Subject: Beating the Realtor commission system
Buyer featured in Wall Street Journal article
Dear Boston Globe real estate editor,
Recently I purchased a home in Arlington, Massachusetts. I obtained a discount of over 2.0% off the purchase price because I hired a real estate broker who agreed to rebate me his commission in exchange for paying him up-front on an hourly basis. The broker is Bill Wendel of the Real Estate Café. Believe it or not, he prefers to work with clients in this fashion.
I understand that you write many of the consumer-oriented stories published in the Boston Globe. If you are interested in my story, I would be delighted to talk to you. Like Bill, I am outraged by tremendous fees that the real estate industry imposes on consumers. I would be ecstatic if sharing my experience in “beating the system” were to inspire other consumers to do the same.
Although many buyers and sellers may prefer to use traditional realtors (and pay them traditionally large commissions), the current system leaves consumers little choice but to do so. In my case, I had only minimal needs for the services of a realtor so Bill Wendel’s model was an ideal alternative for me. Unfortunately Bill and I faced many obstacles imposed by the traditional system (e.g., limited access to listings, resistance by listing agents to schedule showings with us, and the need for Bill to accompany on showings because of “first to show” rule). I have become convinced that the current U.S. real estate system is deliberately structured to make it very difficult for buyers and sellers to work without commission-charging realtors.
When I told my attorney about the arrangement that Bill and I had, he himself expressed amazement that the seller of the home I bought paid 5% of the selling price of the home in broker’s fees. He pointed out that before the days of billable hours, attorneys would also charge commissions as a percentage of the transactions they helped broker, but that that practice ceased because clients wouldn’t tolerate it.
Why do consumers tolerate the large commissions charged by Realtors? I think that it’s mostly because few consumers have enough knowledge of the system to understand how they’re being ripped off. Speaking for myself, the more I learn about the system, the more obvious it becomes that the deck is greatly stacked against the consumer. I believe that the opportunity for significant savings will motivate readers of a story describing my experience to learn more about the system. If the system is to change, it will take outraged consumers like me to fight the system created and imposed by the extremely powerful National Association of Realtors.
Jeffrey D. Thomas, M.D., Ph.D.
Department of Mechanical Engineering