“What’s this I see about 1% and 2.5% real estate fees to sell a home. I know they’re discount brokers and don’t do very much, but how can they charge so little and stay in business?”
***ANSWER:
Many of them don’t. There’s a real revolving door of these reduced service brokers starting up and later shutting their doors.
As to how some charge so little, I was curious too. So awhile back I had a lady on my staff call one, tell them she was planning to sell her home (she actually was), and ask how they could charge so little and still pay an outside broker who brought a buyer.
Their response was they DON’T cooperate with or market to other agents! They did add, “…if one does bring a buyer, you just add their fee to the sales price.”
If only it was that simple.
The truth is these firms dangle a low fee as bait for sellers to call and hire them. Then they shut out other real estate agents and all their clients, keeping the property a secret from 90% of the market! (Is that really “marketing”?)
But if a broker accidentally discovers the property and brings a client, the seller pays a much higher fee than they were promised.
And due to reduced exposure and typically much weaker negotiating skills, on average the property sells for less, erasing all the promised savings.
Not such a good deal.
NOTE: While I’m no fan of reduced service brokers, some are truthful about the services they do and don’t offer. I respect their honesty, as opposed to those who falsely claim to provide the same services as a good full-service broker.
