MOLLIE WASSERMAN – ´It’s growing´

Challenging the traditional commission-based system that real estate agents have relied on for years, more and more brokers are offering a menu of services to sellers and buyers to better meet their needs.

Whether they bill themselves as real estate consultants, fee-for-service or discount brokerage firms, agencies are giving customers more options by charging hourly rates or flat fees.

Just like a customer walking into an upscale spa offering dozens of treatment packages, buyers and sellers are using these agencies to purchase only the services they need and doing a lot more of the footwork and research on their own in the meantime.

But in the Bay State, lawmakers have tried several times to change the way real estate broker commissions are paid, and a leading industry group says if the legislators are successful, brokers who charge hourly rates or flat fees may be at risk.

The Massachusetts House and Senate re-filed bills this year that would prohibit real estate agents from collecting fees or commissions if a sale is not completed. The Massachusetts Association of Realtors opposes the bills, saying the vague language could create problems in cases where closings are delayed.

“As drafted, the bill[s] could also prevent brokers from charging hourly rates or flat fees to buyers or sellers for brokerage services and creates uncertainty as to whether payment of fees are prohibited,” according to MAR literature.

MAR President David M. Walsh said the association doesn’t “encourage or discourage one service over another.”

“We’re certainly supportive of the free enterprise system,” Walsh said.

The Joint Judiciary Committee held a public hearing on the bills last month, and action on the legislation is expected to be taken in mid-June.

Whatever the outcome, real estate experts predict that the full-service, commission-based package offered by most offices won’t completely disappear because most buyers and sellers lack the time and knowledge to seal complicated real estate transactions, industry experts say.

But as more “for sale by owner” signs pop up, agents are tailoring their services to meet new customer needs.

Many of the agents are acting as consultants, getting paid for services which were once strictly contingent on a home sale.

Last fall, Coldwell Banker announced it would test a new service model in two markets at the beginning of this year in an effort to attract people who were selling homes without agency help.

In a press release, officials explained that Coldwell Banker wanted to offer a mix of services and advice while using the Internet to manage transactions.

A spokeswoman from Coldwell’s corporate office refused to say where the new service model was being tested. She also would not discuss any particulars of the experiments, citing company policy.

A Groundswell
Some, like Mollie Wasserman of Keller Williams Realty – which has offices in Framingham and Medway – have moved beyond the testing phase.

Wasserman helps serious home seekers and sellers and those just getting their feet wet by offering flat-fee and fee-for-service options.

The current commission-based system is outdated and does not address what Realtors have to do today, she said.

Real estate agents are not sales people, Wasserman says; they are licensed professionals who offer fiduciary-level services. As such, they should charge fees for their services instead of relying on the traditional commission that is paid only after a sale is made.

The traditional way of doing business – where agents take a 4 to 6 percent commission – also unfairly penalizes homebuyers and sellers who end up paying for deals that don’t close, Wasserman said.

When clients complain about commissions, Wasserman says she tells them “When you’re paying me, you’re not paying simply to market your home. You’re paying me for the buyers that don’t buy, and all the other homes that I worked on that for one reason or another didn’t sell.”

To alleviate that, Wasserman charges a flat $3,500 fee not contingent on a sale to do everything a commissioned listing agent does.

“The commission system is based on risk vs. reward,” Wasserman said. “Realtors take all the risk and therefore have to get the high reward. In this case [with flat-fee], you pay my team a reasonable price on an hourly basis. You’re taking the risk that I would normally take and therefore you get the reward.”

Sellers who are thinking of doing more work themselves can also pay Wasserman for specific services like a market analysis of their property or feature sheets with photography.

For serious homebuyers, Wasserman offers a free one-hour consultation and then starts searching for homes. The buyer must sign a contract, which can be canceled at any time and can be for various lengths of time.

Wasserman said she doesn’t know how many Bay State brokers are offering alternatives to the traditional commissions. But in states like California, Virginia and even in Massachusetts – where there’s been an outcry from consumers frustrated by escalating home prices – these types of services are emerging more often, she said.

“It’s relatively small, but it’s growing,” Wasserman said. “On a national level, it’s a groundswell.”

Discount brokerage firms, although slightly different, also offer people more options.

Wasserman refuses to describe her business as discount brokerage, emphasizing on her Web site: “If you only want to pay for Wal-Mart, you’re not going to get Nordstrom’s.”

Still, discount brokerage firms are popular with sellers who feel they can do a lot of their own work but may not be able to navigate the legalities.

Assist-2-Sell, a nationwide franchise with 12 offices in Massachusetts, is a discount brokerage firm that offers flat fees and reduced commission services to sellers.

“We saved people over $1 million last year in commissions out of this office,” said Frank Rossetti, a Realtor with Assist-2-Sell Landry Real Estate in Lynnfield.

Rossetti and his partner Martha Poti saw the trend of discount brokerage developing about four years ago. They eventually bought the Assist-2-Sell franchise representing 50 cities north of Boston, including Cambridge.

Assist-2-Sell offers customers four packages. Sellers who have found a buyer can pay a $990 flat fee to have Assist-2-Sell do paperwork only. Under that arrangement, a coordinator helps the buyer and seller through the closing process.

For sellers who need more help, the discount broker provides a full-service-with-savings package. Sellers must conduct their own open houses, but the broker gets a 2 percent commission for showing the home and advertising. The home is not featured on a multiple listing service but gets advertised on 1,700 Web sites, said Rossetti.

If the home is featured on a multiple listing service, the commission doubles to 4 percent – 2 percent each for the seller’s and buyer’s agents.

Finally, the firm offers a full-service package, which includes the open house, all advertising and other functions of a traditional agent, with a 4 percent commission charge.

“Consumer advocates love our system,” said Rossetti. Buyers and sellers get more options and brokers also handle more sales, he said.

Rossetti said Assist-2-Sell agents sell about 50 units per year, while traditional agents sell less than 10 units per year.

“To me, there aren’t any negatives,” Rossetti said.

Modern Realtors’ Menu Caters to Many Tastes

by Banker & Tradesman time to read: 5 min