Discount options available:
Commission discounting falls into three categories: the flat fee concept, the discount agencies, and the fee-for-service offerings. Lines of distinction between these types can often overlap.
Flat Fee Concept:
Many agents and various companies are charging a low rate (typically $300 to $500), called a "flat fee" to post your home on the local MLS (Multiple Listing Service) and usually on the Realtor's web site, realtor.com.
The Realtors main selling advantage is that the agents put their homes on the MLS. This central database of homes makes it easy for the member Realtors to see all the homes that are listed for sale. Now you can have this benefit.
In general, the listing agent's primary duty is to market their listings. Advertising costs have really gone down since the internet has made it inexpensive to expose a home to other Realtors and to the vast majority of the buying public.
In effect, this flat fee approach is an excellent way to get a very low commission rate. The phrase, "flat fee", is based on eliminating the commission portion that normally goes to the listing agency, which is typically around 2 1/2 to 3% (or half) of the usual typical 5 to 6% commission. The low flat fee replaces the listing agent's half of the commission
More detail is offered in the helpinghome sellers Advertising Step.
Discount agencies offer their services at a lower commission than the "going" rate. They're just like traditional real estate companies. In some areas they have caught on and are a real force, especially in large, competitive markets.
Some homeowners assume that if these agencies discount their commission they must not be that good. This isn’t true. Discounters may or may not offer less than full service. Their agents have the same state licensing requirements and belong to the same MLS and real estate board as traditional agencies. If they don't, don't use them.
They appeal to homeowners who want to save money but still want professional representation. In a profession that is viewed as having few differences between agencies, a discount is a way for these offices to differentiate themselves.
Put this into perspective. Suppose a few veteran agents left a traditional office like Century 21 or Coldwell Banker and opened Discounts R-Us Realty. They’re the same experienced, competent agents they once were when, only now they’re charging the public a lower commission.
Fee-for-service translates into your paying an hourly rate or a set fee for each service an agent performs. Effectively, this is a consulting service for by-owners and may or may not involve putting your home on the MLS. It is much less costly than commission charging methods - however you will pay for services whether your home sells or not.
Ask any agent how much they would charge for a particular function and he or she may quote you a rate. These chargeable functions typically include the following:
1. Do a CMA to help determine market value and an asking price.
2. Suggest repairs and modifications to enhance your home.
3. Supply you with standard forms, contracts and disclosures.
4. Help create a plan to market your home.
5. Recommend attorneys, title companies and inspectors.
6. Show your home and/or conduct open houses.
7. Review offers and help to negotiate a contract.
8. Provide assistance and reassurance through the closing.
The first three functions above can be obtained for free when requesting a marketing analysis from local agents. Home preparation, marketing and the crux of the remaining items are covered in helpinghomesellers.com.
The International Association of Real Estate Consultants is an organization that promotes the fee-for-service concept. To see if a current member resides near you, go to their website at iarec.com. Select the area from the map provided for members in the USA and Canada. Keep in mind that your local agent does not have to be a member of NAREC to offer fee for services.
Comparing the discount options:
Services rendered by a discount agency can range from the basics (getting your home on the MLS) to offering the same full service functions as those provided by a traditional agency. Review the list of functions below and when interviewing discounters, find out what is included in their commission.
1. Help determine the asking price.
2. Post your property in local MLS.
3. Provide the "For Sale" sign/info box.
4. Arrange for your media advertising.
5. Host open houses.
6. Prepare fliers, home brochures.
7. Help set appointments.
8. Present and explain offers.
9. Assist throughout negotiations.
10. Participate in the home inspection negotiations.
11. Provide closing/settlement guidance.
|TRADITIONAL AGENCY |
FLAT FEE PROVIDERS
FEE FOR SERVICE
COMMISSION / RATE
| Highest||Low ||Lowest ||Hourly charges per function |
| No||No ||Yes ||Not usually |
| Depends on the agent||Medium to full ||Minimal ||As needed |
Flat fee and discount agencies work on a smaller profit margin. They hope to find the buyers for your home and sell it themselves, and earn the full "selling" commission. Perhaps they'll sell you your next home and earn that commission. Their sign in your yard will help them make additional contacts that will lead to more business.
Fee-for-service individuals truly offer the “you get what you pay for” option and that works best if you are a well-informed seller and you’re looking to minimize the commission.
Even more help from the internet: Various internet sites, such as those listed below, will arrange to connect you with agents who have a discounted commission rate. Some sites have the agents bid on your listing. These sites get a referral fee from the agent.
More on COMMISSION SAVING