As home sales dwindle and the popularity of discount real estate agencies continues to grow, at least one mainstream agency is fighting back. Coldwell Banker — the nation’s largest real estate brokerage firm — is addressing the issue head-on with a television commercial that discourages would-be home sellers from enlisting a discount broker.
The commercial — a regional ad now only running in the mid-Atlantic markets — encourages potential home sellers to “find out what a discount could really cost us.” It features a Coldwell Banker agent explaining the advantages of a full-service firm to a young couple preparing to sell their house
“In the last several years, there has been a great trend among consumers to sell their homes for as low a commission as possible,” said Paul Valentino, regional vice president for Coldwell Banker’s metropolitan Washington markets. “And while this was certainly possible in the last three years, it’s not the case now. … You used to put your house on the market and have 10 offers in the first 24 hours. There was a lot less required to bring those buyers to the property.”
The popularity of discount brokerages has grown tremendously in the past several years. For example, ZipRealty — an online agency that offers discounted commissions to its clients — saw a 45 percent increase in its home sales between 2004 and 2005.
But the agency, while it offers discounts, considers itself a full-service firm, said Pat Lashinsky, senior vice president of product strategy for ZipRealty.
“I was really shocked that a company would put out this spot that’s so in-your-face to consumers in saying that you shouldn’t go for the best deal,” he said. “To me this ad is about trying to protect the fees the real estate market has set.”
The typical commission in the Washington region hovers between 4 and 6 percent. Discount brokers typically rebate a portion of their commission back to homebuyers and reduce the commission they charge homesellers by about 1 percent of the market rate.
Firms like Coldwell Banker offer a whole range of services — such as customized marketing plans and pricing strategies — that discount firms don’t, Valentino said. And while discount brokers haven’t made significant dent in their sales, he said, the goal of the commercial is make consumers aware of the advantages of a mainstream broker like Coldwell Banker.
But not offering full service with reduced commissions is the exception, not the rule, Lashinsky said.
“There are always going to be examples across the spectrum,” he said. “But the commercial is playing on fears. It’s like a very negative political campaign.”
What does NAR say?
» The National Association of Realtors doesn’t have an official stance on mainstream versus discount brokers. The association supports all of its members, which includes both mainstream and discount brokers, said a spokesman for the association.
