Is A Discount Brokerage Right For You?

Would you use a discount tattoo artist?

bad tattoo

Looks just like the picture, right?



How about a discount dentist?


This won’t hurt a bit!



Probably not!  Then why would you put one of the largest financial investments of your life into the hands of a discount Realtor?


Real estate fees are expensive, so it’s tempting to try to save money where you can.  But what are you giving up in order to get that discount?  Before jumping on the discount brokerage bandwagon, consider these things:

1.  Why would a productive and experienced agent willingly accept less commission?  Perhaps to gain volume.  The more they sell, the more money they will make.  But if an agent has many homes to juggle, what level of personal attention will they be capable of providing to you?  Will they return your emails and calls promptly?  How will they keep track of each detail of your transaction, while also keeping many other transactions straight?  One solution would be to delegate each step of your process to a different junior agent or assistant.  You might have one person running your showings, one to write and negotiate the contract, another one coordinating the home inspection, and yet another one to process your closing.  The transition from one person to the next may feel a little choppy. How well does each department communicate with each other?

For some, it’s better to have one agent from start to finish so that they understand and address your needs, while keeping the process smooth.


2. How experienced is the agent?  Another reason why an agent may discount their fees is to gain clients when they are new.  How comfortable are you trusting a transaction of hundreds of thousands of dollars to someone who may not know the market or how to handle certain situations?  Maybe they haven’t developed relationships with other agents or strategic partners, like good lenders, home inspectors, and lawyers.  Who would you rather have in your corner when issues arise, someone new or someone who has been there and gotten their clients through it?

Experienced agents will often save you money in the long run and help you to avoid making costly mistakes.


3. What services are provided?  Some discount brokerages have a flat listing fee, but will charge for additional services.  This option is great if you are an experienced real estate flipper or builder and only need an agent to put your listing in the local MLS.  However, if you don’t deal with real estate transactions on a regular basis, chances are that you’re going to need help.

Home sellers:

What are the price trends for your area? How will your home be marketed?  Will you have professional photographs, if any? What websites will your home be featured on? Will you have open houses?  How will you handle showings?  Do you have to be there to let people in?  What if a buyer doesn’t have an agent? Will the agent follow up with the people who have seen it?  When you get an offer, will the agent call everyone to see if there are any additional offers coming?  Are you willing to deal with another agent directly during negotiations?  Will the agent calculate your closing costs and net before accepting an offer?  Will your agent provide you with the necessary materials you are legally required to give to the buyer?  Will your agent advise you during your home inspection?  What if the buyer misses their deadline to respond to the home inspection? Will the agent meet the appraiser at your home to give them the comparables and inform of all your improvements? What happens if an appraisal comes in lower than the contract price, will the agent provide you with assistance? What if a buyer wants to switch loans? What if a buyer doesn’t remove their financing contingency? What if a buyer wants to void the contract? Who will coordinate everything to make sure everything is done properly prior to settlement? Who will provide copies of the contract to the various people who will need it? What if the buyer finds an issue during the final walk-through? Will your agent attend settlement and deal with any last-minute issues?

Home buyers:

Who will find and show homes to you?  Do you know what to expect during each step of the buying process?  Do you have a reputable lender who will get your loan closed on time?  Are you familiar with different loan programs?  Will your agent alert you to possible issues with a home? Will your agent advise you how much to offer, warn you of the risk and opportunities to void the contract? Will your agent attend your home inspection? Will they negotiate with the seller about home inspection repairs? Will they advise you what to do if the home doesn’t appraise? Will you know if you’ve been given all of the materials the seller is legally required to give you?  Will your agent track your deadlines and coordinate with the seller, lender, appraiser, attorney, inspectors, contractors? Will the agent attend the final walk-through and settlement?  What happens if an issue pops up at the last minute?


4. Do they have your best interest at heart?  Some discount brokers will list your home either too high in order to get your business and take a listing fee (or keep tacking on those a la carte marketing options), or price too low so that it is a quick sale and they can move on.

A full service agent should take time with you and consider your best interests when negotiating on your behalf.  They know that if they do a good job for you, you’ll use them again and refer them to friends and family.


5. What is the quality of their marketing plan?  Not all real estate agents are the same, nor do they spend the same on your marketing.  Will your realtor hire a professional photographer to show off your home in it’s best light, or will they take amateur pictures themselves (or none at all)?  Will they spend money sending postcards to target move-up neighborhoods to announce your listing?  Will your realtor provide a professional quality fact sheet, or just print the MLS listing on copy paper?  Will your realtor spend money to send flyers or advertisements to multiple local brokerages, or host a catered open house to introduce your listing to as many agents as possible?  Are they using the latest technology to advertise your property?  Do they bring in professional stagers or virtually stage your home so that your home will be as attractive as possible to potential buyers?  Are they utilizing social media advertisements to help catapult your listing’s visibility?

I spend more on marketing than most other agents, and my sellers tend to get the highest price in their neighborhood.


6.  Do they have resources?  Can a discount realtor help you find the right professional to help prepare your home for market?  Often, experienced, full-service agents know the best contractors who can do the job quickly and save you both time and money.  Would a discount agent run to meet a contractor when you are not able to be there yourself?  If there is a home inspection issue, an experienced, full-service agent probably knows radon, asbestos, plumbing, electrical , HVAC, and other specialists who can give a second opinion when buyers come in with guns blazing.

Full service agents should also know a large network of other agents, within and outside of their own office.  They can help spread the word of your upcoming listing before it even hits the market, and can line up a buyer before you even hits the market.


7. Are they local?  Does the agent live nearby?  Do they know the local amenities and school systems that will help buyers see how desirable your home is?  Can they swing by to check on your property when you are not there?  Can they easily show your home to unrepresented buyers who cannot come to an open house?  Are they familiar with local forms and practices?  Real estate differs from state-to-state, even from county-to-county.  An agent who does not know the local customs or is familiar with the differences in the legal contract or disclosures can end up delaying settlement, or worse.  Select an agent who is familiar with your area.


I can think of a few more reasons why having a full service agent is better (in most cases) than going with a discount broker, but the old adage ‘you get what you pay for’ rings true.  Having a good, reliable agent to care for you from preparing your home for sale to settlement day, will save you time, money, and reduce your stress.

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