Discount Real Estate Brokers: 6 Options To Save on Commissions

Discount Real Estate Brokers: 6 Options To Save On Commissions

Whether you’re buying or selling a house, you’re dealing with such a huge amount of money that one mistake could cost you tens of thousands of dollars and months of migraines. So there’s no wonder why over 90% of all buyers and sellers choose to work with a real estate professional.

The standard commission for a real estate transaction is typically 6% of the home’s sale price, according to most real estate websites. The commission is usually split between the seller’s agent and buyer’s agent which means both agents receive a 3% cut. So, if you’re buying or selling a $250,000 house, the agents would receive a total of $15,000 or $7,500 each.

Maybe you’re dreaming about how much cash you could pocket if you don’t hire an agent. But you might be disappointed at how little you actually save if you skip out on having an experienced professional guiding you through the deal. 

High commission fees can put a damper on the excitement of selling your home, as those fees usually take a substantial chunk out of your home’s sale proceeds. But there is a way to put some of that cash back in your pocket – discount real estate brokers.


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What is a Discount Real Estate Broker?

A discount real estate broker is a real estate agent who works for a discount. Instead of charging you the standard full seller’s agent commission of 3%, they’ll work for less, such as a 2% or 1% commission or a flat fee rate. This reduced rate can save sellers a bundle.

How Does a Discount Real Estate Broker Operate?

To talk about discount brokers is to say there are standard-fee brokers, and nobody will own up to that statement. Why? Because all real estate commissions are negotiable.

However, many real estate brokerages, hoping to capitalize on the growing realization among consumers that real estate commissions are negotiable, have created market niches for themselves that promise to save sellers money and rebate commissions to buyers.

Here are your options to save on commissions with discount real estate brokers:

  1. Low Flat Rate Commission
  2. Low Percentage Commission
  3. Hybrid Real Estate Brokers
  4. Buyer Commission Rebates
  5. No Commission (Flat Fee MLS)
  6. 2 for 1/Reduced Fees in Exchange for Another Transaction

To help you decide which option you would like to utilize, let’s discuss each one of them in more detail below.

Low Flat Rate Commission

A flat-fee real estate agent will help you list and sell your home for a predetermined, fixed-rate instead of taking a hefty percentage of the final sale price. The flat fee often ranges between $3,000-$6,000 and the level of service that is offered depends on the agent or broker being hired and can vary greatly between providers.

If you’re hiring a full-service flat fee agent, you get the exact same level of service and support as any of their full-commission clients such as pricing guidance, professional photos, marketing on the MLS and hundreds of other listing sites, showings, negotiation support, and everything else you need to close on your home – only you pay a fraction of their typical fee.

Bear in mind that you will still be responsible for paying the buyer’s agent fees which is typically the same 2.5%-3%.

Low Percentage Commission

A low commission real estate agent will list and sell your home for a reduced rate, saving you up to half of the 6% fee agents typically charge in a real estate transaction.

These low commission brokers are often able to offer the same or similar services as the traditional sellers’ agents. Although they work for low commissions, you can still expect to receive comprehensive, end-to-end real estate services and support such as conducting a comparative market analysis to make sure your house is priced right, negotiating the sale, carrying insurance to cover any mistakes made and listing the house on the MLS and other real estate sites.

Hybrid Real Estate Brokers

Hybrid brokers replace commissions with flat fees and offer a menu of a la carte services. They typically veer away from traditional broker commissions that hover at 6% and are split between listing and buyers’ agents.

Hybrids often discount the listing commission from 3% to 1% to 2% or they charge a flat listing fee which is usually thousands and provide a commission rebate. Mainstays of traditional brokerages, like manning a Sunday open house or printing a glossy brochure, are hybrid line items that determine how much a client pays for services rendered.

Buyer Commission Rebates

You can find real estate agents who advertise that if you hire one of them to buy a home, the company will credit the buyer a percentage of its commission or a flat-fee at closing. With these types of deals, the real estate agent working with the buyer will return a portion of the commission to the buyer.

The rebate comes from the fee the seller pays the broker who presents the buyer. Generally, a company that elects to give away part of its income to buyers does so in the hopes that it will attract such a huge volume of business that it won’t miss the money. You may or may not receive individualized attention and service due to increasing pressure on these low-profit companies to keep the business coming in the door.

Flat Fee MLS with No Commission

Flat fee MLS services offer sellers the ability to list their home on the “Multiple Listing Service,” which is what real estate agents use to list their properties and share them with other agents that also belong to the local MLS.

Also called an “entry only” listing, this designation signals to buyers agents that the agent entering the listing into the MLS is not performing any other tasks for the seller, so they know not to contact that agent to arrange a showing, for example.

The benefit of getting your house listed on the local MLS is that MLS systems are syndicated with many other websites. When a listing goes live on the MLS, it automatically gets listed on sites like Realtor.com, Zillow and many others.


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The 2-for-1 Model/ Reduced Fees in Exchange for Another Transaction

The least common type of discount real estate broker, the 2 for 1 model involves the real estate agent offering to sell your house for free, with the stipulation that you buy a house with them and they collect a commission then.

A seller that is both selling and buying a home can save a lot of money with this model and will most likely avoid paying any commission at all.



Where Can You Find Discount Real Estate Brokers?

You can find discount real estate brokers all over the internet. Below are some discount broker websites where you can look up and scrutinize the services they offer.

Are discount brokers better than traditional agents?

It all depends on which type of low commission agent you choose to work with.

When you work with a traditional real estate agent, you can expect to receive a comprehensive array of services and support in exchange for your full commission fee. That means help with pricing, marketing, home staging, professional photos, negotiating, closing, and more.

In contrast, many discount and flat-fee brokerages will significantly limit the scope of their services and support to offset their reduced rates.

So, should you go with discount real estate brokers over traditional real estate agents?

To help you decide, here are pros and cons if you head down the non-traditional route and work with a discount broker.

Pros

  1. You can save thousands from commissions.
  2. Choose from a variety of services just like hiring a traditional agent.
  3. Your house gets listed on the MLS – the golden tool of real estate agents.

Cons

  1. Limited service provided depending on which discount brokerage you work with.
  2. Less personalized attention to compensate for the discounted rate.
  3. Less experienced agents handling your listing.