SAN FRANCISCO–Discount and reduced-service real estate firms have met resistance from traditional brokerages on occasion, but consumers will ultimately decide whether the old and new models can coexist, said panelists who spoke Thursday at Inman NewsReal Estate Connect 2004 conference.

Lyle Martin, co-founder of Assist-2-Sell discount firm and a member of the “Don’t discount the discounters” panel presentation, said that discounters have been edging in toward the industry’s mainstream.

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SAN FRANCISCO–Discount and reduced-service real estate firms have met resistance from traditional brokerages on occasion, but consumers will ultimately decide whether the old and new models can coexist, said panelists who spoke Thursday at Inman NewsReal Estate Connect 2004 conference.

Lyle Martin, co-founder of Assist-2-Sell discount firm and a member of the “Don’t discount the discounters” panel presentation, said that discounters have been edging in toward the industry’s mainstream.

The industry has slowly accepted discounters as a fixture in the real estate landscape, Martin said. And as Assist-2-Sell grew, it was clear that “discount was no longer a dirty word – discount was becoming popular,” he added. “The consumer is embracing our model. The real estate community is reluctantly embracing our model.”

Martin said that the industry is increasingly competitive, and the bottom line is thinning for many agents, necessitating changes in the overall market.

Lawrence Bunnell, co-owner and principal broker for InSight Realty, a fixed-fee discount company, said that discounters should certainly not be discounted, and in the years ahead people may be saying, “Don’t try to count all the discounters.” Alternative business models may become the norm, he said. “I see a continuous alternation of the way real estate services are delivered.”

Consumers are unwilling to pay the traditional 6 percent to 7 percent commissions in real estate transactions, he said, and the typical commission divided among listing agents and buyer’s agents has shrunken to about 5 percent. In fact, when a panelist asked real estate agents in the audience whether they had accepted discount commissions in the past year, many of them raised their hands.

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Bunnell said some real estate associations practice “somewhat protectionist policies” that can threaten alternative business models, and he said he expects that such strategies could lead to conflict as the number of discounters swells.

But Bunnell encouraged some increasing regulation in the industry. He said that even among discounters there are some outstanding issues that should be addressed, such as companies that seem to thumb their noses at real estate licensing laws in their e-commerce practices, and real estate commissions have apparently “been unwilling or unable to police these.”

Discounters want to follow the rules that have been laid out for them by the traditional brokerage community, said Aaron Farmer, broker-owner for Texas Discount Realty – but those rules are starting to constrict.

“They opened this box of limited-service listings – now they want to close this box,” he said. “How long before they take aim at your business if you have a new idea?” Farmer proposed the formation of a national organization to unite discount firms.

Rick O’Neil, president of Help-U-Sell Real Estate and Brian Yui, CEO of HouseRebate, were also featured on the panel of discounters. Yui said he believes there is room for both discounters and traditional brokerages in the real estate market. And discount real estate firms aren’t always reduced-service companies, he said. “We’re really a full-service firm.”

O’Neil said that in making the transition from a traditional brokerage to Help-U-Sell, “I found very, very simply that there is another way of doing business. It is consumer-based as opposed to agent-based. It changed my old paradigm to different ways of doing business.”

While some discounters cut commissions to offer rebates to consumers, an audience member attending the panel questioned whether this practice could in some situations be a violation of real estate law. The question excited discussion in the audience and among panelists, and exemplified the continuing debate and unsettled suspicions relating to new real estate models.

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Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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