As a California RE broker, perhaps my experience is worth sharing.
Nobody is forced to even list with a RE company. They can sell on their own. All that is needed is for the seller to spend the time and money to do the things a real estate practitioner would do.
Advertise, price it correctly, show the property, put up signage, hold open houses, negotiate and write the contract and disclosure documents, help find financing, coordinate with escrow, title, inspection, repairs, etc.
The "for sale by owner" has just one property to sell, yet must have the knowledge, skill, time to do all the above for his single transaction.
So this seller decides to save on commissions, and do all these aspects. He often overlooks that his buyers usually seek to "share" in whatever commissions get avoided.
And often realtors attempt to bring buyers to fsbo's if they can get their half of the commission.
Single family homes in most of Calif. are at mostly now 5 percent, not 6 or 7 percent.
At the end of the day, some sales occur without any commissions. If a seller wants this method, he can do it.
But most sellers consider all aspects, negotiate a fair commission, and recognize it is the price for a fast and smooth transaction.
It is not much different than my situation when I need to replace a vehicle. I can put signs on my car, park it in a good location with my phone number. Answer the calls, make appointments, let them drive it. Then come financing and contracts, plus state vehicle registration.
Or I can go to a vehicle dealer, cut the best deal, and go on with life, not worrying that somebody makes some profit.
Mention is made of "Catalist" and their 3 percent rate. Entities like this, and "Help You Sell" have been around for a long time.
Both started in Orange County. They work better in sellers' markets, but not so well in buyers' markets.
The market is in transition right now. An agent with a buyer doesn't much like to show a 1.5 Percent listing, but most will.
Often the seller and agent will be difficult, giving the buyer and his agent reason to skip on by such a listing. All the more so, in a weakening market.
There is no "price fixing" and sellers are free to do what they want. Just be prepared to do all the steps, spend the advertizing money, answer the phone, be home to meet buyers, etc.
Contractors, architects, stock and bond brokers, lenders, engineers and others offer "expert" services and get paid fees to take total responsibility for contractually defined tasks and results.
One reason for high prices is an efficient market, to match willing sellers and buyers of real estate.
'help find financing, coordinate with escrow, title, inspection, repairs, etc. "
Unheard of in No. Va.
You have to have your own financing, before ANY RE agent will show you ANY property, you gotta have it faxed to the RE agent.
I can't even SEE a 'new construction' (rehabbed apt condo) w/o my willing by pay a RE fee. I must have my own RE agent signed up with my preapproval.
I sold 2 homes in California by myself and pocketed the "commission". My buyers got good deals both times, as did I. It's pretty easy in California because the escrow company guides you through all the paperwork. It's not so easy in other states, however. In Wisconsin, I would definitely need an atorney at my right hand. I worked with realtors selling houses in Texas, Washington, and Wisconsin, and it was horrid each time. Right now I'm tryng to sell land adjacent to my manufacturing plant in Wisconsin with a Realtor. It's been listed for 2 years, right across the street from 2 schools. It's a beautiful 4 acres. Between the Realtor and the Village, I'll never sell it.