Web Sites Take Aim at Real Estate Commissions

ByABC News
April 8, 2006, 2:51 PM

April 8, 2006 — -- Roman Levkov thought for a moment that it must have been a trick: He listed his home in Freehold, N.J., through the online broker flatfeemlsdirect.com, which charged him a flat fee of $295 to include his home in the MLS, or multiple listing service -- a large database of property listings accessible to all realtors and consumers searching Web sites like realtor.com.

Within two days, his house went under contract.

"I just saved $10,000 on 3 percent [of the sale price], on the side of my broker," said Lefkov, beaming with pride at overcoming what some see as an inefficiency in the selling of homes. "Three percent from $358,000 is $10,000-something."

The businesses of buying a ticket, booking a hotel room and trading stocks have all been radically reshaped by the transparency and immediacy of the Internet. And now, a similar change may be coming to the most brick-and-mortar of brick-and-mortar businesses -- the buying and selling of homes.

Whether a house is worth $300,000 or $3 million, the traditional model includes the buying and selling agents splitting a commission ranging from 5 to 7 percent. So taking either the buying or selling agent out of the equation can mean serious cost savings.

For instance, a new site called buysiderealty.com has listings of all the properties in California, Illinois and Florida, and offers a once unthinkable incentive for buyers -- a 75 percent rebate on the buyer's commission.

It was enough to lure in Lisa Zimmerman of Chicago, a mother of four whose two-bedroom apartment seemed to shrink in direct proportion to the growth of her children.

"In the price range that I'm looking [at], I would end up getting a rebate of about $8,000," Zimmerman said.