For Sale by Web

Richard Ginsburg struggled for years to sell his 5,000-square-foot contemporary home in Lebanon, N.J.--using three successive real estate agents--before finally turning to Tom Fischer, a local discount broker, early this year.

Fischer placed Ginsburg’s home on the regular Multiple Listing Service, a computer and print database of homes for sale that’s used by brokers. But Ginsburg also posted color photos and elaborate descriptions of the property on his own Talus Web site (https://www.talusmls.com), a cooperative he established for discount brokers. And to reflect the savings from Fischer’s lower commission charges, Ginsburg was able to cut the asking price on his house by nearly $10,000.

A few weeks later, Lea Fonseca was surfing the Net when she came across the Talus site. “I saw a picture of this house that made me drop everything,” said Fonseca, who lived in a nearby town. She turned the picture of Ginsburg’s home into a screen saver for her computer, e-mailed it to friends and called her real estate agent to help her arrange to see the house and close the deal.

Ginsburg and Fonseca, both software developers, aren’t typical real estate customers. But their approach to home buying may be a harbinger of major changes in the industry.

“People are fed up with the real estate monopoly,” said Randall Guttery, professor of finance at the University of North Texas in Denton, who co-wrote an article in the Journal of Real Estate Portfolio Management on technology and the real estate industry. “We’re finally seeing the walls crumble.”

Just as the Internet is revolutionizing the marketing and distribution of everything from airline tickets to books, discount brokers and cut-rate Web services are creating new competition that could eventually slash the high cost of real estate transactions, according to Guttery and other industry experts.

Traditional brokers usually charge 6% to 7% commissions, with half of the money going to the listing broker and the other half to the buyer’s broker--that’s an $18,000 charge to the seller of a $300,000 house. Guttery predicts commissions will drop to 3.5% in 10 years. In addition, he believes the $1,700 or so that buyers pay for title searches, appraisals and other closing costs will fall to as little as $550.

The ability of the Web to connect consumers directly to the information and services they need to buy and sell houses has the potential to eliminate the jobs of hundreds of thousands of Americans who work in the real estate industry--in sales, mortgage brokering, appraisals and other services.

To survive, analysts say, brokers must take on new functions, such as earning fees by connecting buyers to mortgage companies. “What we’ve been telling the Realtor is that they have to make themselves more important to the transaction,” said Jason Altman, an economist at the National Assn. of Realtors in Washington.

Proponents of the new technology say it’s high time the industry is shaken up.

“If you buy a Ferarri, you drive right out with it. But if you buy a home from Coldwell Banker, it takes 45 to 60 days to close,” said Doug Swanson, vice president of NDS Software, a Minden, Nev.-based firm that operates a real estate Web site (https://www.homeseekers.com) that lists more than 700,000 homes nationwide.

“Internet sites will be the vehicle that compresses that period,” Swanson said. “Pretty soon you will see most of the elements of a [deal’s closing] online.”

Online mortgage services are already putting pressure on mortgage brokers. Companies such as E-Loan (https://www.eloan.com) are offering quick service and low rates, connecting consumers directly to lenders. And Mountain View, Calif.-based Intuit offers a $225 rebate on closing costs to home buyers who use its QuickenMortgage Web service (https://www.mortgage.quicken.com/).

The cost of appraisals, typically about $350, could get cheaper because of the Web. Cambridge, Mass.-based Case Shiller Weiss Inc. offers $25 “automated evaluations” of home values. Using its database of 90 million transactions, the company will provide an appraisal based on comparative values of houses in the same ZIP Code. Mortgage companies dealing with borrowers who have good credit will often accept these evaluations, said Karl Case, co-founder of the company and an economics professor at Wellesley College in Massachusetts.

But the greatest potential for savings comes from reduced commissions. In spite of innovations that have sharply cut the time agents spend selling a home--such as the lockbox, the cell phone and the facsimile--commissions have remained at about 6%.

Realtors have been able to maintain these margins in large part because of their monopoly over much of the information required for real estate transactions. But that monopoly is dissolving.

Take the Multiple Listing Service, or MLS. Once the closely guarded bible of Realtors, the comprehensive lists of virtually all homes for sale have become largely available on half a dozen Web sites.

The largest site, https://www.realtor.com, boasts more than 1.1 million listings nationwide, accounting for about 85% of all home listings in the U.S. Stuart Wolff, chief executive of RealSelect, the Westlake Village firm that operates the National Assn. of Realtors-sponsored site, says more than a million potential buyers visit the site each month.

Demonstrating the potential it sees for expansion, RealSelect recently paid $14 million to become the exclusive real estate site on America Online. Microsoft will soon join the fray with a Web site called Home Advisor, scheduled to debut this summer.

