Why You Should Avoid Discount Brokers When Trying To Reduce Realtor Fees

You may have begun to wonder if the typical 6% agent commission is worth the price for help selling your home. Even if you could get a listing agent to reduce the commission to 5%, you may still wonder if tying their commission to the price of your home makes any sense. If so, you are not alone.

Some home sellers decide that a percentage commission is not right for them and look for a way to increase their profits by limiting realtor fees. The most common way to do this is through the use of discount brokers. These brokers offer a seller a limited number of services for a fixed price.

On first glance, this looks like a great option. Who wouldn’t want to sell their home offering just $500 to a broker? However, first glances can be quite deceiving. Let’s look at why you should avoid discount brokers as well as why you should consider the newest alternative known as flat fee, full service brokerage as offered by Recadia.

What the Flat Fee Buys

The discount brokerage fee evolved when agents realized that sellers were unhappy with high realtor fees based on a percentage of the home’s sale price. To combat this, they came up with a plan that offered a basic set of services for one low flat rate.

Agents understand that listing a home on the Multiple Listing Service (MLS) is the best way to market a home. It allows online sites to list the property, allows other agents to find the property, and allows buyers looking for properties to find it online. For years, they touted this as the value they added to a sale.

Discount brokers took this knowledge and offered a limited package that:

  • Lists a home on the MLS
  • Add homes to the main online sites such as Zillow, and Realtor.com

Because some sellers don’t understand all that goes into selling a home, they buy into the idea that they only need an agent to provide the MLS listing. If that were the case, then spending $500 rather than the $18,000 paid if sold the traditional way would be a great deal.

What the Flat Fee Doesn’t Buy

The problem is that buying and listing agents do far more for their money than list on the MLS. They also do the following:

  • Help stage the home: Cost to seller if hiring a stager = $200
  • Take photos of the home: Cost to seller if hiring a professional photographer = $200
  • Create a marketing plan: Cost to seller = 10 hours of time
  • Provide marketing materials: Cost to seller if hiring a printer = $200
  • Provide signs: Cost to seller if buying = $50
  • Field phone calls from prospective buyers – Cost to seller = 20 hours of time
  • Show the home: Cost to seller = 10 hours of time
  • Deal with other realtors: Cost to seller = 6 hours of time
  • Help with negotiations: Cost to seller = 4 hours of time
  • Draw up legal papers: Cost to seller if getting an attorney = $600
  • And more

Even at the lowest estimate, you will have to spend another $1250 and 40 hours of your own time. If your time is worth $25 an hour, that is an extra $1000. Your total out of pocket is now $2750 plus a lot of hassle.

The Odds Are Not In Your Favor

Eighty-eight percent of homes that go on the market without a listing agent do not sell. This means the odds of a successful sale using a discount broker are stacked against you.

It is even worse if you don’t work with a buyer’s agent. However, doing so will cost you more money because buyer’s agents expect to be paid 3% of the selling price. In our example, that is another $9,000.

To recap, working with a discount broker will cost you:

  • $11,750 if you work with a buyer’s agent
  • 40+ hours of your time
  • The hassle of doing everything on your own
  • An 88% failure rate

A Better Way

If the percentage-based fees aren’t a good fit and the discount brokers don’t provide what is needed, what is a seller to do? We suggest that you look at the flat fee, full service model of real estate offered by Recadia.

Recadia’s flat fee, full service model provides you with all the services you expect from an agent without a fee attached to the selling price of your home. Forget buying your own signs, hiring a photographer, fielding phone calls, or trying to wade through legal paperwork. For a flat fee of $3,000, Recadia will do it for you.

Recadia offers:

  • Full real estate services
  • Flat fee of $3,000
  • No hassles
  • An upgraded communications system that keeps you up-to-date at all times
  • A greatly improved chance of selling your home

You can learn more about Recadia’s model by reading How Recadia’s Flat Fee, Full Service Real Estate Model Can Save You Thousands of Dollars on Real Estate Commissions. For further information or to have your questions answered, please call Recadia at (214) 281-8500. We would be happy to discuss your specific situation with you and show you how we can sell your home quickly, with little hassle, and put more money in your pocket.

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