Are Discount Real Estate Brokers A Scam?
No, alternative and discount real estate broker services are not a scam. They are far from it.
A discount brokerage may sound too good to be true if you don’t know how technology and the internet have transformed how we sell and buy houses. However, there will be good and bad companies and agents, as with all businesses.
Commission rates aren’t regulated by legislation or agencies. They’re therefore open to negotiation. However, many people don’t know that there are other options and can request a lower rate or look into discount brokers.
Don’t forget to check out The Guide To Discount Real Estate Brokers Part 1
However, there are some potential issues or challenges when using discount real estate agents. Therefore, you should do your research before making an offer.
- Discount models, for example, are dependent on the volume of homes they sell to make money. This can lead to services that might not be as strong or as beneficial as those if an agent charges the full commission.
- It is possible that you won’t get as much support if you aren’t sure what to expect when selling a house.
- Because they leverage the internet and technology to their advantage, discount real estate agents are disrupting the market.
- They can offer lower rates thanks to automation and digital marketing trends.
If you do your homework, you’ll find a discount real estate agent option that will save you money and provide the level of service you are looking for.
Are Discount real estate agents able to offer the same service as traditional agents?
A few offer the same service, and others that don’t. It all depends on their business model, how flexible they are with their fees and what services they want to offer.
A discount agent will often advertise as offering “full service,” but they may not provide the same services as a traditional agent.
To justify their reduced rates, some discount real estate agents will offer a limited service. These services might or may not be of importance to you. So pay close attention. Below is a table that will show you the typical services offered by Full-Service and Limited-Service real estate agents.
|Real Estate Service||Full Service Listing||Limited Service Listing|
|Advise seller on preparing home for the market||Yes||Maybe|
|Hire a professional home stager||Maybe||Maybe|
|Hire a professional real estate photographer||Maybe||Maybe|
|Advise seller on a pricing strategy||Yes||Maybe|
|Provide a key lock box||Yes||Maybe|
|Provide a for sale yard sign||Yes||Maybe|
|Market to buyers agents by listing property for sale in local MLS||Yes||Yes|
|Schedule showings for the seller with buyers and buyers agents||Yes||Maybe|
|Present and explain offers to the sellers from buyer and buyers agents||Yes||Maybe|
|Advise the sellers as to the merits of an offer to purchase their home||Yes||Maybe|
|Assist the seller in negotiations such as counter-offers and offer acceptance||Yes||Maybe|
|Navigate through the home inspection and negotiation process||Yes||Maybe|
|Work with buyers agent, buyers and sellers to navigate through the escrow process||Yes||Maybe|
|Work with attorney and escrow companies to successfully close the sale of the home||Yes||Maybe|
Before signing an agreement, ask questions
A contract is the Listing Agreement. The Listing Agreement is a legally binding contract that grants the broker or real estate agent the right to sell the house and obligates the seller to pay a commission.
Therefore, it is prudent for the home seller to carefully read the listing agreement and understand the expectations of the homeowner and the listing agent/brokerage.
Before signing a listing agreement with a discount real estate agent, ask these questions:
- How much experience do you have
- What is the best way to determine the worth of my house
- How will you market my house
- How can you communicate with me
- What is the commission
- Do you have an exclusive right to sell
- What length of time will the listing agreement remain in effect
- What are the specific duties of the agent
- What will happen to disputes
- What representations are expected from the seller/owner
- Can you cancel the agreement
Alternatives To Discount Real Estate Brokers
After careful consideration, you may have concluded that a discount broker is not a good choice. However, below are additional options that you might consider.
FSBO – For Sale By Owner
The FSBO option means that you, as the seller, are responsible for all aspects of the sale of the house. This includes, but is not limited to, inspections, appraisals, and showing.
Your house will not be on the MLS, so you’ll need to market it yourself.
Many sellers who are selling their homes by owner do the following:
- Put up a yard sign
- Make marketing materials
- Photograph the inside and outside of your home.
- Make a video tour
- For viewing, stage the home
- Open houses can be set up and operated
- Meet with potential buyers for walkthroughs and appointments
Creative marketing strategies may include listing the house on do it yourself real estate sites and community sites like:
- Zillow is the most popular real estate marketplace. Here, anyone can list their property or be found online by people searching for a house to purchase.
- Craigslist is a classifieds website that lists jobs, housing, items needed, services, community, and gigs. You will need to list your house in every section of the site and each state.
- Facebook Marketplace: This is where people can buy, sell and trade items, as well as rental homes, from other people in their local area. Like Craigslist, you must be aware of the listing details so that the correct search results will be generated.
Selling to a We Buy Houses Company
We Buy Houses is a legitimate real estate business.
There are also legalities, as in any real estate transaction: Taxes. Marketing. Home inspections. All the other things involved in buying or selling a home.
Companies like We Buy Houses take out the hassle of selling a house. Be prepared to take less than the actual house value. Investors will need to consider costs to update the house and make a profit when the house is sold. They are business people and will need to make money to survive. However, you may be surprised by how quick and easy it can be to sell your house this way.
Selling to An iBuyer Company
You can sell it online through an iBuyer real-estate website such as Zillow Instant Offers or Opendoor. This is the latest trend in real estate. They act much like “We Buy Houses”, but they will offer you 24-72 hours based on what you have submitted online. These companies use a lot of artificial intelligence to analyze complex algorithms and determine the best offer.
Remember that you will be granted a home inspection to verify the information submitted online once they have made an offer. After that, they can either renegotiate the offer or withdraw from it if they aren’t satisfied with the conditions.
Using a Traditional Real Estate Broker
If you don’t feel like selling your home at a discount or other options, you can always use a regular agent or broker.
We have already mentioned that most house selling costs are incurred by the seller’s agent and buyer’s agent commissions. However, if you want to save money, there are certain things you can negotiate.
All listing agreements include legal clauses:
- Initial list price of the house
- Term of the listing agreement – how long the contract lasts
- Commission you agree to pay the broker for selling your home
- Length of time during which your broker will be able to collect his fee after the listing agreement expires
- Amount your broker agrees to pay to any other agents or brokers for showing and selling your home.
If you are looking to sell your home. You don’t want it to be a hassle, and you want to save time and money. You want your home to be seen as much as possible for the highest price. Keep more of your hard-earned equity and save on real estate commissions. So it’s worth looking into a discount agent or broker for real estate. You save money, don’t have all the selling to do yourself, and are more successful.