Hot (Residential) Topic: Discount Commissions

Hyperbole Alert... Relax. The following quote is written about residential (not commercial!) brokers:

"It is hard to think of an occupation that garners less goodwill these days than the real-estate agent. More often than not, agents are portrayed as hustlers, sharks or unimaginative opportunists..." (New York Times, Mar 5, 2006, Dubner and Levitt)

Oops. It has always struck me that there is anti-synergy between residential and commercial real estate. That's why you rarely see firms successfully combining both disciplines. (Yes, I know there are exceptions.)

But at the same time, it's always fun to imagine how trends in residential marketing might (or might not) apply to commercial brokerage. Two in particular stand out: discount commissions and public listings.

Although average residential commissions have declined only slightly to 5.1%, according to RealTrends (Wall Street Journal, Apr 6, 2006), investors continue to launch new services to attack the traditional 6% commission. These include Redfin and BuySide Realty, as well as already established ZipRealty and dozens of other discount brokers.

Publicly available information on house listings continues to expand, led by massive sites like Craigslist and Google. Yes, I know that there is a lot of junk there too. But, again, investors continue to launch new portals for home buyers, including Zillow, Propsmart and Trulia. Somebody is spending big bucks.

-- Peter Pike