A 6% solution that realtors love to hate

MADISON, Wis. — Across the country, the National Association of Realtors and the 6 percent commission that most of its members charge to sell a house are under assault by government officials, consumer advocates, lawyers and ambitious entrepreneurs. But the most effective challenge so far emanates from a spare bedroom in the modest home here of Christie Miller.

Miller, 38, a former social worker who favors fuzzy slippers, and her cousin, Mary Clare Murphy, 51, operate what appears to be the largest for-sale-by-owner Web site in the country. They have turned Madison, a city of 208,000 known for its liberal politics, into the most competitive place in the country for residential real estate listings. And their success suggests that, in challenging the Realtors association's dominance of home sales, they may have hit on a winning formula that has eluded many other upstarts. Their site, FsboMadison.com (pronounced FIZZ-BO) holds a nearly 20 percent share of the Dane County market for residential real estate listings.

Charging just $150 to list a home, and throwing in a teal blue yard sign, it draws more Internet traffic than the traditional multiple listing service controlled by real estate agents.

Madison — home to the University of Wisconsin, a city where the percentage of residents who graduated from college is twice the national level, and a hotbed of antibusiness sentiment — turns out to be the perfect place for a free market real estate revolution. Bucking the system, whatever it is, is a civic pastime here.

"It may be an extension of the 1960s when we stuck it to the man by protesting the war," said Mayor David J. Cieslewicz, who notices all the FsboMadison signs around town. "These days we stick it to the man by selling our own home — and pocketing the 6 percent."

Elsewhere, the Justice Department, free market think tank scholars, plaintiffs' lawyers and countless entrepreneurs, vowing to make real estate more competitive and to bring down sales commissions, advocate forcing the Realtors association to share control of its established listing services. Those critics seem to view the listings as an unassailable monopoly.

And who can blame them? Those 800-plus local listing services, controlled by local branches of the Realtors association, help dole out about $60 billion a year in commissions to real estate agents and the firms that employ them. Despite numerous attacks, the association has been remarkably successful to date at protecting its turf. Through lobbying, litigation and legislation, the Realtors group has managed to keep control of the crucial listings.

Miller and Murphy, however, instead built a completely separate and alternative listing service — a parallel market, much like the Nasdaq, which rose in recent decades to challenge the New York Stock Exchange's dominance and sparked competition that eventually reduced transaction costs for all stock investors.

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