What does "Discount Realtor" really mean?

Just who is getting the service?

Let's first understand what the traditional "high fee agent" (5%) break down looks like. Typically a 5% commission is split 50/50. Meaning 2.5% goes to the buyer's brokerage and 2.5% goes to the listing brokerage. This means in a $300,000 home there is $15,000 in commissions paid. Man, that's a lot of skin!

In a typical discount brokerage 3% Program the listing brokerage typically discounts their fees down to 0.5% and offer 2.5% to the buyer's brokerage or on occaision they do 1% and offer 2% to the buyer's brokerage. In one way the listing agents are not getting "their share" and may skimp on the service. The other, buyer's agents will prefer to show other listings where they get 2.5%. Same house as above and your still spending $9,000. Still more then a skinned knee!

A typical 1% Program the agent is not offering any commissions to buyer's brokerages and are expecting to work on behalf of both buyers and sellers. The real danger is that for buyer's to get the info they have to call your agent. Your agent now has a buyer looking to buy a home. Your home pays them 1%. Every other home listed with agents (High Fee or Discounts presented above) get your agent more money. Why would they push your home when they can sell the one up the street and make more money! It may only be $3,000 if it sells but unfortunately for you they sold one of the two above and made $7,500 so you sit with their boring old square sign on your lawn selling other peoples' houses!

Ever think someone was telling you one thing and then doing another?


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