Let’s imagine that we are in the process of beginning to sell or buy a house. Any time a major event like this happens in our lives, there are many factors to consider:
- What price range are we trying to sell or buy at?
- Do the properties in question look like they are going to appreciate or depreciate in value?
- Is the new neighborhood convenient, safe and free of crime?
- Is the house move in ready?
The potential list of questions and concerns can keep growing and growing depending on the factors that you are most concerned with.
We’re going to zoom in on one of the most important questions people ask when buying and selling a home:
What type of real estate broker should I use? More specifically, we will be taking a look at the benefits of hiring a discount real estate broker.
A discount real estate broker is a type of real estate broker that specializes in charging a cheaper than average commission rate when buying or selling a house. They offer a very valuable incentive that may leave you with thousands of extra dollars in savings whenever you make a real estate transaction through them, in comparison with doing business with a more traditional real estate broker.
A traditional real estate broker typically will charge up to 7% commission of the sale price on any given real estate transaction. However, it has dawned on many potential home buyers and sellers that all commissions involved in a real estate transaction are usually quite negotiable. Therefore, in order to gain more business and also provide more fair representation, some real estate brokerages have decided to tailor the majority of their fees and business in a way where their potential clients would save money in commission payouts but still receive the same services.
For example, as we mentioned before, a traditional real estate broker usually charges up to 7% of the sales price. However, from this commission, selling agents who work with the real estate brokerage are usually paid an average co-brokering fee of 3.15%. This means the real estate brokerage collects up to 3.85% of any transaction that they are involved with by simply listing the properties in question and then handing them off to the proper selling agent. That means that the traditional real estate brokerage actually makes more than the agents that handle the actual real estate sale or purchase.
Once some real estate brokerages realized that they didn’t need to charge such exorbitant costs for their services while still being profitable, and that lowering their costs would attract more customers, the discount real estate brokerage was born.
The discounts that discount real estate brokers provide vary quite a bit. It really depends on the individual brokerage and the logic and formulas that they use to calculate what is fair for both sides involved.
Below are a few examples of the types of discounts that discount real estate brokers often provide:
- Very low percent fees for listings – Some discount brokers offer very low listing fees of 1 or 2%. There is usually an extra fee for the agent that handles the actual sale.
- Flat fees for listings – Other discount brokers charge a fixed rate for their listings, no matter how expensive the house is. An extra fee is usually added for the sales agent as well.
- Tiered fees for listings – Some brokers offer limited or tiered services where you don’t have to get full representation and instead let them handle limited responsibilities for a lower price.
- Buyer commission rebates – A broker will refund you a fee or percentage at closing.
If you have any questions or concerns about whether or not a discount fee brokerage is right for your next real estate transaction, give us a call here at Housso. We are happy to help make this stressful process much easier for you!