The original question was “What will a market slow down due to discount brokers?” Many companies are sometimes lumped together in the discount brokerage category to describe all non-traditional business models (e.g. flat fee full service, commission-based listings with rebates, low listing commission – high SOC, buyer agency with rebates, menu-of-service options, limited service listings).

I can only speak for our experience, which is that our business is up 11% so far in the slower market of 2007. We have also seen upward pressure on selling office commissions. Our customers’ most common choice is 3%, and we have seen some SOCs as high as 6%.

Ken Whitney, General Manager, MLS4owners.com

Back when I was practicing law, the biggest problem with pro bono (free) or flat fee clients was they’d take up way too much of your time with phone calls. etc. I could put up with the pro bonos, but with the flat fees what I did what switch to a system where I kept time an whether I billed extra was dependent on them or me (or outsiders).

Real estate agents, on the other hand, don’t charge by the hour. I sort of have a problem telling clients that you can’t get certain service because you aren’t paying me enough, but that’s what I agreed to get paid. That really doesn’t seem right.

I stand by my remark on THIS post that your motivation to comment was to was to “blatantly self promote”.

However, I’ll give you the opportunity to set the record straight. If you can point to any posts (since Craig Blackmon’s August 27 self promoting post), that you joined into a conversation here on the RCG helping the readers here in any of the the posts that involved legal issues (without self promoting), I’ll humbly apologize.

I never claimed to be available at “all hours of the day or night.” However, every one of my clients has my cell phone and they can call me on the weekend when circumstances require it. I simply make it clear from the beginning that I’m not getting paid 3%; therefore, I’m not going to drop what I’m doing to meet their schedule. You know what the result is? They plan ahead and make an effort to avoid last minute deadlines. As for those rare golden opportunities that simply cannot wait, well, I haven’t missed one yet.

As for the gentleman who likened me to an ambulance chaser, I hope that makes you feel better. It just made me laugh.

I’m not saying that reducing commissions in all cases is categorically equivalent to compromising principles…

I’ll tell ya what makes no sense. Anyone who thinks they can sell a $500,000 house for the commission rate comparable to that of a $300,000 house.

Not the best example because there they are paying a higher price to get from point X to point Y. The constant is the price of gas, just as with a commission the constant is the percentage.

So, wealthier people tend to pay more to get from point X to point Y because their more expensive vehicles tend to get less gas mileage. Wealthy people also pay more to get from point X (ownership) to point Y (sale) because their more expensive houses are more difficult to market (but again, perhaps right now that’s not true compared to the very low end).

Thus you might be able to argue that a house selling for $425,000 shouldn’t pay a higher commission than one selling for $400,000, because it is mainly the same group of buyers, but that one selling for $750,000 should have a higher commission because there are fewer buyers in that market. But commissions are typically based on percentages, so . . . .

Also another factor to consider is expenses. We recently spent a considerable amount of money staging a higher priced house for our client (the client could not do it). That’s perhaps an extreme example, but there are other expenses incurred in marketing a higher priced house which don’t happen on your typical starter home.

All that said, personally I’m more likely to reduce the listing commission on a higher priced home if it’s in good shape to market going in, and very unlikely to reduce the listing commission on a starter home or cheap condo regardless of the condition. One thing I’m very unwilling to do is reduce the commission for the agent on the buyer’s side. On a $500,000 property a half percent is only $2,500.00–which could easily be close to the seller’s mortgage payment. While I show 2.5% properties, not all agents do, or even if they do, they might subconsciously downplay the property. Given that it typically takes 30 days+ to find a buyer in a decent market, you don’t want to do something that will increase that time over $2,500.00.

First I am not sure why I am replying at 7 pm on a Friday night : )

Second, you are missing my point. Agents are unlike Uncle Sam and that is the problem. Just like you wouldn’t want to pay a higher price for gas because your car gets a lower MPG so therefore you need more gas… it just doesn’t make sense.