The Wall Street Journal printed a strong editorial, “The Realtor Racket,” on Aug. 12, 2005. It touched on a key issue in the battle to preserve traditional real estate commissions – the welfare of consumers. And the question arises: ‘Does innovation hurt the educated consumer?’

Innovation frequently spawns conflict. Traditionalists try to turn back the clock or at the least try to stop it from advancing, protecting themselves from change that impacts the status quo. This is what appears to be happening in the real estate industry today.

Traditional real estate brokerages, feeling somewhat overwhelmed by alternatives that allow for more consumer involvement in the selling process, seem to be using their ‘muscle’ to stem the rise of innovative competition. What they are missing is that this ‘phenomenon’ – if you want to call it that – is being driven by consumers.

We certainly encourage all real estate professionals to support the National Association of Realtors as their trade association and representative at many levels. However, we urge the NAR to remember what happened to the investment industry when eTrade entered the picture. It didn’t put stockbrokers out of business, but it did change the industry. It expanded choices for investors who now could become very involved with their portfolio management or entrust it to an advisor.

We also would ask the NAR to remember that its membership is comprised of many of the brokers and agents who have taken the lead in establishing alternative models. They pay their dues and they adhere to the code of ethics to which the NAR subscribes. They are licensed professionals who believe that they can do their jobs, serve consumers, make a nice living and do it all while saving consumers money.

As a professional who has worked both in the traditional and the alternative realms of real estate, I’ve seen the tide turning for years and in 1999 realized that alternative real estate models made sense. I watched as companies launched strategic initiatives to offer their clients better service, greater efficiency and savings.

Regarding the issue of consumer protection, consumers protect themselves by educating themselves about the differences in the options that are now available to them.

For example, discounters offer a reduced fee but they need to find out if the service is reduced along with the fee. If so, what exactly will they, as home sellers, have to handle in the transaction and what degree of support should they expect? 

Set-fee companies, on the other hand, list a home for a fee and then handle all of the advertising, buyer negotiations and paperwork involved in the transaction. The homeowner usually opts to show the home himself/herself.

An Internet company allows a homeowner to list the property on its site and will even put it in the MLS, but that’s it, usually.

If consumers are aware of the benefits and drawbacks of each option, then they should be free to make the choice.

As consumer-driven alternative models become more user-friendly and the real estate industry becomes more accepting of the idea, brokerages will have to adapt. In 1999 there were fewer than 150 set-fee real estate offices nationwide, and they were operating mainly on the West Coast. Today there are well over 1,500 operating in virtually all 50 states, and I believe that this group has the potential to exceed the 2,000-mark by year-end.

Recently, even a traditional real estate giant launched an alternative initiative, hoping to recapture sellers that are slipping through ever-widening cracks.

The reason for the growth of this segment: Consumers are confident that they can participate in the sales of their homes, and they like saving money. They’re meeting with success when they opt for an alternative approach to the sales transaction.

While Help-U-Sell is not affected by impending legislation, we are opposed to any limitations on consumer choices, as well as any legislation that limits the introduction of innovative services.

Rick O’Neil is president of Help-U-Sell Real Estate.

***

What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

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