New system lets people choose from a "menu" of real estate services Source: The State (Columbia, SC) ©2001- Jeff Stensland Imagine walking into a real estate office and having an agent hand you a menu, not for food, but for an array of a la carte buying and selling services. Called fee-for-service, it's a new real estate model that allows clients to pick and choose the services they want. Advocates of the system say it empowers both clients and agents in a rapidly changing market. Fee-for-service is starting to catch on at realty companies in other parts of the country and could be in Columbia soon. Julie Garton-Good, a nationally syndicated columnist and one of the most influential people in residential real estate, thinks fee-for-service will revolutionize the industry. She stopped in Rock Hill last week to teach a class on the subject. "Today's consumers are willing and able to handle large parts of the transactions themselves. What they need is expert help in certain areas," she said. Traditionally, agents handle an array of "bundled" tasks and services for the consumer. For this, they are compensated with a commission based on a set percentage of the transaction. But some consumers need help only at the closing, while others just want someone to help market their home. This is where real estate agents can assist by offering a la carte services, "unbundling" the traditional services they provide. One reason fee-for-service is attractive is because the buying and selling climate has changed over the last decade. Buyers and sellers now have a number of tools at their disposal. Knowledge once held exclusively by real estate agents is now widely available on dozens of free Internet sites. Many bookstores also have real estate sections crammed with how- to books for the layman. Increased consumer knowledge has led to a spike in for-sale-by-owner properties. According to a 1999 study by the National Association of Realtors (NAR), these properties will account for about 40 percent of all home sales in the next three years. The NAR study also found that most consumers who used agents wanted a far greater degree of control over the real estate transaction than the traditional agent usually provides. The survey found the biggest reason cited by those who decide not to use agents is the commission agents receive. Consumers have the skills to complete certain tasks themselves, and don't want to pay someone else do it for them, the study said. Chris France, who owns a real estate magazine in Raleigh, said the shift is a sign of the times. "Everybody wants more control of their financial situation. It only makes sense that they want control over what's in a lot of cases their biggest investment," she said. "Realtors need to realize this is not a one-size-fits-all market anymore." While some in the real estate business bemoan these trends, fearing a loss of business, Garton-Good said the smart ones will learn how to thrive in the new environment rather than just try to stay afloat. "We're living in world of specialists, but most Realtors are still generalists," she said. "This is the integration of a new business model into an industry that's very reluctant to change." Agents who have integrated fee-for-service into their businesses say it benefits both consumer and agent. And far from losing money, they say, using fee-for-service has helped business. "You'll actually get more business, but in a different way," said Mark Thomas, a Durham-based agent who has used fee-for-service for several years. "People will call and say 'I need help with a contract. How much do you charge for that?' " Agents who use the fee-for-service model can determine their fee several ways; a menu system, an hourly rate and a retainer fee are becoming popular choices. The appeal lies in providing an alternative to the standard commission fee system, Garton-Good said. But some in the industry worry about consumers' ability to pick which services they need. An overconfident buyer or seller could easily sink a transaction an agent could have saved. Jimmy Derrick, president of Bob Capes Century 21, said legal problems could arise with fee-for-service because it might prove difficult to assign liability if the transaction goes awry. "How much liability are they (consumers) going to want us to carry? If I offer limited service, am I still going to be liable for everything?" Derrick asked. Thomas said most clients are realistic about what they can do on their own and which tasks they are willing to leave to an agent. "Most people are bright enough to know the penalty for not doing things right, so they're upfront about what they don't know," Thomas said. Garton-Good said a growing number of fee-for-service agents ask clients to take a self-assessment quiz, which can help them determine what services they really need. Fee-for-service seems to be gaining momentum. A new designation for agents that take a fee-for-service course, Consumer-Certified Real Estate Consultant, was recently created. Garton-Good started her own course last year, signing up more than 400 agents in the first two months. Some Columbia agents familiar with fee-for-service say it's only matter of time before it's offered in the Midlands. David Ness, owner and broker-in-charge of RE/MAX Real Estate Services, said his company may offer fee-for-service within a few years. "I'm not saying it's coming tomorrow, or even next week, but it is coming," Ness said. "We'll still provide full service, but also fee-for-service. Eventually, you'll see a blending of the two and we'll be able to offer more choices." Jeff Stensland covers real estate. He can be reached at (803) 771-8659 or e-mail at jstensland@thestate.com.