Pros and cons of using a discount real estate broker
Benefits of using a discount real estate broker
You pay less on listing fees. Depending on the brokerage you choose and the value of your home, a discount brokerage might reduce your commissions to 1%.
You receive basic real estate agent services. Discount brokerages provide basic services, including listing your home in the local multiple listing service (MLS), general marketing, documentation, contracting, and legal assistance. Some offer additional services for an added fee. The services you choose are provided via a full suite of tools on their online platform.
Drawbacks of using a discount real estate broker
The seller’s (or listing) agent commission is only part of the picture. As we outlined in the example above, the reduced commission you’ll pay to a discount brokerage doesn’t include the commission for the buyer’s agent.
You may sell your home for less. Agents who work for full commission are motivated to sell your home for more. According to HomeLight’s internal data, the top 5% of agents sell homes for 10% more compared to the average agents.
Moreover, those who handled the sale on their own (For Sale by Owner) sold for a median of $380,000 in 2023, significantly less than agent-assisted transactions that sold for $435,000.
As a result, the 1.5% savings you might gain from choosing a discount broker could end up costing you more in lost profits than simply paying the higher commission.
“Homeowners that go with a traditional brokerage model tend to make more money on their homes. You can save a percent and lose five percent because you didn’t negotiate well and you didn’t get as many bids as you could have gotten on your property,” warns Dombrowsky.
Savings may be less than you think. Some discount brokerages may charge hidden fees, or they sell their services a la carte, which can add up and chip away at your expected commission savings. Additionally, if you pay a flat fee or minimum commission, you may end up paying more.
“You’re going to pay a certain fee to list the property. You’ll pick a photo or video package, a digital media package, or a marketing package. Do you want a lockbox? Do you want a yard sign? It’s a menu, and everything has a fee,” explains Ruiz.
You get limited in-person support. For some sellers, the biggest potential drawback of a discount brokerage might be the lack of in-person support, advice, or guidance. Some discount brokerages do provide in-person support. However, the agents who work for discount brokers often rely on the volume of homes they sell to make money, which means they may have limited availability.
The services you receive may be less robust or personalized than what you might receive from a top real estate agent.
“You don’t have anyone to advocate for you. You’ll be at the mercy of the buyer’s agent, and they’ll be pushing for the best price for their client. Most homeowners don’t have the expertise to negotiate the best price for themselves,” warns Dombrowsky.
There are fewer agents to choose from. Discount brokerages that provide in-person agent services may have a limited pool of agents to choose from, and you don’t always get to choose who you work with.
You won’t have a dedicated agent. An agent who works for a discount brokerage may not be as knowledgeable about your local market or your home, which can translate into a less-than-stellar selling experience. In contrast, a dedicated agent will clearly communicate the features of your smart home, the excellent local schools, and the nearby attractions.
Examples of full-service real estate brokerages
The following recognized brands have built their reputations on providing professional, full-service real estate service from pre-listing preparations to close:
- Century 21
- RE/MAX
Keller Williams - Coldwell Banker
- Compass
- ExP Realty
Services a full-service agent might provide
When you hire a proven full-service agent to help sell your home, you receive services and support from the agent and the brokerage support staff from the beginning of your home sale to the end. Your agent is your guide, real estate guru, and marketing expert, helping you to navigate the complex and often stressful journey, making it as quick, profitable, and stress-free as possible for you and your family.
Top real estate agents often go above and beyond to ensure the quickest and best possible experience, the least amount of hassle, and the most profit for you and your family. Full-commission agents typically provide a wide range of services some homeowners might not even have considered. We’ll review some of these services below.
How are full-service real estate brokerages different from discount brokers?
Not all discount brokerages offer the in-person representation of a live real estate agent. The comprehensive services offered by a full-commission real estate agent are often provided as part of your contract with your agent and additional services, such as staging, or at a discounted rate to what you’d pay if you hired a professional contractor on your own.
In addition, the professional services of an agent can help you pay less in the long run.
For example, says Dombrowsky, if a real estate agent hasn’t prepared the legal documentation, your real estate attorney may charge you more to review your documentation.
