How Do Discount Real Estate Brokers Work?
Most home buyers and sellers are interested in saving money. Discount brokers offer lower prices. But with those lower prices generally come discounted services as well. Don't expect
discount brokers to spend a lot of money on advertising / marketing your home or be available at your beck and call.For some sellers, discounted services are worth the discounted price. You may hear from others horror stories of expired listings or worse, selling for too little when a full-service broker might have commanded a higher sales price. Like with most things in life, you often get exactly what you pay for.
If it's a hot market, though, and homes are selling within days, a discount broker might save you a lot of money. On the other hand, if you aren't getting any showings through a discount broker, it's possible that selling agents are boycotting your listing. It's against the law to boycott a discount broker's listing, but not all real estate agents are ethical.
In any case, don't be confused between the fee you pay a discount broker and the fee paid to the selling agent. You will still pay a fee to the selling agent, and that fee is very rarely discounted.
Ready to Read More Articles? Click below:
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- Before You Hire an Agent
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Comments
I assume that your reference to the selling agent refers to the agent representing the buyer??
Hi John: Yes, the selling agent represents the buyer, the listing agent represents the seller; which is not to be confused with the seller’s agent who represents the seller.
When I say that some selling agents boycott discount broker’s listings, the reasons are #1) often the discount brokers do not offer a “competitive” commission to the selling agent and #2) local agents can be very “territorial” about who sells in their neighborhoods and who does not, and #3) some agents are insecure and resent those who compete with them by offering lower fees.
Elizabeth,
Some full-service brokers resent the lack of service the discount brokers provide as it drastically increases their workload. In our case, our (buyers) agent was forced to do much of the work of the seller’s agent as he was frequently unavailable to his client.
Real estate brokers can provide rebates, cash back, and/or gifts to their clients.
As the Deptartment of Justice website indicates “Some real estate brokers offer consumers cash refunds or non-cash incentives to encourage them to use that broker’s services. Rebates are typically cash payments from the real estate broker to his or her client AFTER closing. Incentives may include gift certificates, closing-cost payments, or free ancillary services such as home inspections or moving services.”
http://www.usdoj.gov/atr/public/real_estate/rebates.htm
Buyer broker rebates are the principal method by which a buyer broker can discount and negotiate his/her fees. As such, broker rebates are morally good because they create healthy price competition and innovation amongst real estate brokers who compete for home buyers. Any restrictions on broker rebates would harm fair trade.
David Gorman/Real Estate Broker
www.CashbackRealty.com