Perhaps a friend's referral steered you to that particular real estate agent or you saw an ad outlining that agent's sales experience.
Now, consumers can skip those conventional methods and have Realtors bid to represent them in an online auction.
That's how Indianapolis-based DoorFly.com matches home buyers and sellers with real estate agents. Buyers and sellers provide their budget and location. Then they wait for agents to offer services - often at a discount.
A year after the startup launched, several Realtors marketing northeast Indiana properties have signed up for the Web site's directory. But others have concerns about DoorFly.com's practice of encouraging agents to offer sales commission rebates to woo clients.
Founders Tatum Hindman and Jon Coulter envisioned the site as a place consumers could find Realtors and compare qualifications. Consumers have a chance to review each bidding real estate agent's experience. And the site helps buyers and sellers negotiate a discounted commission, Hindman said.
"So many people don't know where to go to find an agent and especially to get a discount on those fees," she said.
The average commission rate paid on a sold house was 5.2 percent last year, according to ForSaleByOwner.com, a service that helps homeowners market their own properties. The seller's agent and buyer's agent typically split the commission.
Allen County sales have dropped amid a turbulent economy. First-quarter home sales dropped 17 percent from last year, according to the Fort Wayne Area Association of Realtors. Realtors sold 737 houses during the first three months of the year, down from 888 sold during the first quarter of 2008. The association updated its Multiple Listing Figures since The Journal Gazette reported them last month.
DoorFly.com has hosted about 100 buyer and seller auctions since its statewide launch in May 2008, Coulter said. The site started offering nationwide services in February.
The site's users do not always pick the real estate agent offering the largest rebate, Hindman said. Many opt for someone with impressive experience or local knowledge.
But a discounted commission sounds enticing to southwest Allen County resident Paul Quake. The 44-year-old decided to sell his four-bedroom house himself because he is reluctant to pay the traditional 6 percent commission, which could reach $10,000. Quake has spent less than $400 on advertising and signs, and he showed three couples the house during the past three weeks. The Pember Brook Drive home is listed for $189,900.
Quake is selling the property because his family is building a new house. If it doesn't sell soon, Quake said he would consider listing the house with an agent offering commission discounts.
"In my opinion," he said, "already there's some competition in that industry."
The Internet shook up the real estate industry's commission model. Some Web-based real estate firms tried charging lower commissions, but several either returned to charging a traditional commission or floundered. The weak housing market forced Foxtons, which charged 2 percent commissions in New York City and its suburbs, to close its U.S. operation in 2007.
But some brick-and-mortar companies still advertise commission deals. Fort Wayne-based Ideal Realty, for instance, offers to waive its share of the commission to sell a house if the client buys a new property within 60 days using the company, according to the firm's Web site. Clients still pay the commission for any agent representing the homebuyer.
A Web site like DoorFly.com is a great idea because it gives consumers power to negotiate discounts, Quake said.
One buyer willing to spend up to $90,000 for a central Indiana home had received three rebate offers on DoorFly.com last week. The highest one was $410. If the buyer winds up buying a home through that agent, he would receive the rebate payment when he closes on the property.
But paying a lower commission for a less experienced agent could cost buyers, said John Bellio, president of sales for Coldwell Banker Roth Wehrly Graber. A full-service brokerage's Realtors provide the best value because they can negotiate attractive sales prices, he said. If buyers do not negotiate the lowest possible purchase price, it will be much harder to turn a profit when they sell.
"You should get the best agent you can when you buy and get as much money as you can," he said.
Because home sellers pay the buyer's agent with the sale proceeds, Bellio said there is no reason for buyers not to hire the best agent they can find. And full-service agents have the access to Multiple Listing Service home databases and the negotiating skills that sellers need, he said.
Full-service Realtors can benefit from DoorFly.com's services, co-founder Coulter said. The site provides real estate agents with leads, and they don't have to invest a lot in advertising to make those connections. Real estate agents do not have to offer a rebate to participate in the site's auctions.
Real estate agents pay $19.99 to subscribe to DoorFly.com for a month, and Coulter said the monthly price is lower for longer subscription periods. Agents who subscribe can bid on buyer and seller auctions. There is no fee to be listed in DoorFly.com's agent directory.
Realtor Kelly Frank subscribed to the site a few months ago and already has won an auction. Frank, who owns Fishers-based Creative Approach Realty, joined the site to reach potential customers northeast of Indianapolis and in his native Kosciusko County.
Frank offered a DoorFly.com buyer willing to spend up to $150,000 a $1,800 rebate to choose Creative Approach Realty. He doesn't mind discounting his commission rate because many DoorFly.com users already have researched the housing market. The site allows Frank to do less work to close the deal.
"They're making my job easier by providing the lead," he said.
The Web site hasn't broken even yet, but Coulter and Hindman are optimistic about its prospects. More than 260 Indiana real estate agents have created profiles in the free directory. The company's goal is to attract more consumers and agents, Hindman said.
Unlike for sale-by-owner businesses, DoorFly.com sees the benefit real estate agents provide consumers, Coulter said. DoorFly.com offers consumers a way to meet experienced real estate agents and secure their services at a discounted rate.
"This recognizes the value of agents but can give buyers a negotiation right," he said.
