Realty Rumble

Barbara Erlandson was cruising along the information superhighway when she spotted her dream home on eRealty.com . Erlandson, a marketing consultant in Leesburg, Va., saw images of a 200-year-old stucco house with hardwood floors and three fireplaces. That evening she drove by the house and, when she got home, dropped an e-mail to an agent at eRealty. The next day she visited the place with the agent and soon made an offer. A week after closing, she received a rebate check from eRealty for $4,250, equal to 1% of the purchase price.

For eRealty and other online brokerages, that's the new model of real estate sales: let customers scout houses and meet with agents only after they have narrowed the field. Customers control more of the process and pay lower commissions since they do more of the work. But a fight within the industry could hinder this approach. Critics, including the governing trade group of most agents, the National Association of Realtors (N.A.R.), say the online agencies skirt the spirit of the house listings. Realtors pool properties in the multiple-listing service, a roster shared with competing agents so that clients can see more houses. But sharing a listing online is different from sharing it in a shop, says N.A.R., so brokers should have control of their own listings. "It is the product of their work and business," says Richard Smith, chairman and CEO of Cendant's real estate unit, the nation's largest brokerage with Century 21, Coldwell Banker and ERA brands.

And so N.A.R. is changing the game. This past spring, after years of heated debate and threats from Cendant to bolt, N.A.R. created rules that allow its brokers to keep their listings from any sites they choose whether a Web-only brokerage like eRealty or a site run by a traditional broker.

The Web brokerages argue that they and their customers are being punished for being innovative and that since they too are members of N.A.R. and contribute to the list, they should have full access. They say they just want to provide consumers with the most efficient way to find attractive real estate. "It's anticompetitive any way you look at it," says Russell Capper, CEO of eRealty, which is based in Houston and has offices in 14 markets. The new rules could make some sites less comprehensive, says Patrick Lashinsky, vice president of zipRealty, a Web brokerage based in Emeryville, Calif. Buyers might see fewer properties, and sellers' houses might not be marketed as widely, he says. For now, any action that might cripple the Web brokerages is at a standstill. This fall the Department of Justice and the Michigan attorney general's office launched investigations into the new rules. Feeling the pressure, N.A.R. delayed their implementation by six months, until July 1.

One unspoken reason for the industry objections: the fear that Web brokerages will push down commissions, as has already happened in the travel and stock-brokerage industries. Commissions at Home Quarters, a Detroit-based Web brokerage, are as low as 4.5% for services that traditionally garner 6%.

But it's not just the promise of a lower price tag that keeps consumers coming. "This was the way I wanted to spend my time house shopping," says Erlandson. "I didn't want to spend hours in somebody else's car." A less independent house hunter might prefer having help picking out the best homes to see, as well as getting advice on neighborhoods, school districts and local amenities. Bob Sutton was at first frustrated with eRealty. "It took a while to figure out how to do searches," he says. After a call to the company, he fared much better and wound up buying a house in Austin, Texas. Call him a convert. Although the industry may not be putting out a welcome mat, for many consumers the new style is growing downright homey.