The Dangers and Pitfalls of Discount Brokers
Discount brokers attract sellers by boasting the low fees associated with using their services, but along with the lower fees come dangers and pitfalls that the seller needs to be aware of as well. Consumers selling their home want to get the most out of the sale of their home, getting the best price possible without having to spend the additional money on commission to a real estate agent.
While the discounts and deals a discount broker presents to consumers look good, they need to look at the full picture to ensure it's the best decision for them. Someone well-versed in real estate would likely have a better overall outcome using a discount broker. So, what are some of the dangers and pitfalls that consumers need to be aware of before ruling out a traditional agent?
1. Misleading Fees
Typically, discount brokers will offer a reduced listing fee of 1.5% and a bonus if they also purchase a home through them, they will reduce the fee down to only 1%. This looks great, right? What is not included in their offering is the buyer's commission, sellers will still pay between 3.5 and 4% in commission fees on top of the 1 to 1.5% they are paying the discount broker, so it's a misleading percentage.
When choosing to work with a discount agent, sellers potentially lose the value dedicated agents can provide. Traditional real estate agents make 100% of their pay from the commission they make on the sale of your home, so they are motivated to sell your home quickly and for the most money because it affects their bottom line.
Discount agents can offer a low commission because they aren't usually paid based on a percentage-based commission rather they receive a salary. Agents getting a flat salary vs. a percentage-based commission don't tend to be as motivated to sell their home at a high price or efficiently.
Traditional agents tend to make each of the clients a top priority, whereas discount agents usually have a higher volume of customers taking away from the quality customer service of a traditional agent. A higher volume of customers means less time to focus on marketing and selling your home.
2. No Dedicated Agent
When you work with a traditional agent, they are with you each step of the way, guiding you through the processes to ensure you make the best decisions for your needs.
Discount agencies tend to work with a pool of agents, so you will likely work with multiple agents throughout the entire process. For example, you a home you want to look at so you schedule a viewing, the assigned agent will meet you to walk you through the home but, you're on the fence about something. The next day, you find another home you are interested in taking a look at, so you schedule a viewing. When you go to the viewing, a different agent is there to guide you through the viewing.
You don't have one agent who is familiar with your wants, needs, and possibly even familiar with the area you are interested in. Having a rotating door of agents will make you feel like you're starting over at square one each time.
3. No Quality Guarantees
A traditional agent that is trying to sell your home will be familiar with the ins and outs of your home, so when it's time to show your home to a potential buyer, they can provide thorough information and answer questions.
Discount agents are not assigned particular homes that they are responsible for selling, so it is not uncommon for an agent to show a home that they have never stepped foot in or have any knowledge of. They have no incentive to sell the home, so they are just there to unlock the doors and walk through with the potential buyer.
4. No Guidance
It's difficult to get any guidance from an agent when you don't have the same agent twice. Utilizing a discount broker, you don't have a dedicated agent to assist you throughout the entire process. This can become a big issue when important information needs to be communicated, the information could either be completely left out or miscommunicated changing the entire outcome of the sale.
- How Much Does it Cost to Sell Your Home?
- 5 Ways to Sell Your House
- 3 Things to Know About Pricing Your Home
- Do You Still Need to Stage Your Home?
- 5 Staging Tips to Make a Bigger Profit
- 6 Questions to Ask Your Real Estate Agent
- What Sellers Should Know About Home Inspections
- How Much Will I Make Selling My House?
- Is a Cash Offer Always the Best?
- How to Choose Between Multiple Offers?