Discount Real Estate Brokers - Good or Bad?

nubiwan

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Aug 20, 2009
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#1
I am contemplating selling a home or two. It is not something that I do often, therefore my question regarding the process of selecting a listing agent.

There are a few discount brokers (like 3% Realty, Property Guys) who offer to save the seller a few percent on successful sale of their home. I am wondering how effective these brokers are when compared with some of the national brands (ReMax, Century 21 etc). There are also services that offer Flat Fee MLS listings that essentially let you list your own home on MLS and sell it directly.

It occurs to me that a buyer might be more inclined to "trust" one of the more renowned national brokers than either a discount broker, or indeed, one of the more locally owned brokerage firms, in order to buy a home. That, by nature, larger firms have a wider scope of potential buyers/leads from which to draw, and expose to your home.

There might clearly be other demographic factors involved - region, property type, buyer type etc.. Still, there must be some statistical evidence showing how effective discount brokers are compared to those more traditional entities, broken down by region perhaps.

In my situation, there is a small local agent I might list my property with, but I am concerned they simply do not enjoy the traffic of the larger firms. There is also a 3% broker who has made the effort to contact me directly. It also occurs to me that national brokers (with more employees) would also be able to draw on a wider range of market skills and experience. It is a tough decision to make, and the market is very competitive here, so I want to make an informed decision.

My other, and probably biggest, concern is that if I am a good, hard working RE agent, then I might want to "avoid" those properties that do not pay a standard (5% shared) commission. That I might only present properties to my client that pay me standard commission.

Anyone care to share thoughts or experience on this?

Finally, has anyone here attained their own RE license in order to list a home? For a minor fee, I could actually see some personal benefit in having my own RE license.

Thanks
Tony
 
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Michel Lafleur

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Apr 30, 2015
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#3
From my perspective (I am a Realtor with RE/MAX), I would list with the agent whose business is most aligned with your properties.
If they are suited houses or something that is clearly an investment product, definitely work with an investor focused Realtor.
If you have something that's more digestible for a first time buyer or an affordable home (such as a townhouse or half duplex), then you don't need an investment specialist. Either way, I'd go with a big name brokerage such as RE/MAX or C21.
Your comments about discount brokerages are mostly true - agents do show them, but when working with a buyer under contract, the buyer would be responsible to cover the shortfall on any commissions paid by the seller. In my experience, buyers usually decide not to view them unless they are priced low enough that paying the extra commission makes sense for them. And if I do show them, I negotiate my fee with the listing agent before presenting an offer. With a discount brokerage, expect fewer showings, lower offers, and longer to sell.
Selling a piece of real estate requires marketing, and marketing is all about reaching as many people as possible to get them into your property.
I can't speak for all markets, but I know that in Edmonton RE/MAX does more deals in a year then the next 9 brokerages combined.
What do you think sells more? Coca-Cola, or no-name Cola?
 

Devin Roberts

Devin Roberts - Brent Roberts Realty
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Nov 17, 2015
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#4
Completely agree with Thomas. Not sure where you are looking to sell, but I work out in the Fraser Valley and Greater Vancouver areas and can comment on my experience. Discount companies pay the purchasing Realtor less commission, and though they are supposed to bring all listing to their clients, often they won’t if they don’t get full commission. There was a discount brokerage in my area which went out of business, but it used to warned their clients on their website that many realtors will not show the properties.

If you live in an area where it is difficult to sell currently, you have another issue. If your home is stale on the market, you are unsure whether you are over priced or are not paying enough commission.

Hope this helps


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Martin1968

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Jan 22, 2017
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#5
You have gotten the perspective of a few realtors. In general their claims are accurate, however it is of course from their perspective as a realtor.

When selling a home tho, nothing stops you from trying to sell without a (listing) realtor involved.
I would start the process with an appraisal, either have it appraised or invite 3 different realtors for an assesment. With that info you should have a pretty accurate idea of what you can ask on the market. (Be aware of realtors that inflate asking price to get your listing)You could then proceed with a listing on Kijiji first. Organize an open house yourself and see what’s coming your way in offers. Be aware tho that many buyers think to undercut the price cause there is no realtor involved. Thinking that when you as a lister save money, they should save too. The net result might be the same as listing with a realtor.

