4 Things You Should Know About Discount Brokers
When buying and selling real estate, you can choose between traditional brokers and discount brokers. There are several key differences between these two options that you should consider before deciding which way to go.
Here are 4 main differences between traditional and discount brokers:
1. Discount brokers give you a discounted price on either the purchase side or the listing side.
Discount brokers typically work off of a flat fee, while the traditional broker's commission is typically 6% of the sale (split between the listing agent and the buyer's agent). This may be a huge pro for you, but discount brokers usually make up what they lack in per-sale commission with volume. We'll discuss how that business model affects you in main difference #2.
2. Their tasks go from A to B: they get you under contract then hand you off to someone else.
A discount broker's services typically don't extend past the contract stage. This is how discount brokers get more volume in sales. While there are full service discount brokers, many offer minimal services, meaning they get you from A to B during the home sale.
Traditional brokers, on the other hand, get you from A to Z. If you go with a traditional agent, you will be their client from the very start of the process to the very end. This means your agent will help you with not only listing your home on the MLS, but also with fielding buyer questions, scheduling showings, marketing your home, navigating the closing process, and more.
3. A discount broker's services do not typically include help with the contract, negotiations, closing, or any other aspect of the deal.
As mentioned above, a discount broker's services don't typically extend into these other aspects of a real estate sale. A traditional agent will, however, consistently stay your point of contact throughout each step of the home sale process.
4. If you're not comfortable selling your house yourself, a discount broker is not the way to go.
Selling a home consists of 119 different tasks, from scheduling showings to navigating home inspections to marketing the property, and much more. All of the tasks that a discount broker doesn't cover will then fall on you. If you aren't prepared or comfortable to take on all of that legwork, a traditional agent is most likely a better option for you.
Realtor® and Director of Operations Robert Garcia discusses the discount broker more in his video below. Check it out for his thoughts on the topic and for help on deciding which way you should go.
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- Market Update from Realtor® Robert Garcia