What You Get When You Work With a Discount Agent
Here’s a hint: it’s not much.
While discounted brokers might seem attractive (who isn’t attracted to a lower price tag?), a lower cost does not often equal a better experience in the real estate world. Before jumping on the discount bandwagon, take a minute to read our reasons why traditional realtors are still the kings (and queens) of the real estate world.
Traditional vs. Discount
Before launching into a discussion about why the traditional model trumps discount upstarts, it’s important to understand the distinction between the two.
A traditional broker is a tried and true real estate agent – he or she will charge a standard commission fee (often 6% of the sales price), but will not charge any other fees. Traditional brokers generally control all aspects of the real estate transaction, such as advertising your home, working with the MLS in your state, negotiating offers, helping you discover anything unique about certain properties, developing individualized marketing strategies to ensure that a homeowner’s property gets maximum market exposure, and finding properties for prospective buyers.
A discounted broker, on the other hand, charges a lower commission, often around 3-5%, but sometimes even lower. Some discounted brokers even charge a flat fee, rather than a percentage. The difference here is that discounted brokers offer far fewer services than traditional brokers, and often charge extra fees for any additional services the client chooses to add on. Also, rather than giving your home its own personalized marketing campaign, a discounted broker will often use advertising funds to funnel prospective buyers to a central hub – usually a website – that lists available properties.
It’s worth mentioning that some agents function within the traditional realtor model but list properties at a cheaper rate. They are usually able to do so because they handle most of the property’s marketing themselves. This strategy runs counter to most traditional realtors’ marketing policies, which involve hiring professional photographers, graphic designers, and more to ensure the listing is showcased as expertly as possible. While this latter advertising campaign will cost more than a discounted broker’s, it will showcase a home more effectively because it will utilize the skills of trained professionals, rather than amateurs. It goes without saying that professional photography will flatter your home far more than fuzzy iPhone pictures.
The Dangers of Discounts (a.k.a., “You Get What You Pay For”)
So why is a traditional realtor better than a discount broker? After all, isn’t it always better to save money? While being thrifty is generally a good idea, in the real estate world cheaper usually isn’t better for a variety of reasons.
Simply put, traditional real estate agents charge the standard fee because they do more work. Apart from finding you a home/developing a specialized advertising campaign to help you sell a home, traditional realtors will help you negotiate hefty, 50+ page contracts involving seller’s disclosures, contingencies, escrow deposits, and more. If you’re feeling fairly clueless when it comes to such phrases (which you probably are), then that means you are by no means ready to navigate such a contract alone, which is what you’d have to do working with a discounted broker. Additionally, an oversight in negotiating this contract can cost any buyer or seller thousands of dollars and essentially negate any savings made working with a discounted broker. Working with a traditional realtor, however, means that a trusted advisor will help you navigate this tricky process by using years of experience.
In short, you get what you pay for. Working with a discounted broker will cost less up front, but will also mean more work for the seller/buyer and the potential risk for cumbersome fees (and possible legal complications) down the road. A traditional realtor, however, will charge the standard fee but will provide far more services and use years of expertise to secure the best deal possible. In short, by working with a traditional realtor, you transfer the most difficult parts of a real estate transaction to the agent, which means you can bypass the stress and simply enjoy the process of buying or selling your home.
Do your research! Find out how many homes the agents you’re interviewing have sold. The average agent sells 4-8 homes per year. Pickett Street Properties averages 150 per year for the last 5 years. They can see a change in the market or system usually weeks before the average realtor.
Reach out if you need help in the real estate world: #425-502-5397 Pickett Street is here to be a resource to you!
Sources:
http://www.realtor.com/advice/buy/why-you-should-use-realtor/