Home rebate plan touted Affinity program set at Price Clubs, AmeriNet says

'Verbal commitments'

Company rejected by Long & Foster notes Costco ties

January 25, 1998|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

The company that was jilted by Long & Foster Realtors last week says it has "verbal commitments" from other brokers to participate in an affinity rebate program that could return thousands of dollars to homebuyers and sellers.

AmeriNet Financial Systems Inc., of Englewood, Colo., would not reveal which brokers it has been negotiating with.

But according to Monte Helme, vice president for corporate communications, the company expects to have its affinity program available in area Price Club warehouse centers, owned by Costco Cos. Inc., by the spring.

"As far as Costco taking this into the mid-Atlantic states, it does not slow up our timetable," he said. "The program will be introduced sometime in the first quarter [of 1998], most likely in Maryland and Virginia."

There are two Baltimore-area Price Club warehouse centers, in Glen Burnie and White Marsh.

Helme added that there "are a number of firms in both states who are very eager to participate in the program." AmeriNet has rolled out the program in a number of Western states, including Washington, Idaho, Nevada, New Mexico and, in March, California.

However, James P. O'Conor, chairman of O'Conor, Piper & Flynn Realtors, said he has not been contacted by the company, and "would not be interested" in participating in the program. Likewise, D. R. Grempler, president of Coldwell Banker Grempler Realty Inc., said his company would not participate.

The AmeriNet program, called CARES (Consumer Advantage Real Estate Services), would work as a referral service for Costco members who purchase $100 executive memberships. The Costco member would call a toll-free line and be referred to a participating broker, who would list the member's house.

After settlement, 35 percent of the listing broker's commission would be rebated to AmeriNet. According to Helme, AmeriNet keeps 20 percent of the rebate, with the remainder going back to the home seller.

For example, if the broker's commission is $10,000, then $3,500 would be rebated to AmeriNet. It would keep $700, and $2,800 would be returned to the seller.

Likewise, a buyer who originates a mortgage through AmeriNet would be entitled to approximately a 1 percent rebate of the loan amount. For a homeowner who sells and buys through AmeriNet's referral system, the savings could amount to thousands of dollars.

It was the fear of providing discount services -- of altered commission structures that might pit an agent in the referral system against one who wasn't -- that began a mini-revolt the likes of which Long & Foster President P. Wesley Foster Jr. said he had not seen in 30 years at his company.

Foster said he had entered into the agreement in December with two thoughts in mind: First, grab the program before another broker had a chance, and second, create more market share for his company.

"When we first decided to do it we talked with a few of our best agents, and they felt like it was something that we needed to do," Foster said. "But when it was proposed to everyone, there was a large contingent that was really concerned about it. And we were concerned."

After learning that John L. Scott Realty, the largest in Washington state and the first to enter into an agreement with AmeriNet and Costco, had severed ties, Foster rethought his decision.

"We had several meetings with many of our agents who were up in arms about [the program]," Foster said.

"We had listened to our people, and Scott had lost at least 12, maybe more, very good agents. I didn't want to lose the first one. They left for other companies, and we were threatened with that here. Scary."

Said Helme: "I understand there was a lot of agent pressure there. We would have liked to have had them, but we are not going to skip a beat just because they are not [going with the program.]"

"To some extent, the horse is out of the barn," said Laurie Moore of Real Trends, a firm that analyzes the real estate industry.

"Somebody is going to be doing that business, and if there is enough of it in that market, then the consumer begins to recognize that discounting is occurring.

Pub Date: 1/25/98

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