Five Things You Lose When You Hire A Discount Broker
Nobody likes to waste money, so I'm never surprised when a home seller wants to know if we are a discount broker and are willing to reduce our fees for them.
The performance bar in our industry is set very low, and the cost for our services is very high, so the allure of a reduced fee broker does not seem strange at all. But there are times in life when cheaper isn't better, it is actually more expensive, and every day there are home sellers who learn this painful truth.
What You Get From A Listing Agent
The listing agent typically is all you get from a real estate company. They are the front-end "pitch" to sign you up, they are the marketing department, the advertising department, the administrative section, the management team, etc. Whatever you pay a real estate company as a home seller, all you are going to get for your money will come from that listing agent.
Because most real estate agents get the majority of the commission paid on the deal (70% to 80%), so in effect, they are a company in themselves. With the bulk of the earnings going directly to the agent, the real estate company is not in a position to assist them much further than providing office space, a brand, and coffee during office hours.
If they are part of a true team based home selling process, they might have (some) staff that will help them prepare and market your home for sale. They might offer some group advertising or marketing assistance, but you still will be heavily reliant on your listing agent.
Regardless of whether you hire an individual or a team, from what I have seen, all they basically do is put a sign in your yard, enter your property as a listing in the MLS, run a few ads, and then they pray that somebody brings you an offer.
What Gets Cut By A Discount Broker
So if that is all anybody does, you can certainly bet a reduced fee makes sense. Do you really need to pay tens of thousands of dollars for that amount of work?
But if some listing agents are charging "full price," while others are cutting their fee, aren't you curious about what is getting cut? Certainly you don't expect to get the same benefit of a full priced listing agent from a discount one, do you?
If you have done your homework and you are looking for the listing agent that will get you top dollar for your home, while selling it in the time frame that fits your goals, then you likely wonder what's the difference between discount versus full price in real estate brokerage.
The following list shows the 5 most likely "cuts" being made by a discount broker:
Cost Versus Value
Cost is the amount of money you will spend on your listing agent. Value is the amount of money you will receive or save by having an expert working for you that you can trust to help you get top dollar for your home.
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Don't be penny-wise and pound-foolish, hire the best and then demand the best. Take the time to interview until you know you are working with somebody who can guide you to where you want to be. Remember, you will have to be able to trust this agent to know exactly what to do during a negotiation, so make sure the agent is strong and knowledgeable.
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