This section provides a historical look at what REALTORs® had to do to sell a home decades ago (prior to the creation of the Internet), and how that affected their negotiation on commission

Before cell phones and the Internet, REALTORs® needed to meet to talk about new homes for sale. They would meet one day each week with REALTORs® from other real estate companies, and one day each week in their office, with other REALTORs® that worked for the same company (“broker”).

Each REALTOR® would talk for about 30 to 60 seconds about any new homes for sale. After discussing the homes for sale, the REALTORs® would get in their cars and drive around looking at these homes. This is called a “Broker Caravan”.

Before cells phones and the Internet, REALTORs® had to spend a lot of money advertising homes. Local and regional newspapers were the preferred method of advertising, but many REALTORs® also advertised in magazines targeted at home buyers.

REALTORs® also advertised to other REALTORs® as well. There were companies that delivered property flyers to real estate offices. The office clerk would put a set of flyers into each REALTOR’s® mail folder, and the REALTORs® would review the flyers.

Back then open houses were critical because there was no other way for prospective buyers to see the home, other than seeing 1 or 2 pictures in a newspaper.

This meant three things:

  • REALTORs® had to spend a lot of money (often thousands of dollars) advertising each home.

  • REALTORs® had to spend a lot of time promoting each home to other REALTORs®.

  • REALTORs® has to hold “open house” as often as possible for prospective buyers to see the home.

And things were even harder for REALTORs® working with buyers because there was no way to show the buyers pictures of the home. The REALTOR® had to take the buyer to each home, which took a great deal of time.

Because selling a home was so time consuming (prior to the creation of the Internet) for the REALTOR® representing the homeowner and the REALTORs® representing the buyers, REALTORs® needed to negotiate a commission high enough to cover their costs (mostly for advertising) and extensive time, which (in south Orange County, California) was often negotiated at about 6%.

This is how it all started, over 30 years ago.