The True Value of Realtors vs. Flat Fee Brokerages

You may have seen advertisements for companies that claim they’ll sell your home for considerably less than what traditional real estate agents charge. These “discount real estate brokers” sometimes charge a flat fee (which may or may not be refundable if your home doesn’t sell) or a commission percentage that’s less than the five percent to six percent typically charged by many traditional real estate brokers.

And while you may be tempted to enlist one of these discount brokers to sell your home, you’d be wise to thoroughly compare the discounters to a traditional real estate agent before you make a decision. Selling your home, after all, is likely one of the biggest financial transactions you’ll make in your lifetime. It’s essential to get it 100% right. 

 

Maximum Experience, Maximum Price

Many discount brokers are less experienced than full-commission real estate agents. It’s a very easy-entry industry, but it’s harder than most people think. Eighty-five percent of agents wash out in the first three years. In the long term, it’s a tricky business, and experience counts.

Depth of knowledge is particularly crucial, for example, when negotiating a sales contract, a process that requires care and experience. A contractual error can end up costing much more than the perceived savings from using a cheaper broker.

Importantly, the marketing efforts of these discount brokers may be limited. An MLS listing and a sign in the front yard is hardly sufficient. Smart brokers have access to and knowledge of numerous marketing channels, and they know which ones to utilize in each unique situation. 

You should also know that with some of these companies, you may end up interfacing with many different employees — one who shows your home, one who writes the contract, and others who do the settlement. This lack of continuity can lead to inconsistent service. 

 

A True Relationship

Discounters rely on volume to sustain their business model. Because they make less per transaction, they must complete more transactions to make money. This means individual sales generally may not get the attention they need. Their practice is to just do volume, milling out a quick transaction and not maximize the client’s profit.

The bottom line is that you get what you pay for. When you enlist a full-service broker, that’s what you get: full service. It’s more than just a transaction. There’s a lifetime value to selecting the right broker to help you sell your home. It doesn’t make sense to be penny wise and pound foolish.

Discount brokers tend to be one and done, whereas as traditional Realtors know that an individual transaction is part of a long-term relationship. Brokers are in it for the long haul. I’m an advisor to my clients. I have their best interests at heart, and I take care of them like I take care of my own family.

Traditional realtors often circle back regularly to “check in” with their clients. Expect to hear questions such as: “How is the property holding up and meeting expectations?” “Need a recommendation for a reliable contractor?” “I noticed your property taxes seem high, can I help you with the county protest process?” “I know you’re not necessarily looking to make a move, but I found a piece of land that would be perfect for the retirement dream home you’ve talked about forever.”

It’s highly unlikely you’d get that kind of long-term relationship from a discount broker.  

If a real estate transaction is in your future, it makes sense to thoroughly research the person or company who will accompany you on this important journey. Ensure that they have your best interests at heart and that they have the experience and know-how to ensure the smoothest process possible.


Author:
Debbie Trominski
Realtor, Broker Associate
512.293.5380