How Discount Real Estate Agencies Can Help You Save

The biggest costs a seller has to bear during a sale is the payment of commissions to real estate agencies.

Usually, the costs are fixed, and they are usually a sizable chunk from the sale price. With discount real estate agencies however, this is not the case. This article will explain how.

How Discount Real Estate Agencies Operate

Discount real estate agencies, for the most part, work like regular real estate agencies. The services are largely the same, but the way they charge for those services are different. For regular real estate agencies, they mainly charge by being paid a fixed percentage of the sale price of the property. For discount real estate agencies, it is quite different.

The clue to how they get paid is in their name; the seller effectively gets a discount on the real estate agent fees. For instance, if the fixed percentage for commissions in a local market is 4%, this means the buyer will pay 4% of the sale price of the property to the real estate agency, plus the buyer’s agent’s fees. With discount real estate agencies however, they would reduce that percentage to about 2%, or even as low as 1%. This would save the seller thousands of dollars.

This ability to drastically reduce the amount of money you’ll pay in commissions is due to the advent of technology. By making clever use of technology, discount real estate agencies are able to lower their rates and play the volume game. The more sellers they can help sell their properties, the more money they will make.

The discounted prices that discount real estate agencies use are done by way of commission splits. The following are the types of commission splits;

1. MLS Only Flat Fee Listing

This type of commission split works on the premise that you will be charged for the use of one of the principal tools of the trade, the multiple listing services. The discount real estate agency will key in the details of your property into multiple listing services, and then you would be responsible for everything from there. You would still pay the buyer’s agent’s fees.

This method of commission split is usually best if you’re using the FSBO route, as the prices involved are as low as $160.

2. Reduced Commission Percentage Listing

This type of commission split involves a reduction in the percentage of the sale rice payable by the seller. Depending on the agency you go with, rates can be as low as 1%. The low rates are also an indication that the services rendered will also be streamlined. The agency would simply have no time to dedicate to an elaborate service for one client, the sort of which you would see at a traditional real estate agency.

As a result, the agency would formulate a method of service that allows them to get your properties sold as quickly as possible, whilst also giving you a satisfactory level of service. Agencies with this type of commission split are best for sellers who are interested in quick sales.

3. Reduced Commission Flat Fee Listing

For agencies that adopt this type of commission split, they will usually sell your property for pre-agreed flat fee. This flat fee will not be affected by the sale price of the property, even if the property sells at a price below its list price.

The fixed commission is usually between $2,000-$4,000, though some agencies can go as high as $5,000.

Conclusion

Using a discount real estate agency would no doubt be invaluable when you want to sell and at the same time save a few precious thousands. Understanding how they help you save is crucial to deciding whether or not you want to go with them.

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