Secondly the best way of marketing your home excluding the realtor (Alberta) is to use Comfree.com
You will have full mls exposure (realtor.ca) and many realtors have gotten onboard and definitely show your property, and will present you an offer, but would want to know the commission. You will likely still end up paying the 3.5 plus 1.5, but you are sure that there will only be one realtor involved, while listing with a realtor will most likely bring 2 realtors in on the deal thus you as the lister having to pay the full commission.
You can also negotiate a flat fee when realtor ask about commission. Sometimes you might be able to save a few extra bucks. (Comfree has become VERY big in Alberta, but not so much yet in other provinces)

If all that fails, I would then list with a realtor. (Low commission realtors and property guys are not the best)

From my own perspective, I have my own realtor and work with him when needed and he is fully understanding that I always want to try to list myself first. I have listed and sold 2 props in the past without any realtor involved, and purchased 1 without realtor involvement, knowing I truly got the best price possible in the market and saved dollars on commission and no realtor could have done a better job. Right now we have another prop on comfree and showings and offers are coming in mainly from realtors with clients. A flat fee commission is offered and in general realtors seem to be fine with that.
(It’s a decent commission but slightly less the the 3.5/1.5)

Here are a few examples how realtor shouldn’t and should work for their money, we all know about their excellent marketing skills that is being sold to us and going to make all the difference........... But how about their customer service skills.........listening and catering to your clients should be high up there

Just 2 weeks ago we had a realtor with a client showing the prop and subsequently wanted to come up with an offer, as the realtor stated his clients ‘LOVED’ the property. However he was addement he wanted the full 3.5/1.5 commission.
We didn’t budge and he said he was no longer interested. It begs the question for whom this realtor was working. Was he working for his client or merely for himself.What did he tell his clients....Sorry I can’t get the commission I wanted so don’t offer anything? (I doubt that) or did he tell them a lie as a reason not to write the offer?

On another note, I remember a property we once bought that was an exclusive listing, but my wife and I really liked it.
Our realtor had no problem showing it to us even tho his cut would be minimal, as he said that it was about what ‘we, his customers want’. He made a customer for life and over the years, especially on the purchasing end he has been more then compensated.

Hope this helps. Regards.
 

Matt Crowley

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Dec 14, 2013
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#6
I can't wait for technology to make the home buying process a lot better and displace 50% of Realtors. They really do almost nothing for $15,000 or more..
- write advertisement - posted on MLS
- post on personal website
- give me the same for sale homes to my inbox as I can get online with a 5 minute filter
- pay for gas in car

The only value add is that Realtors have locked up the sales comp data. Appraisers & inspectors have more skill in comparative value and identifying problems. This will eventually get disrupted by a good tech company that realizes human psychology can actually learn what people want in a home, what represents good value, and what does not. If people will chose their spouses from an app, why wouldn't they use it to find a home? Much more intelligent process. Realtors could just be employees earning a wage + commission.

Commercial is quite different in my view, a lot more skill and sophistication involved.

For the time being, there is no good solution to paying Realtors.
 

Martin1968

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Jan 22, 2017
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#7
Matt, thank you for your added perspective. I couldn’t agree more. My post would have been very long to cover all aspects of what I think will be the future selling process. But their is no doubt in my mind the way of realtors doing business will change in the future. Comfree is already a very good example.

Furthermore, the large and successful real estate franchises such as REMAX trying to break into other parts of the world, have already noticed the way of doing business and how being paid commission is different then here in North America.
For example my native country tops out at 1.8% commission, that can be negotiated down to as low as 1% depending on value of the house. Furthermore, you as a buyer can only deal with the listing realtor. You can’t bring your own realtor into the deal, and why would you.

It’s a matter of time that we will see changes in the industry, and looking forward to it.
 
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nubiwan

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Aug 20, 2009
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#8
Even once listed on the MLS, as with ComFree, there are limitations to selling privately IMHO. Personal time being high among them. Signage, advertising, market acceptance, exposure are some others, that cost money. Paying an agent fee of $20K to sell a $350K property just not justified some times. Some times, it is clearly money well spent.
 

Wei12694

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Oct 18, 2017
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#11
I have very good experience with discounted realtor. He does mere listing and cash back for pre sale condo. He is a big advocate to reduced realtor fee as he said technology actually reduced his work a lot. He does not spend that much time any more. My personal view is not about the big firm name it is about the individual realtor who has knowledge and integrity. He got paid $3000 only and got me the pre sale condo appreciated over 40% in a year. He was surprised by the appreciation too. I was very new to real estate investment and he answered all my questions regarding property price in different area, rent etc, to assist me to make decision. when it was time to rent,he told me the rent to list ($300 more than we initially estimated when I bought the condo) and exactly how much I should drop if no huge response in 3 days. Rented it out in 3 days exactly at the price he dictated. Huge help to newbie. I can feel he put my interest over his own. I dealt with 5 realtors who helped me buying properties. Funny thing is he is the best out of 5 and he is the only one charging discounted fee.


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Sherilynn

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Oct 22, 2007
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#13
Perhaps the reason many people think discount realtors are a good idea is because they have worked with (or heard tell of) substandard realtors in the past. In every industry, there are top performers, there are those who do the absolute least amount of work possible in order to still get paid, and there is a spectrum of effort and performance in between. I think I have worked with every type of realtor and can see why people try to sell properties themselves.

Unfortunately there are a lot of realtors who think all they must do to sell a house is list it on the MLS and cross their fingers. But there are also many great realtors out there.

As a property owner, you must find a realtor who knows your market and has the connections and drive to get the job done.