Oregon Public Broadcasting

With so many problems in the housing market, many sellers are taking a long hard look at the sales commission realtors usually charge. The national average stands at just above 5 percent.

In fact, a new agency has just opened in the Portland/Vancouver area with the aim of cutting that commission.

But as Kristian Foden-Vencil reports, there are laws on Oregon's books stopping real estate agents from giving rebates back to sellers.

Here's Glenn Kelman's pitch. He's the president of the new real estate agency, Redfin.com.

Glenn Kelman: "So about half the money that a typical real estate agent charges is what we charge. And the other half either goes to charity or to closing costs, depending on what the lender allows. In other states we just give it back to the consumer, but here in Oregon there's an anti-rebate law that prevents us from doing that."

So on a quarter of a million dollar home, you might currently pay almost $13,000  in commission.

Kelman says that by putting as much relevant information on the web as possible -- and by letting you conduct your own search -- he can reduce that fee by more than $3 grand.

But Oregon law dictates he can't just give it to you.

Glenn Kelman: "Generally wherever we have gone, consumers have formed some kind of fan club that has helped pass more progressive legislation around real estate."

Redfin has only just opened, so it's a little too soon for any kind of fan club.

But the company's business plan has already caught the attention of the Oregon Real Estate Board.

Deputy Commissioner, Dean Owens, says the anti-rebate law is designed to protect consumers by stopping unlicensed people from trying to sell your home or get a finders fee. 

Dean Owens: "I don't want somebody on the street to say look: I'm going to send you to a person to get a great deal. You buy through them and you know at the end of the closing, they're going to give me $500 and they're going to give you an extra $1,000 kind of under the table thing."

But what Owens regards as 'under the table,' others simply see as cost-cutting, efficient business. In fact, Oregon is one of ten states with anti-rebate laws on their books.

The U.S. Department of Justice has pressured other states, like Montana, Kentuky and New Mexico, to overturn such laws. New Jersey repealed its law just last month.

State Senator, Floyd Prozanski, introduced a bill to the Business and Transportation Committee last year to lift the rebate ban. But he says, it didn't get anywhere.

Floyd Prozanski: "It stayed there with no action.No committee hearings. And it died in committee when we adjourned on June 29th of 2009."

Stephen Brobeck: "The realtors are very well organized politically at the state level."

Stephen Brobeck is the executive director of the Consumer Federation of America.

Stephen Brobeck: "They strongly influence and sometimes dominate the state real estate boards that regulate the industry. Moreover in almost every state legislature there are realtors that are prepared to represent the interests of the industry."

But regardless of whether you're in favor of rebates or a more traditional home selling experience, change is coming to the industry.

15 years ago, there was an obvious need for a well-informed agent who could tell you all about the neighborhood and which houses had sold for what.

But now says Redfin's president, Glenn Kelman, the internet puts all that information literally at a buyer's fingertips.

Glenn Kelman: "What you have to realize is that 90 percent of the cost of real estate is prospecting for clients. So you have an enormous number of people closing six or seven deals a year who spend all their time beating the streets looking for new customers.  But if you build a beautiful website that publishes more information than any other, folks are going to beat a path to your door."

Whether that's true remains to be seen.

Meanwhile at 'Evans Elder and Brown' real estate agency in Bend,  John Brown says he welcomes competition -- but warns customers: you get what you pay for.

John Brown: "I highly recommend that you base your decisions on accurate, verified data. Not just data that you're getting from a website. Because you have no degree of reliability on the source of that data, who put it in, what the intention of the parties were et-cetera. And it doesn't take but one or two sets of data to really skew the truth. And so I personally think there is no substitute for a good qualified real estate professional in the transaction."