I don't usually get so worked up over a 60 Minutes Report, it's one of my favorite shows. Tonight, however, I couldn't believe the things Leslie Stahl was insinuating on her "Red Fin" discount internet real esate report and the demise of the 6% commission. If you missed it you can see it at CBS 60 minutes.
Following is a copy of the letter I sent to 60 Minutes. I hope more of you will let them know you opinion.
"Leslie,
I'm really disappointed in you and 60 Minutes after seeing your report on Red Fin, the internet real estate discounter. First of all on YOUR website you have a Coldwell Banker logo saying they are your sponsor. I'm sure Coldwell Banker won't be real happy about this report or the fact that when you finally got a Realtor's view point it was a Re/Max agent.
You should get your information straight as a journalist, especially one on TV. It is ILLEGAL to fix commission rates. They are ALWAYS negotiable. While 6% is traditionally a norm, it is not a fixed rate. If a home is not going to need as much work, time, advertising and marketing to get sold, then certainly the commission should be negotiated down before the listing agreement is signed.
Commissions can also be variable, meaning on a very expensive home you can charge one percentage for the first million and a lower percentage for the second million and so on. A lot of agents today will lower the commission if they find the buyer and do not have to split the commission with another broker.
Are the internet discounters really getting the best possible price for the home? If they don't even see the house how are they giving value to the condition and upgrades (or lack of them). And what about disclosures regarding things that could affect the value or future value of the home? Who is really looking out for that seller?
If they put the listing on the MLS, who is paying the buyer's agent. Since Red Fin only charges $3,000 to list the house, do the sellers have to cough up more money to pay the buyer's agent or do they not put the home on the MLS making it available to other "traditional" real estate agents?
What happens if the house doesn't sell? The seller has most likely already paid their $3,000. Do they get it back? A "traditional" real estate agent never gets paid a penny if the house doesn't sell. Therefore, they're making an investment with every listing having to pay for advertising, marketing, open houses, gas, etc. out of their own pocket. Don't you think that gives them a pretty good incentive to get that house sold?
And what about the buyers who go through Red Fin? Yes, they may get some money in their pockets at the closing, but do they know all the details they should know about the home? Do they know it was the best home at the best price for them? Who is going to help them when they have a problem 6 months down the road? Who is telling them that the road the home is on is due for widening or that it is being considered for rezoning to commercial?
Don't get me wrong, I do believe in free enterprise and I do believe that the internet is making a major change in the way everything is bought and sold including real estate. However, there will always be a need for the "traditional" broker/agent as many people will not have the time or inclination to worry about strangers coming in to look at their home, holding open houses, making flyers, etc. What I resent is the way you made it sound like real estate agents are money hungry, over paid, sharks who do nothing to earn their fat pay checks. Most of us are very hard working, caring people who take pride in helping homeowners with their most valuable asset - their home. When you consider the hours we put in and the expenses we have (on behalf of the seller) our hourly wage would really surprise you.
Sincerely,
Elizabeth Ruvo
Broker Associate/Office Manager
All Florida Realty Services Port St. Lucie, Florida"
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