When shopping to sell a home it is highly likely that you will run into Realtors or brokers offering to sell your home for 1%, a flat fee, or a discounted rate. Discount real estate brokerages promise lower commissions than full-service realtors. And when the real estate market begins to tip in favor of sellers, these discount brokerages become more prominent. Whether you choose a discount real estate brokerage or a traditional brokerage, you should understand what each provides and how they are compensated.
To understand what these alternative brokerages are offering, it’s important to understand how real estate commissions are paid. In the traditional real estate brokerage model, the seller pays the listing broker a percentage of the home’s selling price (usually 6 percent, though it is negotiable). That listing broker usually has a split with the listing agent and also offers out a cooperating broker compensation of up to half the total commission to the buyer’s broker, who then splits that with the buyer’s agent. In other words, that 6 percent of the purchase price can go to paying the commission for as many as four people, plus any service people like transaction coordinators should the agents use them. Still, to any seller, 6 percent is a lot and — in many cases — may make the the difference between breaking even on your home or being able to pay off the mortgage at closing.
There are many types of offers these discount companies can make available. One of those is the flat fee rate for their service. In the flat fee listing method, the broker lists your home on the Multiple Listing Service (MLS) for a set fee (such as $2,000). Keep in mind you still have to pay the buyer’s broker’s fee, which is usally between around 2.5 and 3 percent.
Discount in commission percentage is probably the most popular form of offer these discount real estate professionals promote. One good example of discount Columbus real estate is the Homes that Click company. With a discount commission percentage listing you can literally list your home for as low as 1 or 1.5 percent commission. Now that is the seller commission to be paid. It’s important to know that you still have to pay the buyer’s brokerage in order to attract a buyer to sell a property.
Either way, there is a lot to know in making a decision between a discount real estate professional and a traditional Realtor. If you do elect to use a discount real estate service, make sure to use a Realtor that still provides full service even at a discounted rate.