Realty firms to package homebuyer services


CALL IT THE one-stop shop. Call it a real estate supermarket. Call it "packaging" of services. But whatever you call it, get ready to see your real estate broker offer a growing list of in-house services from home loans to all-inclusive fixed-fee settlements.

In a move that has gained relatively little public notice, the National Association of Realtors is urging its million-plus members to explore ancillary services including title, settlement, and "packages of services to consumers for their complete real estate related needs."

The move is part of a strategic plan designed to ensure that brokers retain as much influence over home-purchase transactions - and the revenues they produce - as feasible.

It also holds out the possibility of competitive, discounted-fee settlements to homebuyers who sign up for multiservice packages.

The Realtors' initiative comes barely a year after the association helped derail a Bush administration settlement-system reform plan that would have encouraged lenders and others to create "guaranteed" mortgage and settlement cost packages using new federal guidelines.

The Bush plan would have allowed consumers to shop for ironclad guarantees of mortgage fees and closing costs from competing lenders at the same time they received their interest rate quotes.

Along with other trade group lobbies, the Realtors opposed the Bush plan in part because they thought it gave mortgage lenders too much control over real estate transactions.

The Realtors' plan would instead seek to put brokers in the catbird seat, potentially offering homebuyers everything from title searches, property insurance, mortgage products and settlements in one upfront package at the time of purchase.

You might sign a contract to buy your new house, and moments later sign up for an all-inclusive fixed-fee mortgage and settlement services package that would carry you through the entire transaction.

Many of the 50 largest real estate brokerages across the country offer at least several ancillary services, especially mortgage financing, home improvements and property insurance.

But the vast bulk of smaller and medium-sized firms focus mainly on brokerage. In its 2004 survey of members' business practices, the National Association of Realtors found that barely 6 percent of realty companies offer any form of mortgage-related services, just 3 percent get involved in settlements, and 4 percent offer homeowner hazard insurance.

The Realtors' new packaging strategy may dovetail with movements already under way among major lenders and large title insurers to form joint ventures and "affiliated business" relationships with realty brokers and homebuilders.

Prominent lenders such as Countrywide Home Loans, Wells Fargo Mortgage Corp., and Metrocities Mortgage Corp. have created dozens of such joint ventures recently to ensure a steady flow of homebuyer loan business in exchange for a sharing of joint venture revenues with participating builders or realty firms.

Often the joint ventures offer customized financing options and other attractive incentives to home buyers who use their services. Home builders frequently offer extra amenities such as finished basements or discounted settlement fees to buyers who use their affiliated lending, title and settlement subsidiaries.

Such come-ons generally are legal under federal real estate settlement rules as long as the affiliations are properly disclosed, and consumers are free to choose independent service providers if they prefer.

Joint ventures among realty brokers, lenders, and title companies also generally are legal, provided the partners follow federal rules designed to discourage kickback arrangements.

With the national association endorsing "packaging" for realty brokers nationwide, you can expect a move to one-stop-shop offers covering the entire home-buying process. Some realty brokers might also form joint ventures with lenders who offer fixed-fee mortgage and settlement packages that guarantee customers that their total transaction costs will not exceed a certain preset dollar figure.

Hypothetically, you might buy a house through XYZ Realty, and walk away with a discount-fee mortgage deal, plus a guaranteed bottom-line price for all other services through settlement. Better yet, ABC Realty down the street might offer you a lower price.

At its best, that should lower total costs to you as a homebuyer and bring price competition - and bottom line certainty - to an arena where both are seriously deficient today.

Harney's e-mail address is

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