A discount broker can save you money….Fact or Fiction?

A discount broker can save you money….Fact or Fiction?

IMPORTANT: There is a direct correlation between the number of potential buyers who view a home and the size of a seller’s net proceeds check. More buyers = more money! If you are thinking of selling a home, understanding this correlation is critical to your financial well-being. Listing your home based on commission savings, instead of an agent’s ability to generate buyer interest, can cost you thousands of dollars in net proceeds.


All agents are not the same and the services offered by individual agents can vary dramatically. It is critical that a home seller, to maximize the size of his net proceeds check and to minimize inconveniences, employ the services of an agent who has the motivation, skill and financial ability to attract as many potential buyers as possible.

If you are thinking of listing with a “limited-services” agent, please consider all of the points below, before making your final decision. DON’T LEAVE THOUSANDS OF DOLLARS ON THE TABLE!

1) YOU WANT TO INVEST MONEY TO MAXIMIZE YOUR EXPOSURE. Discount brokers work on a very limited profit margin. For this reason, they cannot afford to spend money on marketing, in the amount needed, to maximize a home’s exposure to the buying public.

2) NEGOTIATING SKILL - Is an agent who is willing to so quickly reduce his income going to be able to offer you the guidance you need to negotiate a maximum selling price? Think about it. The standard commission that agents charge is 6% of the selling price. 3% to them and 3% to whomever brings the buyer. If you try and bring their commission down, do you really think you will get the absolute best out of them? I realize that it sounds like a lot of money, and again, depending on the price of your home, most agents are willing to reduce their commission by ½ or even 1 percent. Interview potential agents and find out exactly what their services are in return for you paying them commission,.

3) THE USE OF AN AGGRESSIVE, ORGANIZED MARKETING PLAN – Every successful product in our world owes its success to an organized marketing plan. Your home is a product. Will a discount broker spend the time and money needed to implement an organized, aggressive plan to find buyers for your home?

4) PRICE GUIDANCE - A discount broker needs your home to sell quickly because he cannot afford to spend time and money marketing it. For this reason, he may suggest you list it for a price that assures a quick sale instead of the highest possible net for you.

5) FAIR COMPENSATION TO COOPERATING AGENTS - 60% or more of all real estate transactions are the result of cooperation between two real estate agents. Can a reduced commission broker offer enough compensation to cooperating agents to motivate them to show your home?

6) MULTIPLE LISTING SERVICE EXPOSURE - Once again, 60% or more of all real estate transactions are the result of cooperation between two real estate agents. If your home is not listed in the MLS, you will lose 60% or more of all potential buyers for your home.

7) COMMUNICATION - Communication is one of the most appreciated services offered to a home seller. Is a “reduced fee” agent going to make a commitment to communicate with you consistently? Do you want to list with a “list’em and leave’em” agent?

8) WEB EXPOSURE - 70%+ of all buyers begin their home search on the Internet. It’s crucial to expose a home to as many Internet leads as possible. Will a discount agent have multiple websites, and assure all sites are well-placed in the most-used Search Engines?

9) OFFER SERVICES THAT OFTEN PAY FOR THEMSELVES - A full-service broker’s marketing activities often more than pay for the additional cost of using his services. By attracting more buyers into a home, a full-service broker may bring a larger net proceeds check to a seller.

10) EXPERIENCE AND KNOWLEDGE - High-volume, reduced-fee agents may hire less experienced assistants to market your home and, if it sells, to close your transaction. Is it wise to have these inexperienced agents/assistants perform tasks that are critical to your well-being?

11) OFFER MINIMAL, INCONVENIENCE FOR A HOMEOWNER - Selling a home without dedicated assistance can be a real hassle. Full-service agents assist you in home preparation, schedule appointments, accompany buyers who are viewing the property, smooth-out paper work hassles, offer guidance, perform marketing tasks, etc. Discount brokers may just bring a sign and wish you luck. The hassles become your problem. Especially once you are in escrow. You want someone who is going to watch out for your best interest, including all escrow documentation, home inspections, request for repairs and all necessary disclosures to protect you as the seller.

12) INDIVIDUAL ATTENTION AND ACCESS - Discount brokers focus on volume. Full-service brokers can offer more individualized attention and are often more accessible to the individual home seller.

13) CONSISTENT BUYER FOLLOW-UP - Nothing is more frustrating than having potential buyers look at your home and not write offers. How can you make needed adjustments if you don’t know what is causing this lack of interest? Does a discount agent have the time and motivation to follow-up each time your home is shown to a potential buyer?

14) BUYER SCREENING AND QUALIFYING - Nothing is worse than thinking your home is sold and later, sometimes much later, finding that the buyer has lost interest or cannot qualify for the needed financing. A “limited services” agent may be less likely to do a quality screening of potential buyers to assure they can close a transaction.

15) CLOSING FOLLOW-UP - Who is going to assure that your transaction is moving smoothly toward an on-time closing? A limited-services agent, because of his need for volume, is more likely to spend his time searching for a new listing than to spend time making sure your transaction is progressing smoothly to a successful, stress-free closing.

16) MOTIVATION - Selling a home for the best possible price requires a lot of hard work. Human nature is such that there is a direct correlation between the amount of reward received and the size of the effort made. Agents who reduce compensation minimize effort.

17) ADVERTISING BEWARE - some discount brokers will advertise I will sell your home for 1%. That is not true. In the past many sellers have bought in to that advertising, but when you get to the bottom line, the broker actually sold the home for anywhere between 3.5 to 4%. They do not advertise the 2.5 or 3% that they are going to pay the other broker. Always ask for an estimated sellers closing statement up front. Look at all the charges. This is a detail a seller would not know to look for. Also, pay the cooperating broker, or the broker bringing the buyer as close to 3% as you can. When searching properties in the MLS, brokers who see sellers paying only 1% or 2% are more likely to not show your listing. Buyers take a lot of time and effort. The cooperating brokers commission is going to help get the most profit for your home.

Your home is one of the biggest investments in your life. I hope the above points will help you in your decision making process before hiring a discount broker. If you have any questions, please give me a call.