March 14, 2022
WHAT IS THE DIFFERENCE BETWEEN A FULL-SERVICE REALTOR AND A DISCOUNT REALTOR?
This poses an interesting question so let’s take a look at how a discount realtor is actually very similar to a full-service realtor.
A full-service realtor will usually provide a free market evaluation to determine the appropriate selling price. Once that is established, they’ll:
- list your home on the MLS ® system;
- arrange for showing your home to potential buyers and their agents;
- prepare (or receive) any offers to present to you;
- promote your home on their own website as well as the MLS ® system;
- provide guidance throughout the selling process; and
- provide conveyancing services to bring the sale to completion.
While this list is not exhaustive, it generally describes the selling process. Depending on your agent, they may also offer referrals to other industry experts such as mortgage professionals, home inspectors, and lawyers.
A discount realtor provides most, if not all, of the same services but at a lower commission rate. Rather than using the industry standard of 7% of the first $100,000 and 2.5 or 3% of the balance, a discount realtor uses a lower fee structure which allows the seller to save potentially thousands of dollars of commission payouts to use for any other purpose they want.
Some discount brokerages offer a straight 1 or 2% commission. The downside to this is the buyer’s agent doesn’t get their “usual” fee and may not be overly enthusiastic about showing a home listed this way.
Flat Fee Commission
A flat fee discount realtor does things a bit differently. While the buyers’ agent will receive their normal, full commission for bringing a buyer, the seller’s realtor takes a discounted commission by reducing their fee to a fixed dollar amount. This means you won’t lose any buyers because those agents don’t want to take a lower commission and the seller still receives all of the same services as if they had used a full-service realtor.
Some discount brokerages also offer packages that allow you to sell your home on your own, with only certain services being provided by the brokerage. These services may include:
- Listing your home on the MLS ® system;
- Forwarding potential buyers to you;
- Promoting the home on their website and other internet websites; and
- Forwarding title of your property.
The fee for this type of service is usually a flat fee for the service of the discount brokerage, plus the normal commission due to the buyer’s agent. This type of sale can be time-consuming for the seller and if the seller is not experienced in buying or selling homes, there can be pitfalls to trying to sell the home privately.
Either way, the seller ends up saving a significant amount of money by using a discount brokerage.
Education and Training
Discount realtor brokerages have highly trained, educated, and experienced agents in the exact same way and to the same high standard as agents at traditional brokerages. The governing body for the real estate industry requires all agents to undergo the same training and education to ensure the best professionals are representing the public, regardless of the type of brokerage they represent.
Using a discount brokerage doesn’t mean you have to sacrifice experience, training, or knowledge. Many discount realtors are in the top percent of the real estate industry and are high achievers with excellent skills and awareness of the market conditions. With any transaction of this size, always ask your potential realtor for references, and don’t be afraid to check them out before making a commitment.