Published November 7, 2002, in issue #40 of The Hook

BY LISA PROVENCE

The next time Scott Hiller sells a house, he's listing it with Assist-2-Sell, a new real estate brokerage challenging the notion that selling a house requires a six percent commission.

Hiller thinks a realtor who takes half an hour to show a $200,000 house and then walks away with $6,000-- half of the standard six percent commission-- is "a hard pill to swallow."

Anthony McGhee thinks so, too. That's why he opened an Assist-2-Sell franchise that boasts a $2,995 flat fee. And he says his phone has been ringing off the hook.

"The average commission on a house in Charlottesville is $10,000 to $15,000," says McGhee. "That's a lot to pay for what can be one day's work."

Sellers who chose the $2,995 flat rate get a sign on the lawn, advertising, and an agent to show the house. What the flat rate doesn't include is a commission for any other agent who might bring a buyer, and a listing in the Multiple Listing Service (MLS), which some realtors consider the single most valuable tool in selling a house.

For a 4-1/2 percent commission, Assist-2-Sell will put houses on the MLS. (Three percent goes to the agent who brings a buyer, and Assist-2-Sell takes a 1-1/2 percent cut.) Although both options are discount rates, McGhee insists the seller gets full service.

McGhee compares the real estate industry to the way stocks and bonds were sold 15 years ago, when people had to go through a broker. "That changed with [discount brokerage] Charles Schwab," he says.

If local real estate agents are quaking in their boots at the potential threat to their commissions, they're acting plenty cool.

"This is not new," says Pat Jensen, president of the Charlottesville Area Association of Realtors. "We've been hearing about it for years, and it's one of several new business models."

She calls it "unbundling," and says many companies in the area are offering clients a menu of services rather than just the opportunity to pay the standard 6 percent commission. "I've done it myself," says Jensen, mentioning a time when a client had a buyer and wanted someone to write the contract for a flat fee. "This is not blind-siding us," she adds.

Jensen, a broker with Real Estate III, doesn't see Assist-2-Sell as a major threat to the traditional way of selling real estate. "Some people really want the MLS and like the way things have always been done. Others want change. It depends on who they are."

Now that Assist-2-Sell has opened the door, will realtors start slashing commissions? "I wouldn't think so," says Jensen.

Realtor Ray Caddell, whose ads tout him as the "hardworking nice guy," says, "You get what you pay for." Caddell says his Century 21 office finds most of the properties for clients through the MLS, a tool used by the approximately 800 agents in the area.

But wouldn't home sellers rather pay $2,995 than $12,000 to sell a $200,000 house?

"Yes, and so would I," replies Caddell. "But I'd rather drive a Mercedes Benz than a Yugo."

Caddell does not anticipate cutting his commission in light of the new kid in town but admits that's he's reduced it from time to time over the years. And he warns consumers to make sure they know what they're getting.

"Have you seen anything in their marketing materials that says, 'We're not in the MLS, and we're not offering a commission to the other 800 agents around for $2,995?'" he asks. "If they're so damn proud of it, stand up and say so."

McGhee doesn't think the MLS is worth a $15,000 to $20,000 commission. "Full service is not sticking a sign in the ground and putting a house on the MLS," he says. "I find it really surprising that the MLS is the one piece [local realtors] would use to say clients are not getting full service."

According to McGhee, active buyers are out there looking, and when a house sells one day after the sign goes up, buyers are finding it without the MLS.

Caddell contends that it's easy to sell a house in a hot market, but he wonders whether it will be so easy when sales cool off. And his experience with people who call in from an ad or a sign? "They almost never buy that house," he says.

Rives Bailey, an agent with Montague Miller, says he's sold quite a few houses in three days, and he credits the MLS as the most important tool in attracting buyers.

"It doesn't take a lot to sell a house if it's priced right," says Assist-2-Sell's McGhee. "That's full service."

And his satisfied client, Scott Hiller, concurs. "I didn't get any less service from their company than from any other real estate company," he says.

Rob Lynch, who works with McGhee at Assist-2-Sell, emphasizes that they want to work with realtors and to get fair compensation for those who bring buyers to the $2,995 listings.

"We're not going to put anybody out of business with this program," he says. "It just offers a seller alternatives."

How low will they go? Anthony McGhee and Rob Lynch at Assist-2-Sell are the dealingest.
PHOTO BY JEN FARIELLO

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