Among Money's Great Mysteries - Real Estate Commissions

Article excerpt

Byline: Burt Constable

Among the many things I don't understand - the appeal of Paris Hilton, the existence of gay Republicans or Cubs manager Dusty Baker's fondness for Neifi Perez - finances still rank at the top.

Money mystifies me. I know it makes the world go around, that the love of it is the root of all evil, and that it doesn't grow on trees - and that's about it.

I can't, for instance, explain why a waitress who calls you "Hon," balances a $5.35 collection of piping hot plates containing eggs, toast, bacon and hash browns, and refills your coffee cup as fast as you can drink it would be thrilled with a $3 tip. But a disinterested waiter who brings you one $9 martini and barely makes the effort to plop a $42 steak-and-potato in front of you is ticked if you leave him anything less than a $10 bill.

Likewise, a real estate agent who might sell an $850,000 house after one day of little effort earns a commission thousands of dollars more than a hard-working agent who might labor for weeks to sell a $140,000 house.

In a nation where more than 2 million people hold real estate licenses and God-only-knows how many are doing cheesy TV commercials for the sell-it-yourself movement, I don't understand how it all works.

Maybe that is because it doesn't.

"I think this industry is really broken," says Realtor Evan Kane, 37, a member of the National Association of Realtors (NAR) and founder of suburban-based Endeavor Realty, one of a newfangled breed that has broken away from the brick-and-mortar real estate offices and traditional 6 percent commissions. "I think it's anti- consumer."

The Justice Department agrees.

For the last nine months, the Justice Department has continued to push toward a courtroom its antitrust action against the National Association of Realtors, which is headquartered in Chicago.

Since the start of this year, the NAR ( has tweaked its policies, but not enough to stop the case from moving toward court. The organization also has been waging a nationwide public awareness campaign that emphasizes trust, ethics and its study showing homes sold by Realtors sell for up to 16 percent more than those sold without them. …