the market. Walk though every open house and find out later what the house sold for. For the shy or decorous, technology offers an alternative.
Homesmartreports plans to offer a service for home buyers, too, that would provide an unlimited number of reports over a day or day period so you can get a better idea of how much to offer for a house.
Get listed Some of the new sales services try to sidestep the M. As listings proliferate openly on the Web, the M. But for now, in all but the hottest markets, it pays to get into the M. Some will also take pictures of the house to run with the listing. There is one caveat: If you list there, you may be obligated to pay a commission to the buyer's agent, which is usually set at 3 percent.
You can, however, build that commission into the price of the home, so the buyer actually pays it. Or, if the housing market is particularly hot in your area, you may be able to write into the contract that the buyer is responsible for paying his agent's commission. Hand off the annoying stuff For many sellers, the hardest part is all the details: Paperwork is not that hard to do if your discount broker gives you all the preprinted forms.
You can probably foist some of that work on the buyer's agent, who is really working for you anyway. Alternatively, go with a sales service that for a higher fee of about 1 percent of the selling price will handle everything. But these services often don't include an M.
As for stagings and showings, watch a few shows on the cable channel HGTV, like "Sell This House," to learn how decluttering or putting on a fresh coat of paint will raise the value of your home. September 20, , Tuesday An article in Business Day on Saturday about home sellers who do not use real estate agents referred incorrectly to former rules that are at the center of an antitrust lawsuit brought by the Department of Justice against the National Association of Realtors.
The association allowed members to block customers' Internet viewing of certain property listings on the Multiple Listing Service -- not a brokerage firm's access to the M. Because of an editing error, the article also misidentified the cable network that carries "Sell This House. Tell us what you think. Please upgrade your browser. Correction Appended Stan and Gloria Wakefield are no fools. Newsletter Sign Up Continue reading the main story Please verify you're not a robot by clicking the box.
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