Big changes are coming in the way you buy and sell your home - partly because, unbelievable as it may seem, real estate brokers aren't profiting much from the current bull market in real estate.
Star agents are pocketing most of the commissions and passing less on to their brokers, who have also been forced to invest heavily over the past few years in computers, voice mail, Web sites, digital cameras and other new technology.Perhaps you're not inclined to shed a tear over brokers' weakened profits. But whether you're a buyer or a seller, you should be on the lookout for ways brokers are trying to shore them up.
Some are giving up on trying to wrest more away from their agents and are looking to sellers for higher commissions. That affects buyers, too: If sellers have already committed to pay higher commissions, they may be a little less willing to bargain with buyers.
For example, one of the largest brokers in the country, Long & Foster Real Estate, based in Fairfax, Va., raised its commission from 6 percent to 7 percent earlier this year and added a $149-per-deal transaction fee. Long & Foster executives emphasize that their commission is negotiable - about 30 percent of new listings are signed at 7 percent. Meanwhile, competing brokers can point to Long & Foster's higher rates to defend their own full commission of 6 percent. So, in effect, negotiations over commissions start at a higher level.
Laurie Moore-Moore, an editor of the industry-watching newsletter Real Trends, sees a commission hike as a way for brokers to "buy a little time" before the industry finds a new way of doing business.
"We're going to see a lot of experimentation as brokers try to stay profitable," she says.
One prime arena for experimentation is the Internet, which allows brokers to offer enhanced services to buyers and sellers across the country. Realtors have posted more than 1 million listings on the Realtor.com Web site (www.realtor.com). Even for-sale-by-owner sales have a home on the Web (www.owners.com).
You can help yourself to information on neighborhood amenities, crime rates, school scores, mortgages and listings through Microsoft's new online foray into real estate, (www.homeadvisor
.com). It has fewer listings than Realtor.com but boasts a broad range of information, allowing you to search for listings, mortgages and neighborhood statistics. (Microsoft doesn't plan to include FSBO homes on its site.)