In the world of real estate, there are many terms that those outside the industry do not always understand. But knowing these terms can help you make better decisions when it comes to buying and selling a home.
Discount real estate broker is one of those terms.
In recent years, brokerages offering lower fees for listing agents have significantly grown in popularity. Therefore, it’s more important than ever to truly understand what a discount real estate broker is.
What is a discount broker?
Although real estate brokers and agents are very similar, there are some important differences. Brokers are licensed and trained to supervise other agents. Real estate agents help clients with buying and selling homes. Brokers and agents can both work in brokerages. However, brokers can also work on their own.
Discount brokerages are new-age real estate brokerages that leverage the use of technology to offer more competitive commissions and save money for their clients. The specific brokerage you choose will determine the level of savings you can expect and the payment structure.
How real estate agents get paid
It is first worth noting, for those who may be unaware, that the traditional real estate commission is 6%.
Traditional real estate agents
Traditional agents are encouraged by their brokers to charge 6% whenever possible. That commission is split between the listing agent and the buyer’s agent. It is typically paid by the seller at the closing.
This commission structure goes back over 100 years and many in the real estate industry do not want this to change. Even though the job of being a real estate agent has become easier with the technological advancements in the industry, most agents still want to charge the standard 6%.
Discount real estate agents
The difference between traditional and discount real estate agents is that discount agents charge a significantly lower commission to their clients for the listing of their property.
Some discount real estate brokerages, such as Change Realty, charge a commission of just 1% when you list your home.
The fee for the buyer’s agent can vary based on several factors including the client’s needs and wants. Typically a 2.5% commission is decided upon.
This means that the total commission paid by the seller is just 3.5% rather than the standard 6%.
That can equate to thousands of dollars in the client’s pocket.
What does a discount real estate broker do?
In short, a discount real estate broker will do all of the same things that are done by a traditional broker or agent.
They just do so for a smaller commission.
A discount agent will:
- Provide market research for your area
- Show you comparable sales in your neighborhood
- Help you decide on a listing price
- Advise you on how to stage your home
- List your home on the MLS
- Provide professional photos of the property
- Leave a sign in front of the home
- Hold an open house if needed
- Advise you on offers received and negotiation
- Help you with inspection and appraisal
- Help you throughout the closing process
As you can see, a discount real estate agent will do all of the same things that you would expect from any real estate agent.
How can discount real estate brokers charge less?
The reason that discount brokers and agents can charge such a lower commission than traditional agents and still provide full service is due to technology. Years ago, agents had a lot more work to do when they listed a home for sale.
They would have to hold multiple open houses. Brokers would pay for ads in magazines and newspapers, which costs a significant amount of money.
In short, they really had to promote the property when listing your home for sale.
Now when an agent lists a home on the MLS, it is automatically uploaded to hundreds of websites within minutes. And aside from professional photographs and general advice, that’s almost all they do until an offer is received.
There’s nothing wrong with this, of course. The only problem is that, despite their job getting easier, they are still charging the exact same fee.
Even open houses are mostly a thing of the past. Most shoppers today look at the photos online and just schedule a showing for the homes that interest them.
Misconceptions about discount real estate brokers
Due to the number of influential people in the real estate industry, change is not something that is encouraged. The “powers that be” want commission structure, and everything else for that matter, to stay the exact same way that it has been for ages.
And why wouldn’t they?
They are benefiting from technology making their jobs easier all while not passing any advantages on to you, their client.
Many agents are even told to talk negatively about discount real estate agents and say that you aren’t getting full service. Most of their clientele will believe them and never actually look into it themselves. That is definitely a huge mistake for sellers.
The truth is that discount brokers provide all of the same services that traditional agents do for a lot less money.
And that scares people.
They don’t want to lose their grip on that coveted 6% commission.
How to choose a discount real estate broker
To find out if there is a discount broker in your area, just search “discount real estate broker” or “discount real estate agent’ on Google. You can research them in much the same way you would any other realtor.
- Ask them about their experience
- Find out how their commission structure works
- Make sure they are giving you full service
- Ask for referrals
- Look at reviews online
If you are in the greater Portland area, Change Realty is here to be your discount real estate broker. Change Realty has been providing discounted real estate services for more than 13 years!
We are the trend setters.
We have helped over 1250 families sell or find their homes and we would love to help you too.