Decommissioned Source: Indianapolis Star ©2001-Gargi Chakrabarty Realtors, dealing with more savvy clientele, try fee-based services to prop up sagging profit margins. Steve Rudolf knew his home of nine years like the back of his hand. So when it came to selling it, he didn't need a broker to show his home or tout its virtues. Nor did he want his Far-Northside home listed publicly, because he already had received many inquiries. "I didn't need a broker to sell my house. I knew many people who wanted to buy it," said Rudolf. "I just wanted some help with the paperwork." Rudolf's friend Phillip Lande, a longtime Re/Max broker, offered him a deal. Instead of charging a flat commission rate, usually a percentage of the sale price, Lande offered to charge Rudolf only for handling the paperwork. As a result, Rudolf paid Lande $500 for helping close the $225,000 sale. "Normally, a broker would charge 7 percent commission," said Rudolf. "By paying only for one service, I saved more than $15,000 in brokerage fees. My house was a hot property. It sold in one day. I didn't need a broker to waste my time and his, too." Still, Lande's offer to Rudolf wasn't just a friendly gesture. While Rudolf's case was far from typical -- not everyone has buyers literally waiting in the wings -- some local real estate agents are offering services in an a la carte fashion instead of charging clients a flat commission fee. In addition to Re/Max, local branches of Century 21 Group Co. are reviewing this menu-driven business model while Hall & Russell Real Estate Group has launched a variation of it. Although the fee-for-service concept has been around a while, it remains a niche model, said Kevin Roth, senior economist at the Washington-based National Association of Realtors. "The fee-for-service program is aimed at those clients who wouldn't have sought brokers to sell or buy homes," Roth said. "Nationally, 15 percent to 20 percent of sellers don't seek brokers and sell their homes themselves. This figure has not changed despite the advent of the Internet." Some people don't want or need the full range of services offered by real estate agents, prompting some to look for ways to offer more targeted services at a lower cost. "They'd rather have some revenue than none," he said. "Frequently, sellers are not able to sell their homes, and they eventually seek the help of brokers. So fee-for-service often leads to future business for brokers." Roth said real estate group Coldwell Banker launched its menu-driven service called Blue Edge in Pittsburgh and central Illinois but met with limited success. Taking its cue from other markets, local firm F.C. Tucker is not ready to abandon its traditional commission-based business, saying customers prefer one-stop shopping for their real estate needs. "I don't know if home sellers can handle marketing or sale negotiations," said H. Jim Litten, president of F.C. Tucker's residential real estate division. "They certainly don't handle closing transactions. I think customers want more service (rather) than less." Litten, whose company charges 5 percent to 7 percent as commission, said the pay-per-service models also could result in poorer service. "Agents are compensated for what they do," he said. "If they earn $150 instead of $1,500, I wonder what kind of service customers will get. Real estate is getting more complex, and customers need more and not less service." In contrast, some brokers, such as Lande of Re/Max, believe customers need brokers only for specific services. "Every customer has a different need," he said. "Some are experienced and can do the advertising themselves but need help with the paperwork and closing. Some have attorneys to do the paperwork but need brokers to show their homes. That's the beauty of this program. It's very flexible." Under the Re/Max program, clients pay a base commission of 3.5 percent -- as much as half off the typical commission -- and then may choose from among three package options and a host of a la carte options: • Silver: Priced at $995, this option is for experienced home sellers and includes help mostly in pricing and listing a home for sale. • Gold: Priced at $1,495, this package includes contract negotiations, listing and closing procedures. • Platinum: This is the most comprehensive package, costing $2,995 per customer. The services include listing, closing procedures, contract negotiations, virtual tour of the homes, advertisement and appointments, among other things. Real estate experts say technology is prompting the need to change traditional business methods. "With the advent of technology, most customers were well-informed and could do themselves most of the services offered by a traditional broker," said Julie Garton-Good, who founded the National Association of Real Estate Consultants in 1999. "Most customers question the commission-based fee," she said. "They want to pay only for their specific needs." Named as one of the 25 most influential people in real estate by the National Association of Realtors last year, Garton-Good started the Consumer-Certified Real Estate Consultants training two years ago to promote non-commission based brokerage business. The training will be in Indianapolis in January. "The consulting approach allows brokers not to go in as a salesperson," she said. "Instead, brokers assess the needs of a customer and help accordingly, like accountants or lawyers." The need for the real estate industry to evolve is imperative, given the falling profit margins for real estate agents, Garton-Good said. "A broker assumes the listing cost of $1,200 to $1,500 even if a home doesn't sell," she said. "Brokers operate in a sell environment instead of a profit environment, and there haven't been enough sales to boost incomes. "Brokers need to think 'What can I stop doing?' and what clients can do themselves," Garton-Good said. "Some services are time-consuming for agents but can be easily done by customers themselves. The monetary burden of these services should be shifted from the broker to the home seller." Some local firms introduced the pay-per-service program but found few takers. "We do have a fee-for-service program," said broker Priscilla Russell of Hall & Russell Real Estate Group. "But it is not much in use. Customers preferred to stick with the commission-based system." Russell, who said her agency charges 4 percent to 6 percent commission, said most sellers don't have the knowledge to market, negotiate and close home sales. Others don't want to be bothered with the time-consuming paperwork. "Our clients are mostly investors," she said. "They don't have the time to make flyers, put up listings and follow through negotiations. They would rather have us do the work." Some others are reviewing the model and evaluating its benefits. "Three or five years from now, menu-driven service could be the alternative to traditional brokerages," said Kevin Kirkpatrick, president of Century 21 Realty Group Co. LLC. "But right now, people are disappointed with its results nationwide. We are still reviewing it. We'll probably offer this option to customers in the future."