Lew Sichelman
Selling your house doesn’t need to cost as much as most agents charge. How does 1 percent of the selling price grab you? Or a flat fee of around $500?
That’s what low-fee brokerages charge. And of late, they’ve become attractive alternatives to traditional agents, whose firms want 5 percent, 6 percent or even 7 percent for essentially the same services.
For years, low- and flat-fee brokers have tried to break through the noise made by their full-fee competitors, who claim that they offer little service in return for those low costs. To protect their commissions, some traditional agents even refuse to work with their low-fee counterparts.
Sellers, too, have long feared that low-priced brokers would provide inadequate service. An April survey found that 82 percent of respondents were concerned that a low-fee broker would not provide the services needed to successfully complete a deal.
But the options have expanded in recent years. And with the recent upheavals that have shaken the real estate business to its core, the opportunity to save money – often big money – is closer than ever.
Services Rarely Advertised
There are at least 2,000 agents nationwide who exclusively offer low-commission or flat-fee brokerage services, according to a new report from the Consumer Policy Center. And “many thousands” of conventional agents sometimes offer lower-cost services, though they “rarely advertise” these offerings, said the CPC.
CPC Senior Fellow Stephen Brobeck, who authored the report with CPC Fellow Wendy Gilch, said there’s “every indication” that many low-commission agents provide “the same quality of services offered by traditional agents for significantly reduced fees.”
What kind of money are we talking about? On a $500,000 property, an agent charging 6 percent would walk away with a nice little payday of $30,000. Of course, they might have to split that with the buyer’s agent, but even then, they’d pocket $15,000.
Contrast that with a reduced-fee broker who charged, say, 1.5 percent: Their commission on the same property would be $7,500. And if you had hired a flat-fee broker who charged you $500, well, you’d have saved $29,500.
Better yet, CPC’s study found no evidence that traditional agents sell houses for more money than alternative agents do. Other studies suggest otherwise, but Brobeck and Gilch cite research that found no difference in selling prices, no matter what kind of agent is involved.
Brobeck and Gilch also said there’s “every indication” that many low-commission agents provide the same quality of service offered by successful traditional agents.
Sellers who are prepared to take on more of the responsibility and work of selling their homes can save the most money. For example, for as little as $100, flat-fee brokers offer such basic services as listing your house in the local multiple listing service and in major portals such as Zillow.
For, say, $500, they’ll tell you what you have to do to get a sale to closing. And for $1,000, they’ll give you more personal advice and assistance.
You’ll have to do quite a bit on your own, though: hold your own open houses, be ready to show your place at a moment’s notice (by yourself), get contracts signed and bring the deal to the closing table. If you want the agent to do any or all of those things, you’ll have to pay more.
Full Range of Services
On the other hand, the report maintains that low-commission agents charge 1 percent to 2 percent of the eventual sales price, but still provide the same full range and quality of services offered by their traditional colleagues.
The trick for sellers is to figure out what they want and how to proceed. According to the report, the best candidates for flat-fee brokers are sellers who are under no pressure to sell, have at least some knowledge of real estate transactions and are likely to find a buyer on their own.
Once you decide how much of the pricing, listing, posting, showing, bidding, negotiating and closing you wish to do yourself, check out the flat-fee brokers in your area. Consider their qualifications, track records and the reputation of each of the candidates with whom you speak.
In choosing a low-commission broker, the report advises sellers to make sure to pick one who will provide full, in-person services, including an initial meeting, home inspection, home showings and closings. Their office should be within a reasonable distance, say 10 miles, of your place. That way, they can respond much more quickly than an agent who’s on the other side of town.
The brokerage office should evaluate each agent’s performance, but you should, too. Check client reviews, but don’t stop there. Call a couple of references. They’ll be glad to discuss their adventures in the world of low-fee brokerages.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