These Web sites typically include pictures of homes, mapping software that helps pinpoint the location, descriptions of schools and even neighborhood crime rates. Buyers can search for houses based on such criteria as size, price and location, reducing their dependence on real estate agents.

The Web will “continue to erode the position of power enjoyed by the real estate professional because of his or her familiarity with the Multiple Listing Service,” John Tuccillo, former chief economist for the National Assn. of Realtors, wrote last year in the trade journal Business Economics.

To be sure, the Web won’t replace agents any time soon. Home sales are complex transactions involving a great deal of paperwork and a huge amount of money.

“It’s one thing to buy an airline ticket online. It’s another to try to buy a home,” said Fred Sands, founder of California’s largest independent brokerage firm. “You want to smell it, taste it.”

Sands said his company’s Web site is largely a marketing tool and hasn’t had a significant impact on sales. And Realtors argue that homeowners will continue to depend on a professional to handle the sale of their most precious asset.

“If you need brain surgery, do you go to a doctor who works out of his home or do you go to a hospital?” asked Bob LeFever, president of Coldwell Banker Southern California.

But early observations of the way people use Web sites suggest that the role of the agent in the real estate transaction will change.

“People will typically come to a site and spend 34 minutes looking at maybe 20 houses,” said Swanson of NDS Software. The typical Web user will print out information on five houses and maybe drive by a few before contacting a broker, he said.

“This gets agents out of the taxi business,” Swanson said. “He doesn’t have to run around with screaming kids in the back.”

Brokers get more out of their advertising dollars since the listings they place in their local MLS could reach millions of potential buyers directly. And they can save time by responding to buyers’ questions using e-mail. Such efficiencies are making it easier for Web-savvy Realtors to compete with lower commissions.

Take Fischer, the Bridgewater, N.J., Realtor who listed Ginsburg’s house. He has vastly increased his market share by offering to list homes for a fixed fee of $500 to $1,000, depending on the price of the property. For another $500, he will negotiate the sale of the house. To make sure sellers get the broadest exposure, he assures brokers representing buyers they will get their full 3% commission.

What Fischer loses in commission, he makes up in volume. For example, he has 35 listings in his Bridgewater neighborhood--more than his better-heeled competitors.

“The heyday is over for Realtors and commissions,” said Jeffrey Meeks, a 38-year-old painter who recently sold his four-bedroom Colonial home through Fischer and cut his asking price by about $9,000 to reflect the lower commissions he was paying. “What really sells the house is price.”

The Web is also making it more attractive for owners to sell homes on their own. “By owner” sellers--who want to sell their homes without using a real estate agent--often face huge obstacles such as high advertising costs. As a result, few owners successfully sell their homes without a Realtor’s help.

Several Web sites offer free “For Sale by Owner” listings in their classified sections. The San Francisco-based Abele Owner’s Network has put together a more comprehensive site (https://www.owners.com) that Chief Executive Hans Koch calls a “one-stop marketing shop” for FSBOs. Homeowners can list their properties there free. For $115, Abele will post five color photos and information on the home submitted by the clients. Abele will also produce and deliver a customized yard sign.

“All of a sudden, the consumer is going to be in control,” said Koch, who admits that the site is still too small to have a major impact on the market.

Another obstacle faced by owners trying to sell their own homes has been determining the market value of their property. For $9.95, San Diego-based Acxiom Dataquick Products (https://www.products.dataquick.com/consumer) will provide information on 10 homes of comparable size that recently sold in a particular neighborhood.

Real estate companies have responded to such innovations by using the Web and similar technology to improve their own efficiency. Sands, for example, offers customers quick mortgage approvals and is cutting the time it takes to close on a home by handling title searches and escrow accounts in-house, all drawing from information on computer networks.

Parsippany, N.J.-based Cendant Corp., which owns the Coldwell Banker, ReMax and Century 21 real estate brands, each of which has its own Web site, is using technology to help its 180,000 real estate agents become more efficient. By offering new software to reduce paperwork and help agents keep track of appointments, “we want to make the broker’s life better, make him more competitive,” said David McNicholas, Cendant executive vice president in charge of information processing.

Such efforts by the large real estate firms could help them maintain market share. But the likeliest survivors are the Realtors who are not only Web-savvy but effective in maintaining their network of personal contacts.

Fonseca--who used the Web to adopt her three cats, find a job and buy a home--recalls that when it came to selling her house, she turned to the same full-priced Realtor who found her previous home.

“It was a loyalty thing,” she said.

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Times staff writer Leslie Helm can be reached via e-mail at leslie.helm@latimes.com.