Do alternative brokers suffer discrimination? Opinions vary in Baltimore area

August 01, 1993|By Ellen James Martin | Ellen James Martin,Staff Writer

A survey of alternative real estate brokers, released Tuesday by the Consumer Federation of America, found that traditional brokers often discriminate against alternative brokers. Reaction of area brokers interviewed this week was mixed.

Some discount and buyer's brokers said they agreed with the survey. But other brokers -- both traditional and alternative -- said that discrimination does not occur here, or, if it does, that it has subsided.

"I think they're out of their minds," Wesley Foster, chairman of Long & Foster Real Estate Inc., said of the consumer federation. "I think they're a radical group -- right out of the '60s."

Mr. Foster asserted that those working for Long & Foster, a Virginia-based realty chain with a major presence in the Baltimore area, do not discriminate against alternative brokers.

National survey

The consumer federation surveyed 85 alternative brokers in 17 cities, including four in the Baltimore area. The federation said found that traditional agents often do not show their home listings to alternative brokers, or falsely tell clients that discount brokers offer inferior service.

"I'm surprised at the report, because really, in Maryland, I wouldn't say we've seen any complaints --certainly not in Baltimore," said Arthur Davis III, president-elect of the Maryland Association of Realtors.

"Both buyer's brokers and discount brokers are an accepted part of our community," said Mr. Davis, who is president of Chase Fitzgerald, a Roland Park real estate firm. He noted that a number of alternative brokers are members of the Greater Baltimore Board of Realtors and make full use of the Multiple Listing Service, a list of homes for sale by member brokers.

Fewer than 10 percent of the brokers working in the Baltimore area are discount or buyer's brokers, Mr. Davis estimated

Most real estate agents work for the seller and typically charge a commission of 6 percent to 7 percent of the sale price of a home. Buyer's brokers are advocates for buyers; traditional agents, though they often help buyers shop for homes, work for the seller's interests. Discount brokers are similar to traditional agents but typically charge commissions of 1 to 2 percentage points less.

'Misunderstandings'

Mr. Davis said there may have been "misunderstandings" on the part of the traditional real estate community about the role of alternative brokers -- particularly buyer's brokers.

But he attributed such problems to "fear of the unknown," not to bias by traditional agents.

Among other things, he said, there has been confusion about how commissions are made by buyer's brokers -- and mistaken fears by sellers' agents that their clients could be stuck paying an unusually large commission in a deal involving a buyer's broker.

Mr. Davis said some traditional brokers have worried that the sellers they represent would "get into an adversarial relationship with the buyer's broker."

But he said educational efforts have eased such misunderstandings in the past couple of years.

"It would be irrational to discriminate," Mr. Davis said, "because real estate is an inclusive business." Realtors rely on one another to sell each other's listings, he said, and it would be contrary to their self-interest to harass members of their own profession.

Hurting the industry

Rick DelSantro, marketing director for the Mid-Atlantic States office of Century 21, said that bias against alternative brokers by traditional brokers occurs only in "isolated cases."

Sometimes, traditional brokers resent discount brokers because they take away business through lower commissions alone, rather than through better service.

"Some people see it that they're almost taking dinner off their dinner table," Mr. DelSantro said.

In fact, Mr. DelSantro said, he thinks that some discount brokers have hurt the real estate industry by offering a lesser package of services for a lower commission. "That takes away from the professionalism of the industry," he said.

Thomas Ross, owner of the Help-U-Sell office in Timonium, a discount brokerage, said problems he has encountered were due to misunderstandings -- not malice -- from traditional brokers.

He said such misunderstandings now occur less frequently.

"I think they're treating us fine," said Mr. Ross, who bought his franchised Help-U-Sell business three years ago and has been successful in the local market by charging homeowners a maximum commission of 5 percent to sell their homes.

'Absolutely problems'

But other alternative brokers say they face serious problems in dealings with the traditional real estate community.

"There are absolutely problems," said Sandra Blaker, owner of Homeowner Consultants, an alternative brokerage with offices in Columbia and Glen Burnie.

She said that some traditional firms "refuse to let their agents show my listings to their buyers." She also said she has trouble placing ads in some home-advertising magazines -- apparently because of pressure from traditional brokers who advertise in them.

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