You have all been faced with the question - Do I cut my commission to make this deal? There is a list of reasons the commission may need to be reduced:

• Another Agent has reduced their commission to get the listing and you feel you need to do this to compete.
• You are within $1,000 of making a deal and neither the buyer or seller is budging.
• The listing price on the home is over $1,000,000 and 6 percent may seem to be too high.
• The seller is also going to let you find them a house and that is a lot of money to make off of one person.
• A builder is offering you several properties to list if you reduce your commission across the board.
• You are new to the business and the only way you think can get customers is to reduce the commission.
• It's a hot seller's market and homes aren't lasting a week, so your seller doesn't want to pay the full pop.
• Buyers are finding their own homes and coming to you to navigate the deal.
• You are a people person and you are just in the business for the fun of it, not the money (never mind about this one, I have heard of these agents, but I never met one.)

I could pontificate and discuss all of the moral, ethical, practical and business reasons agents should not cut their commissions. But, each case and each Realtor's personal situation is unique. It is impractical to say that one should never cut their commission. One thing I feel strongly about is you should never, ever cut your commission unless you are asked. Then, it becomes a judgment call.

Those who offer up a commission cut without being asked are selling themselves cheaply. REALTORS® are supposed to be industry professionals and master negotiators - not flea market sales people.

Read a Response From Chris Newell

This is probably the most controversial question surrounding real estate agents these days. Many believe that the Net is going to replace the real estate agent. Many believe that the Net is going to make a real estate agent "virtual." And some still believe that the Net is going to have no impact on the agents. (I run into these yahoos every day and it still surprises me every time I hear it.)

I don't feel the Net is going to replace the REALTOR® but I feel confident that the Net is going to totally change the way agents communicate with their customers and will have a big effect on how agents advertise their services.

Consumers are going to expect every Realtor to be able to provide instant data, listings, property analysis, and other information via the Internet medium. That means the ability to use and send attachments and links to property listings, useful sites, etc., through email. Realtors will be expected to check and respond to their email as often as they do their voice mail. They will be expected to own and be able to operate the equipment that will allow them to deliver and receive information via instant communication avenues. That means the Internet and email. Consumers will have no patience with Realtors who will not master this basic skill. (Would you use a Realtor without a mobile phone?)

More and more consumers are turning to the Web as a resource for information. It is a done deal that when the consumer needs a Realtor, the Net will be the first if not the only place they will look. Realtors are going to need to advertise themselves on the Web and look professional. The good news is, one can look very professional with the right tools. This positioning on the Web will be a monthly endeavor, that will constantly change, but it will be necessary if an agent is attempting to attract new customers. Obviously old satisfied customers will turn to their past Realtor, as they have in the past. However, if they haven't mastered the Net communication skills, or positioned themselves on the Web, these Realtors could very well lose these customers.

The best news is: I believe that the Realtor will continue to be the center of the transaction. They are the ones who advise, they are the experts in the marketplace. They are the runners and chauffeurs. They are the presenters of homes. They are the "Deal Makers". The Web won't change that.

The difference is that the agents will soon be communicating and advertising via the Web..... or at least the successful ones will.

Yesterday E- LOAN went public and their stock rose from $14 to $37 - a whopping 164 percent increase. Not bad for a company who I remember back in the Spring of 1998 had to quit taking loan applications, because they were understaffed. (I'm sure this statement will elicit a call from them for a correction.)

Obviously, they have come a long way since then. They have all the right ingredients to become a major league successful company. They used Goldman Sachs as their lead under writer They are financed by GE Capital, are "in bed" with Yahoo, and have alliances with DLJ Direct & E*Trade. Not bad.

However, what I find impressive about E-LOAN, and the reason I think they will do well, is their focus. These people are trying to do one thing - make home loans. They are not trying to be a homesearch, they are not trying to sell credit cards, they are not trying to make automobile loans. Their Web site is dedicated to everything needed to apply for a home loan or refinance an existing loan. No other fluff or information to confuse the consumer. They are e-commerce at its finest. This is one of those business models that the public will understand and therefore, should do very well.

Disclaimer: E-LOAN is an advertiser on Realty Times. I think I would have said the same thing about them had they not been an advertiser.......I think.

• I wonder if we will ever see the electronic transaction?
• I wonder how the local mortgage broker is going to compete in the future?
• I wonder how many people understand the relationship between Cendant and NRT?
• I wonder if David Liniger is going to try to balloon around the world again?
• I wonder who is in charge at Classified Ventures?
• I wonder if NAR raised their dues to $1,000, how many Realtors would we have left.
• I wonder if RIN had survived if it would be worth more today than NAR's 10% share of HomeStore.
• I wonder why all the portals put someone with no real estate experience in charge of their real estate sites?
• I wonder if Brad can squeeze three Real Estate Connects into next year?
• I wonder how you go from HomeShark to iOwn?
• I wonder if the people on RealTalk are ever happy?
• I wonder if Stuart Wolff has ever mowed his own yard?
• I wonder if I am going to regret writing all of this stuff a year from now?

To keep myself informed of what the real estate insiders are thinking, I have subscribed to every one of their e-mail discussions I can find. There are several topics that pop up each week - What is NAR doing with the Realtor's dues, Buyer brokerage, and the threat that the Net brings to REALTORS®. Maybe it's better said, the threat the Net companies bring to the Realtors. Constantly there are conspiracy stories about HomeStore or Microsoft taking over the real estate business. "Disintermediation of the Realtors" is the new catch phrase. Well, all I will say about disintermediation is: "If the consumers want disintermediation it will happen". Right now I don't see that happening.

What I do see is a great deal of free advertising going on. In the past, about the only way to advertise a listing was to pay for newspaper or magazine ads. The key word here is pay. Now listings are shown on HomeStore, HomeSeekers, and HomeAdvisor. Every one of these sites displays these listings free of charge to the Realtor. Realtor.com alone displays each home 130 times per month and HomeSeekers claims about 75 times.

The conspiracy theory is that these companies have a greater plan, and eventually want to "go around the Realtor". However, I see the relationship between these Web sites, the listings, and the Realtors as one of those few times you have a win win win.

As for me, I think this free advertising is a great deal for the Realtors.

• Week of June 21, 1999
• Week of June 14, 1999
• Week of June 7, 1999
• Week of May 31, 1999

has been in the real estate industry in Texas for over 15 years in both commercial and residential brokerage and is a past member of National Association of Realtors. Jody is the publisher and majority owner of Realty Times, which first launched as Agent News on October 15, 1997. Jody’s wife, Nora Lane, is a very successful Realtor in Dallas, Texas.

Published: June 28, 1999

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