When you’re buying or selling a home in today’s market, getting the best price and saving money is the name of the game. This is one of the reasons why discount real estate brokerages are becoming so popular. But how do these discount brokerages work for you?
The typical brokerage fee to list your home for sale with a real estate company is 6% of the sales price. In most cases, 3% will go to a buyer’s agent and 3% will go to the listing agent. On a $600,000 home sale that’s $36K right off the top! A discount brokerage can save you thousands of dollars on this ‘listing fee.’
The thought of saving thousands of dollars on your home sale sounds exciting, but that savings usually comes with its own price – service, experience, and expertise. However, if you’re the real do-it-yourself type then a discount real estate brokerage is an option for you to consider.
4 Discount Brokerage Types
1. Flat-Fee Listing Brokerages
With this type of broker, you are only going to pay a certain amount to list your property with them and in the local MLS (multiple listing service) regardless of how much your home sells for. This can save you a lot of money, but you’ll be responsible for nearly everything – submitting the listing, marketing, contract negotiation, escrow, etc.
If you want agents to actually show your home to potential buyers, you’re going to need to offer a 2-3 percent commission to them at a minimum. ListWithFreedom.com is one of several real estate companies offering this type of service.
2. Discount Listing-Fee Brokerages
Another attractive option for homeowners is listing with a full-service company at a discounted listing percentage rate. So, instead of paying six to sever percent of the sales price in commission, you pay a percentage rate of 3-4%. Although this may sound appealing too, you’ll usually get what you pay for – less assistance and exposure.
Most of these companies will list your house, condominium, or another type of property in the MLS but may offer less money to a buyer’s agent which can result in fewer showings of your home. Not to mention any other cost-cutting measures they might take to make up for the discounted fees.
One of the largest businesses offering this type of service is Redfin.com. They pay their agents an hourly rate with bonuses rather than a commission and claim to offer comparable services to other full-service agencies such as Coldwell Banker, Keller Williams, REMAX and Zip Realty.
3. Commission Rebate Brokerages (Buyers and Sellers)
This method to sell properties works by having the broker offer you a percentage of the commission back they earned from the sale at closing. This is a good way to get cash right after your real estate sale.
One warning, you should always make sure you have everything in writing with your broker, including the percentage they have promised you. This can work for sellers as well as buyers.
You can also negotiate your listing and purchase fees with any full-service real estate agency. However, a lower listing fee upfront doesn’t necessarily mean you’ll save money in the long run.
Think of it this way: if your boss asked you to come in tomorrow and do the same job for significantly less money, how motivated would you be to come in tomorrow? Probably not much and you’d likely do the bare minimum to get by if you came to work at all.
If you ask your real estate agent to do the same thing they’re not going to have as much money to dedicate toward marketing your home and probably won’t be as motivated to work for you as they are for the client paying them a standard transaction fee.
4. Home For Sale By Owner (FSBO) – Brokerages / Free Sites
Another option is to sell your house, condo, vacant land, etc., without using traditional real estate brokers, is selling it by owner. This can save you even more money on the sale, but if you want to get the property listed in your local MLS then you’ll need to use a FSBO site that’s partnered with a brokerage who’s a member there.
Here’s some of the best FSBO sites found nationwide to buy and sell homes on your own. Some of them are completely free while others offer different levels of services with discount brokerage options and service fees.
