Why Discount Real Estate Brokerages Don’t Work (And What You Should Do Instead)

Why Discount Real Estate Brokerages Don’t Work (And What You Should Do Instead)

Looking to sell your home? With discount real estate brokerages, you can get rid of your house without spending money on commissions. That sounds like a great idea, right? It might be, but here’s why discount real estate brokerages don’t work in practice and what you should do instead to sell your home quickly, easily, and at the highest possible price.

Choosing a brokerage can be overwhelming

There are multiple brokerages to choose from, many of which advertise their services as some kind of discount brokerage that does all of your work for you.

Although these brokerages may be an appealing choice at first glance, they won’t make selling or buying a home any easier than using a traditional real estate brokerage.

In fact, these so-called discount brokerages can actually do more harm than good. If you’re considering using one of these real estate agents, don’t: Here’s why discount brokerages don’t work and what you should do instead.

Not all Real Estate Agents are commission-based

Not all real estate agents work for commission. Some operate on a flat-fee model, while others are paid a salary to represent their employer.

Although commission-based agents do get paid more when they sell your home, there are times when it makes sense to use an agent who gets paid another way. For example, if you’re selling your own home with plans to buy or rent within a year, a flat-fee broker can be beneficial because you can pay one set price instead of paying again on closing day.

An experienced agent will not only help you negotiate through that process but also find you homes that meet your needs and budget in no time.

No agency is the same

Buying a home is stressful enough; you don’t need to also be stressed about who you hire to sell or buy your home. At every real estate agency, every agent, and even every transaction are different. Many people assume that because they’re working with a discount brokerage they will automatically save money on commissions and fees.

While it’s true that most discount brokerages can offer lower commission rates than traditional agencies, that doesn’t necessarily mean their services are as good—or better—than those of an established full-service agency. The truth is that all real estate brokerages have strengths and weaknesses.

When looking for a discount brokerage, make sure you understand what each one offers so you can find one that best fits your needs.

Asking questions before you hire an agent can save you thousands of dollars

One of the best ways to save money as a new homebuyer is to avoid paying real estate commission fees. The easiest way to do that is by using a flat-fee or discount brokerage company—and, let’s be honest, they certainly sound like they’re doing you a big favor.

But before you jump on board with these brokerages and their “no closing” costs pitches, it’s important to know how they work and what they mean for your bottom line. Before you start hunting for your next house or apartment, find out exactly what commission-free means for your deal.

What To Ask When Picking An Agent

Choosing a real estate agent can be an overwhelming task, but it doesn’t have to be. Before you begin interviewing agents, come up with a list of questions you’d like them to answer. Consider things like: How long have they been in business?

How many homes do they sell per year? Can I contact past clients for references? Are you willing to show me properties outside of your current listings and off your own MLS board? These are all valid questions, and even more should pop into your head as you’re talking with candidates. But don’t feel like you need to ask them all!

How NOT to Hire an Agent

Buying or selling a home is a complicated process, and it’s never smart to just trust your fate to anyone. In most states, there are no laws about who can and cannot be your real estate agent; for that reason, real estate brokers of every variety set up shop and pitch their services as experts in your neighborhood.

The problem is that many of these people aren’t actually professionals—they’re just marketers with an idea—and you shouldn’t trust them with what’s likely to be one of your biggest financial transactions ever. Here’s how NOT to hire an agent.

Hint: It starts by not hiring an agent at all!

Agents who focus on commissions and discounts can lead to trouble down the road

Rather than saving you money, these brokers may get your listing, but then miss out on valuable opportunities that other brokers will find. They may not be working hard enough to take advantage of those opportunities either—by interviewing neighbors and coming up with compelling marketing ideas.

While it’s okay to work with a commission-based agent, you want to make sure they’re going above and beyond for you during their first two months on your listing.

These first impression agents are more likely to land you an offer—and less likely to leave because of poor performance or a bad relationship later down the road.

Relying on commission rebates isn’t what it seems

In a typical discount brokerage, you agree to split commissions with your agent and give a set percentage back. So if you sell your home for $800,000 and pay $16,000 in commission to your real estate agent, she would get half of that ($8,000) and you would get half of that ($8,000).

But what most people don’t realize is that there are hidden costs that keep those rebates from being quite as large as they seem. For example: what happens if you don’t list with her? If her commission ends up being $1,500 per buyer for both buyers and sellers who do business with her — but she still gives a 1 percent rebate — then how much does she really make on each transaction?

It’s probably not $300. It might be closer to $250 or even less. The same goes for when she sells your house; it might look like you gave her a 2 percent rebate, but if she only makes 3 percent off each sale, then that means she made less than one-third of a percent on your sale. That doesn’t sound like such a great deal anymore, does it?

Connect with me today and I can show you exactly how I can make your real estate experience pleasant and profitable!

I know that saving money can be attractive, but choosing a discount or flat fee brokerage will not get you max value for your home! Fill out the form below and let’s chat!

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