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The Triangle Business Journal
November 19, 2004
Fonville Morisey puts brakes on fee-accord bid
11/19/2004
Fonville Morisey Realty has shelved a controversial commission-splitting plan it had offered to its
competitors.
In September, Fonville wrote to owners of other residential real estate agencies in the Triangle asking them to sign agreements guaranteeing that Fonville Morisey would be paid a set fee, suggested at 3 percent, when a
Fonville agent brings a buyer to a home sale.
The guarantee was to be reciprocal between Fonville and each agency that came aboard.
Fonville General Manager John Hawkins said in late October that several hundred agency owners had accepted the offer, but he would not specify which firms were cooperating.
The concept rankled others, and the North Carolina Real Estate Commission received complaints and questions about the proposal, which it forwarded to the North Carolina Attorney General's Office.
In a letter dated Oct. 29, Fonville Morisey President John Morisey said that the proposal was off the table.
"Unfortunately, the letter was not clear and has caused terrific confusion," Morisey wrote. "With that in mind, we do not feel it appropriate to continue with the offer made in the agreement at this time. We will continue to co-operate with your firm at the percentage stated in the (multiple listing service.)"
In a written statement, Hawkins said, "We proposed a co-op strategy we believe was clearly in the best interest of the consumer. Unfortunately, there was misunderstanding and confusion regarding the letter. We continue to believe our strategy is right and we are re-evaluating how best to accomplish it."
The Consumer Protection Division of the Attorney General's Office has had the matter under review since October. "We are aware that Fonville has now withdrawn that proposal," says Noelle Talley, a spokeswoman for the office.
Real estate agent Wayne Gaddy is among those who complained to the commission and state justice officials. "Our main contention was that it limited consumer choice by effectively putting a floor in place as far as commissions," says Gaddy, an owner of Chandler Gaddy Realty.
Hawkins said last month that the offer was an attempt to speed the sale of homes for its clients by sweetening buyers' agent fees and making listing agents work more efficiently.
Hawkins said the firm would not raise the listing fees it charges clients - the amount of which he would not divulge - even if it began making bigger payouts to buyers' agents and other brokers. He said the firm would recover any lost dollars by selling more homes.
Some welcomed Fonville's effort as a bid to move Wake County's real estate market to the more common 50- 50 commission split between buyer's and seller's agents.
More often in Wake County, the agent listing a house for a seller takes 60 percent of the fee paid by the homeowner, while the buyer's agent is paid a 40 percent share, agents say.
"I had never encountered that split anywhere in the country and it made trying to do projections very complicated," says Joe Williams, one of the founders of the Austin, Texas-based real estate franchise Keller Williams Realty, which has offices in the Triangle. "I honestly believe (John Morisey) was trying to institute a more logical split that moves his company forward in terms of catching up with what has been the co-brokerage trend for decades."
Others saw it as an attempt to set a uniform commission rate or put discount and smaller brokers - who often capture home listings by trimming fees they charge clients to below the traditional 6 percent - at a competitive disadvantage.
"I want my consumers to save money," says Glenn Wallace who owns a real estate agency called My Dog Tess.
Fonville Morisey employs 600 agents and controls about 17 percent of the Triangle's resale home listings. It was the region's second largest agency when ranked by 2003 sales volume, according to Triangle Business Journal research.
Fonville reported that its sales slipped from $1.8 billion in 2002 to $1.7 billion last year. Hawkins says he expects the firm to ring up $2 billion in sales this year.
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