It would be difficult for a consumer to understand all the ins and outs and politics of real estate brokerage, but this writer is going to attempt to explain in layman's terms why brokers have the right to control where their listings go.

In response to Realty Times' defensive pro-Realtor counterpoint to the recent anti-Realtor article published by Forbes magazine, a Realty Times reader wrote the following:

Wow! This is the first time I have read an article on this website and have been taken aback.

As a regular old consumer I have to say first and foremost that I love my Realtor. She has helped me in 4 real estate transactions in the last 4 years, including one sale.

However, I also love Ziprealty. The one thing that was missed in the above article is that the SELLER of the house is paying the broker. So, even though it is the 'brokers listing,' it is MY HOUSE...and I want as much exposure as possible. Ziprealty is one of the few 'user friendly websites.' As soon as I hired my realtor to list the house; I expected that she would do everything in her power to get the information out, to every possible source. Had I not viewed my home on the many websites out there (especially the easy to use ZipRealty website) I would have questioned her integrity and wondered if her primary interest was getting the full commission or...selling my house. If the NAR is trying to block the mls access than I do have to question the reason behind that. It is definitely not what the owners of the homes listed (that are paying the Realtors) want.

In my case. My realtor would never do anything as greedy as blocking any access. She is wonderful, very professional and has my business until she won't do it anymore.

Just thought you would want to know how the consumer feels.

Thanks for reading.

Maria Whitaker

As the industry attempts to put the genie back in the bottle by eliminating MLS public-access Websites (Cincinnati, Chicago) and attempting to regulate the status of no-service brokers (Texas) it may appear to the general public that the industry is missing the point - that consumers want access to listing data and more exposure for their homes.

What the public doesn't understand are the issues that make consumer access and exposure for listings practical for the industry.

Due to time constraints, Realty Times answered Maria's letter with a brief acknowledgement:

Thank you for writing. I agree with your perspective but please understand that this was not an article for consumers. Realtors are business people and while they are obligated to expose sellers' homes, they are not obligated to do so to the point of damaging their own businesses. Naturally any seller would be delighted if a broker spent as much as possible on ads, open houses, etc. to get a home sold, but that is neither practical or feasible, and it certainly becomes impractical to give listings to a competitor who is allowed to use the listings to attract consumers and then tell the consumers that the broker who is providing the listing is charging too much commission. I wouldn't do it, would you? Blanche Evans, editor

But the answer wasn't really adequate as an explanation, because Maria, like other consumers, can't possibly understand the nuances of how the real estate industry currently works and what changes can mean from an editor's short response.

At first glance, it appears as if Realty Times takes an editorial stance against discounters, which isn't entirely true.

What Realty Times is against is entitlement - that anyone can feel they are entitled to benefit from the work of others without proper payment.

In the case of discounters, there's nothing wrong with discounting one's own fees. There is something wrong with taking the listings given freely by other brokers from a broker cooperative to promote their fees. It's not done in the MLS environment, and there's no reason why it should be done in the public environment.

Here's why. Brokers are independent contractors. They agree to put their listings into a repository called the multiple listing service where their inventory can be shared with other brokers. The purpose of the MLS is to create a "to-the-trade" marketplace where brokers market their listings to other brokers.

Public Websites aren't to-the-trade. They're to the public, and that's a very different environment.

Because of the advances of the Internet, it has become possible to display MLS listings to the public, and the industry has struggled with how to do this without losing its bearings.

Realtors went to tremendous trouble and expense to present homes on the Internet over the last ten years. They bought Websites, listing presentation software, virtual tours, and other marketing tools to put listings before the public.

Obviously, marketing expenses escalated instead of lowered. To make matters worse, competitors to their system began to find other ways to get listings besides the MLS and present them to the public. Some companies even charged lead generation fees of 35 percent or more back to the brokers for their own listings which they never had permission to use!

While the Internet grew in popularity with buyers, it did not grow as much with sellers. Brokers found themselves not only paying the confusing and expensive marketing costs of the Internet, including data protection so they wouldn't have to pay for their own leads, but having to continue expensive offline marketing expenses as well (newspapers, etc.)

And what was their reward? - consumers demanding lower commissions. As soon as listings were online, consumers wanted to search for homes themselves. They also wanted to reward themselves for doing the work that Realtors used to (and still do) perform for them.

Since the advent of the Internet, commissions have dropped over 25 percent from six and seven percent to as low 4.2, 5.1 and 5.4 percent by differing polls.

So, the bottom line is that instead of brokers being paid more for going to the trouble and expense of supplying listings to the public, they're being paid less!

If that's not a kick in the teeth, I don't know what is.

In the MLS environment, brokers advertise their listings to other brokers, where the other brokers can email them or otherwise present them to their buyers.

What zip and others want is not a few listings at a time, but the whole MLS database, which has more value than individual listings. They want to give consumers access to the whole MLS database and use that as a lure to get them to turn over their contact information.

That works for zip but not for the listing brokers who supply the listings, because the listing is now in zip's advertising environment where it's all about lower fees. The listing broker is advertising a listing - not lower fees. On another broker's site, the listing broker can't defend her business model or why she charges full-service fees because she's not in charge of the advertising environment.

Listing brokers have the right to control where their listings are advertised, including newspapers, Websites, and other media. They have control over how the listings are presented to the public and in what context because that is what they have sold to the seller. When a listing broker makes a listing presentation to a seller, the broker presents a reasonable, feasible marketing plan for the home which includes pricing it, making it market-ready, and promoting it. The seller knows where the home is going to be exposed and why. This marketing plan includes exposing the home in the most cost-effective, results-oriented way that will bring the most willing, ready and financially able buyers to the seller's door. It doesn't include exposing the home to the point of putting the listing broker out of business.

Why would a broker list a home where the maximum commission is only going to be $1,500 and then turn around and pay $3,000 for advertising on television, radio, newspapers and the Internet?

But if a broker is marketing homes through the MLS, should she simply give up her right to control the advertising environment where the listing will go? If so, that makes the MLS no longer a cooperative, but a place to get sabotaged, doesn't it? The safe thing would be to withdraw the listing and try to sell it alone. But that wouldn't be very nice, either, would it? However, many markets including New York City, operate that way - without MLSs. And I guarantee you, those brokers would never let another broker advertise their listings.

The bottom line is that all brokers may discount. zipRealty and others choose to advertise that they discount which is fine, but consumers should know that they may be able to afford to discount because their costs may be less. They may not advertise in newspapers, or they may not have a brick and mortar office to keep up.

While some consumers would rather meet their broker at Starbucks and save a little money, others may want the full-service experience of using the brick and mortar office, and seeing their home in the local newspaper. That's free enterprise.

Exposing the listings to the public costs money, which may be one reason why full service commissions are higher than zip's. And the cost of using zip to expose seller's listings isn't free if the whole industry is forced to lower commissions to compete. That means they can no longer afford to advertise in the newspaper and their business models have to change, too. Then everyone will be a discounter, with only virtual services available. Nothing wrong with that, except that a lot of consumers, thanks to Spam, porno and other reasons, don't want to use the Internet.

As long as sellers turn to newspapers to see where their brokers are spending their advertising dollars, there will be full service brokers.

Realty Times is pro-Realtor. What Realtors do with their income is up to them, including whether or not they want to discount their services. But discounters shouldn't use other brokers' inventory to further their own agendas, when that inventory has already been graciously supplied to-the-trade.

Published: August 18, 2004

Use of this article without permission is a violation of federal copyright laws.

Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.