The Chapel Hill News
November 4, 2002
To sell a house
Fee-for-service agents offer homemarketing
alternative. But Realtors say there’s still a price to pay.
11/4/2002
CHAPEL HILL — Glenn Wallace put his Chapel Hill house on the market in October 2001. When it sold for seemingly little effort on the part of the fullservice agent who listed it, the experience left him with the belief that anyone with access to the
Multiple Listings Service would be able to sell a
house.
“I didn’t see the justification for the high cost of
selling a house through a Realtor,” said Wallace, a
certified public accountant who works for a venture
capital concern in Research Triangle Park. “If you
were to break down on a per-hour basis what these
(full-service agents) make, it’s more than highly
trained lawyers.”
A month later, he signed up for training courses that allowed him to sit for the real estate salesman and broker licensing exams. Armed with those licenses, he put up a Web site, bought a week of ads on National Public Radio and, by mid-September of this year, had set up My Dog Tess, a fee-for-service agency that he operates evenings and weekends.
Home sales in the Triangle have lagged behind the
record sales enjoyed by the rest of the nation this
year. Houses in Chapel Hill that three years ago
might have gone under contract in a matter of days are now waiting months for a buyer. As a result, the inventory of unsold homes has grown, and along with it, competition among sellers for the comparatively fewer buyers. Such competition
confirms for some sellers the importance of listing
with an experienced full-service broker; other sellers are checking out the options offered by limited service or fee-for-service brokers.
Homeowners in sell mode usually pay a full-service
real estate agent a 6 percent commission to market a house, find a buyer, handle negotiations, write up the contract, educate one or both parties on thelegalities of the transaction, keep the process on schedule, and make referrals to inspectors, appraisers, lenders, contractors and repairmen. For a $200,000 house, the seller would pay a commission of $12,000, usually split down the middle with the buyer’s agent, with a separate cut given to each broker’s agency.
“Tough market conditions play in the favor of fulltime, full-service agents, ” said Jeff Rupkalvis, a fullservice agent with Franklin Street Realty.
Full-service agents have established relationships
with other agents and professionals in the homebuying process, keep abreast of local ordinances that may affect property values, and support real estate PACs that lobby to protect the interests of homeowners.
“You’re buying into a network that has proved for
many years to be effective in bringing buyers and
sellers together,” Rupkalvis said.
The homeowner who has the time and the
inclination to sell his house without an agent can put up Web sites and take out ads in newspapers. But only a licensed real estate agent can put a house on the MLS.
“The MLS is the most powerful tool a Realtor has to
offer,” Wallace said. And for $500, he’ll sell homeowners that access, and throw in a yard sign and a lock box for good measure. So far, five
people have taken him up on his offer.
The $500 fee paid up front doesn’t exempt My Dog
Tess clients from paying commissions. Wallace’s
contract makes clear that clients must still pay a
buyer’s agent a 3 percent commission, and any
additional advertising and marketing is to be
arranged by the seller at the seller’s expense.
Should sellers decide to switch to a full-service
agent, Wallace will refund the $500 fee once the
house sells, providing that the sellers tell him the
name of the real estate agent they will hire so he
can secure a referral fee of 25 percent of any
commission the new agent earns. On a $200,000
house, 25 percent of a 3 percent to 6 percent
commission is $1,500 to $3,000. All for a 10-minute phone call.
Even so, Wallace noted, “That beats the heck out of paying 6 percent.”
Fred Stevens, a manager of TriPointe Properties
York Simpson Underwood, worries about liability an
agent faces by offering MLS access without aiding
homeowners with negotiations and advising onissues that come up in contracts, inspections,
appraisals and financing.
Rupkalvis recalled representing a buyer in a transaction with sellers who used an agent only for
MLS access.
“(The sellers) were out there relying on their own
experience or what they ’d learned on the Internet,” Rupkalvis said. “I felt bad for them.”
Rupkalvis was put in the position of explaining
paperwork and proceedings to both his client and
the sellers.
“I have an ethical duty not to ignore their ignorance,” he said.
Ryan McDonnell worked for an independent real
estate agency before he opened an Assist2Sell
franchise in Hillsborough in February. He tries to
balance service with a seller’s desire to spend less
in marketing by offering clients two plans.
“You never sell two houses the same way,”
McDonnell said. “Some are easy; some are hard.”
For the easy sales, he offers a flat fee of $2,995
payable at closing, for which he provides a yard
sign and brochures, and includes the listing in a
newspaper ad and on the Assist2Sell Web site. The
house is not listed on the MLS, nor do sellers
compensate a buyer’s agent.
“What sells a house is the right buyer at the right
time,” he said. “You don’t necessarily need the MLS to do that.”
Clients who do want MLS exposure can opt for
paying a 4 1/2 percent commission — 3 percent of
which goes to the buyer’s agent — for a plan that
includes the sign, brochures, newspaper and Web
site exposure, plus an MLS listing.
That leaves 1 1/2 percent for McDonnell, who said
he left a small independent firm because he couldn’t generate enough sales volume competing with large agencies. He thought of joining a large
franchise agency but decided that splitting his
commission with the company would not be profitable. The Assist2Sell franchise offered the
backing of a nationally recognized name and the
promise of attracting a sizeable client base quickly.
“Money talks,” McDonnell said. “People want to
save more money. It’s lucrative to me because I can do a higher volume.”
Thomas and Denette Clark initially listed their house in Orange County with a full-service agent for about six months, then tried to sell it themselves before signing on with Assist2Sell.
“Obviously, $2,995 was enticing, ” Thomas Clark
said.
McDonnell set a listing price based on an analysis
of comparables and “lived up to what he said he
was going to do,” Clark said. After about six weeks, the Clarks opted for the 4 1/2 percent commission plan, and the house sold about four months later. But because the buyer did not come through the MLS and did not work with a buyer’s agent, McDonnell only charged the Clarks $2,995.
“The experience was worth more than he charged, ” Clark said.
The 6 percent commission charged by full-service
agents is negotiable. But experienced agents in a
position to pick which clients they’ll work with may
not want to do business with clients who don’t want
to pay for full service, said Home Team agent Julia
Tucker, president-elect of the Chapel Hill Board of
Realtors.
“The question I ask everybody who wants me to
work for a reduced rate is, ‘Which of my services
would you like me not to perform?’ “ Tucker said.
Established full-service agencies have a more
visible presence through full-page newspaper ads
and Web sites with broker reciprocity on high-traffic
servers. Full-service agencies train agents on
marketing and pricing that can bring sellers top
dollar for their home. All of that costs money, money that comes from the commission the agents split with their company.
The variety of options sellers have in marketing a
home is great news for the consumer, Fred Stevens
said, “as long as the public understands what they
are getting.”
“I would encourage the public to ask, ‘What do you
provide?’ when deciding who they want to do
business with,” Stevens said. “I would encourage
anyone interested in selling their house to get a
good apples-to-apples comparison.”
