6% Real Estate Commission, Discount Fee, and Flat Fee Full Service: What Are the Differences and Which Should You Choose?

If you are selling your home, you may be getting mixed signals about the best way to get it done. Some people will say, “You have to pay a broker a 6% commission if you want to sell your house.” Others will say, “Brokers don’t do anything other than get you listed on the MLS. You can pay someone to do that for you and save a bundle.” While some new, forward-thinking companies suggest that both are wrong, saying, “You need all of a broker’s services, but you don’t need to pay a high percentage-based commission.”

With so many differing opinions, how can you know which one is right for you? To determine the best choice for you, let’s look at three main real estate models: the traditional percentage-based fee, the discount fee, and the flat fee full service model.

6% Commission Model

This is the most common model of real estate fee structures in the marketplace. It has been around for decades and consumers, until recent years, simply paid the commission without question. Here is how it works.

A listing agent and seller create a contract stipulating the listing price of the house, the listing agent’s percentage (usually 3%), and the buyer’s agent percentage (usually 3%). The listing price of the home is usually increased enough to make up for the cost of these fees. If a homeowner wants to put $275,000 in their pocket, they will have to put their home on the market for about $293,000 to cover the fees.

For their 3% of the selling price of the home, the listing agent will market the home, add it to the MLS, help field calls, do showings, negotiate offers, and get the home to closing. The buyer’s agent, for their 3% will help a buyer find your home, show the home, help them with their negotiations, and help the buyer through to closing.

Pros

You have a professional working for you to help you get the highest sale price for your home. The work you do during the sale is limited to fixing up your home prior to putting the sign in the front yard, keeping it clean for showings, and providing needed paperwork to the agent.

Cons

6% of the sale price of your home goes to your listing agent and the buyer’s agent. Even if you create a contract asking for 4% or 5%, what you pay still depends on the sale price of your home rather than the value of the services provided by the agent.

Discount Fee Model

Some sellers believe that the only thing a broker does that is of any value is get the home listed in the Multiple Listing Service (MLS). They believe, with the advent of technology and their ability to use it, that they can do everything that a broker can do and not have to pay the high fees. Some brokers agree and created what is known as the flat fee MLS or discount fee model. Here is how it works.

A seller approaches a discount broker. The broker, for a flat fee, agrees to get the house listed on the MLS. Some discount brokers will also ensure the house is listed on some of the major Internet sites like Trulia, Zillow, and Realty.com. Once the house has been listed, the broker has finished their work, and the seller does the rest.

Pros

Depending upon what the broker actually provides, a seller can get their home listed with a discount broker for around $500 for their services. On a $400,000 home, this is a savings of over $25,000. On the surface, this seems like a huge savings.

Cons

Understanding the market, determining an asking price, marketing, showing the home to prospective buyers, fielding and negotiating offers, creating legally binding contracts, dealing with appraisers and inspectors, and getting the home to closing is completely up to the seller, which leaves the seller paying the cost in time and money to get this accomplished. Before long, the $500 paid to get listed in the MLS blossoms to thousands as they get signs, professional photos, legal contracts, and more. It grows even more if a buyer adds in the value of their time. To make matters even worse, statistics show that 88% of homes that go on the market without a realtor do not sell.

Flat Fee, Full Service Model

Recadia believes in a better option for those who want to sell a home, an option that gets rid of the cons while keeping the pros. Thus, the flat fee, full service model is the right choice. Here is how it works.

A seller contacts Recadia to be their listing agent. The contract includes a listing price and suggests a low, flat fee to be split between the listing and buyer’s agent. Because the fee is so low, the seller has more options when creating a listing price on their home, including more money in their pocket. This effectively gets rid of the CON for the 6% fee. Fees are drastically reduced saving thousands of dollars and there is no commission based on the value of the home.

Then, the Recadia agent begins doing what a full service broker does, because they are a full service broker. Whether it is marketing, showing a home, fielding phone calls, helping weed out the tire kickers for the real buyers, negotiating offers to help you get what you need and deserve, or getting the paperwork ready for a closing, Recadia is there the entire way. This effectively gets rid of the CON for the discount broker. Flat fee, full service sellers have someone with them the whole way.

To learn more about the flat fee, full service real estate model at Recadia, please call us at (214) 281-8500. We’re ready to help you put thousands more in your pocket while getting the full service you need.

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