>>> IMAGES: Pull Feb. 14, 2006, cover + illustration on page 17 for second “Also from that issue” item.
In February of 2006, the Capital Region real estate industry was rocking and rolling. Home sales nationwide were at their precrash peak, and south Louisiana was at the height of a post-Katrina market. Even so, Realtors complained of a three very real looming threats to the standard 6% commission: the Internet, for-sale-by-owner marketing and competitors willing to do it for less. In its cover story, “Death of a sales commission,” Business Report detailed the rising challenge of full-rate brokerages to justify the fees. “Faced with pricing that undercuts the 6%,” the story noted, “competitors say some Realtors have been fighting back with brass knuckles.”
Enter the Internet. According to the Realtors, 2% of buyers used it to search houses in 1995, up to 77% now—most of them on MLS-linked sites. The Internet-enhanced for-sale-by-owner (FSBO) marketing helped create a new tier of discount and a la carte brokerages. Full-rate brokerages now have to justify their commissions. “More and more, every Realtor has to prove that value proposition,” says the executive vice president of the local Realtors association, Herb Gomez. “Sellers say, ‘Tell me why I’m paying you this much.’ ”
—From the Feb. 14, 2006, edition of Business Report
ALSO FROM THAT ISSUE …
SOME NEW ORLEANS residents are willing to take big losses on their Baton Rouge houses as they return home, but don’t count on finding bargains from the reverse migration. Some cash-rich evacuees paid premiums for houses. They are now offering those houses for less than they paid, but not—for now—at discounts compared to prevailing market prices. Court records show … a home in Jamestown Court bought for $754,000 about a week after Katrina is now on the market for $499,000, the market price now but a loss for the owner.
FIRST THERE WAS a state-sponsored 30-member board to oversee hurricane recovery efforts. Then came another 19-member panel to regulate revamped building codes; a slew of inspectors will need to be hired just to carry out its mandates. An 11-member consolidated levee district with some form of jurisdiction over southeast Louisiana could soon follow, as could a new undersecretary of transportation, complete with staff, to manage statewide flood control. There’s little doubt the calamity deposited by Katrina and Rita last year demanded action on the part of the state. But officials are adding new layers of government at lightning speed during a time when resources are scarce.
