MediaOne of Utah, which handles publishing and noneditorial duties for The Salt Lake Tribune and the Deseret News , has created a real estate brokerage designed to compete against traditional full-price firms -- and it's causing a stir.
MediaOne Real Estate is intended to provide sellers with the same level of service as a full-service, traditional brokerage, including a presence on the Wasatch Front Regional Multiple Listing Service, but for a flat fee of $2,000 instead of the typical 3 percent commission.
Unlike a traditional brokerage, MediaOne Real Estate will focus only on sellers. Buyers who contact the agency will be referred to local real estate brokers, MediaOne President and CEO Brent Low said Tuesday.
Still, starting a brokerage puts MediaOne in the position of competing against their realty customers, said Ryan Kirkham, president of Salt Lake Board of Realtors.
"The frustrating thing is that we're now competing with a company that we're paying to advertise with," he said.
Kirkham said Tuesday he wouldn't be surprised to see some Realtors pull their advertising from the newspapers. "I've heard from a lot of angry Realtors and brokers."
Low said many brokerages don't advertise much in the newspaper anymore anyway. And those that still do will benefit because they will get buyer referrals from MediaOne Real Estate, Low said.
MediaOne is advertising the brokerage as a low-cost alternative to selling a home through a traditional brokerage.
When a property is sold, sellers typically pay 3 percent to the company that lists their home and the other 3 percent to the buyer's agency, although a number of real estate agencies have been discounting commissions to help generate business during the downturn.
On a $250,000 home, for example, a seller paying the full 3 percent to both the listing and buyer's agencies would pay $15,000, or $7,500 to each agency. Through MediaOne Real Estate, a seller would pay the flat $2,000 fee to MediaOne, plus the 3 percent, or $7,500, to the buyer's agent for a total of $9,500.
That's a difference of $5,500, which "could send you on a trip to Europe," Low said.
Steve Perry, the principal broker for the new MediaOne Real Estate, was formerly an associate broker with RE/MAX Results in the Salt Lake area. Perry was not available for comment.
Low said that although sellers will pay less, they will get as much as -- or more -- help in promoting their properties. That will include exposure for their properties via the Web site www.UtahMore.com and in the daily print newspaper editions. Homes also will get exposure in Media One niche publications, he said.
Although the move is creating a fair amount of controversy among real estate professionals, it is part of a national trend. Media companies nationwide, in an effort to find new ways beyond the traditional newspaper to generate revenue, have in recent years moved into the real estate sector in various ways.
Some media outlets have established partnerships with real estate firms. The Arizona Republic , for example, works with HomeFinder.com.
"This, however, seems like a new venture altogether," said Pili Linares, advertising director for the Newspaper Association of America. "It's a creative approach to new revenue in the real estate category for a media company."
But will it work? Veteran broker Babs De Lay of Urban Utah Homes and Estates believes hostility among real estate agents may undermine MediaOne's efforts. She found MediaOne's advertisement for its new brokerage insensitive to real estate professionals, particularly the wording that said, "Selling a home is about you. Not your agent."
De Lay, who uses the newspaper to advertise her company's listings, said she won't be advertising in either newspaper again. She noted that she and other real estate professionals have plenty of other options, including other newspapers, direct advertising, radio, Web sites and, now, social networking sites. Many real estate agents use Facebook.com and Twitter to promote listings.
"I just don't see why I would want to advertise anymore in either newspaper," she said. "Why would I advertise with the competition?"
Troy Burnett, principal broker with Utah House Pros in Salt Lake City, advertises primarily online, not in newspapers. He said he's not disturbed by MediaOne getting into the brokerage business, noting "there's enough business for everyone."
