What You’re Not Being Told About 1% Commission Realtors
What You Will Read In This Article
- Difference Between a 1% Listing Agent and Traditional Realtor
- How Much Money Can I Save?
- Why You Should Sell Your Home with a 1% Commission Realtor
- How To Find a Reputable One-Percent Commission Realtor?
- What Services a 1% Commission Realtor Must Offer
- Alternatives To A Discount Real Estate Broker
- Final Thoughts Regarding 1% Real Estate Agents
So you’ve decided to sell your home. Congratulations!
But what’s next? You likely need some help. After all, the home selling process is complicated, nuanced, and full of legal and procedural requirements.
Traditionally, a seller would hire a real estate agent to whom they pay a commission based on the eventual sales price of the home. This percentage can range from 4-8% and is split (usually equally) between both your agent (seller’s agent) and the buyer’s agent.
However, modern real estate services have evolved to bring unique and valuable alternatives to the market, providing you with more options than ever before.
One such option is the 1% Commission Realtor. Sounds too good to be true?
This guide will take you through the ins and outs of the 1% Realtors, what they offer, and whether or not it’s a bargain or something to avoid at all costs.Learn how to sell a house and save thousands with ISoldMyHouse.com.
What’s the Difference Between a 1% Listing Agent and Traditional Realtor?
A lower commission rate sounds appealing to just about anyone no doubt. But what are you giving up by doing so? Let’s take a closer look at the key differences between a “traditional” listing agent and 1% agent.
A traditional Realtor (or real estate agent) is a versatile role encompassing a broad range of services related to the preparation, sale and transfer of property.
Responsibilities generally include…
Pre-Sale Consulting and Guidance
A Realtor will meet with you to discuss and learn about your needs, wants, preferences, motivation for the sale and more. They will use this information to tailor the service and marketing towards finding the right buyers for your home.
Educate and Inform
A good agent will make sure you have the information you need to feel comfortable with the process and selling timelines from start to finish. This may include explaining various steps, what to expect and how you can better prepare for the eventual sale and more.
Connect Your Listing to Their Network
An experienced Realtor will have established a professional network over the years. They will tap into this network of agents, lenders, buyers, home inspectors, contractors, investors, and other connections to help get the word out about your listing.
Marketing The Property
This isn’t “Field of Dreams”. If you list it “they” (meaning buyers) won’t just come. You need to get the word out. One of (if not THE) biggest roles of an agent is to market your property as well as list it on the MLS (Multiple Listing Service).
Conducting Showings and Open-Houses
When buyers are interested, they want to see the property in person. A Realtor or listing agent will host open houses as well as one on one showings of your property.
An Advocate Looking Out for Your Interests
Realtors have a moral, ethical and legal responsibility to look out for the best interest of their client. They are contractually obligated to look out for your financial and other interests, advocating, negotiating and ensuring the best outcome possible for their clients.
Negotiation and Making the Deal
Buyers want to get a deal. Sellers want top dollar for their property. A deal is often made somewhere in the middle. To get there, sometimes a bit of negotiation is needed. From fielding “offers” to making counter-offers and dealing with repair requests, a full-service Realtor will handle it all.
Paperwork and Administrative Tasks
Every real estate transaction is wrought with paperwork, red tape and deadlines. Your agent will prepare paperwork, ensure the right signatures are made, review contracts that you might not be able to back out of and more.
Other Responsibilities Include:
- Miscellaneous consulting and advice on mortgages, financing, market conditions and more
- Performing a comparative market analysis
- Estimating the property’s value and helping you land on a sales price
- Coordinate and cooperate with mortgage lenders, home inspectors, appraisers and escrow companies
1% Listing Agent
Sometimes lumped in the general category of discount agents, 1% listing agents are in no short supply these days.
A 1% Listing Agent typically offers a set package of services for, you guessed it, a 1% commission fee at closing.
Many of these agents offer a full range of services similar to a traditional real estate agent, but with a little less hand-holding.
That said, there is no standard level of services for a 1% listing agent and what is (or is not) offered will vary wildly between providers. Some offer “full service” similar to a traditional agent but with less time spent with clients, leveraging standardized systems and workflows to allow them to make up for the reduced commission with efficiency and volume of listings.
At a minimum a 1% listing agent generally includes:
- Comparative market analysis
- Pricing assistance and advice
- Contract review
- MLS listing
How Much Money Can I Save?
The million-dollar question. How much can you actually save? Turns out, it can be a lot. Let’s do some math with a real-world example.
For this example, let’s say that the median sales price of homes in your neighborhood run around $300,000. With a traditional real estate agent and a commission of 6% (including the fee for the buyer and seller agent), you could expect to pay out of pocket $18,000 in real estate commissions.
Alternatively, using a 1% Listing Agent you would pay $3000 to your agent, with the buyer’s agent still getting their 3% fee. This comes out to 4% total commission, saving you $6000. In cases where both the buyer and seller were represented by a 1% Agent, you would save $12,000.Learn how to sell a house and save thousands with ISoldMyHouse.com.
Why You Should Sell Your Home with a One Percent Commission Realtor
In a society that has trained us to believe you only “get what you pay for”, you might be rightfully suspicious of “discount” real estate agents offering what seem to be fees that are too good to be true.
However, as with many industries, the real estate services industry has experienced a serious paradigm shift over the last decade, evolving to offer value-based, high quality services to clients on both the buyer and seller side of the equation.
Old models of real estate are getting pushed to the side as new and innovative ways to do business have taken their place. The “Flat Fee”, 1% (discount) agent, and other models have picked up steam and are being adopted at breakneck speed by savvy consumers who realize the potential value.
Truth is, real estate is what we would call a “volume” business. The more homes a real estate agent sells, the more money they make. Old models result in an average agent selling less than ten homes a year, with top producers hitting around fifty.
By contrast, 1% agents can earn more clients by offering a competitive rate that doesn’t skimp on services. They utilize battle-tested processes, plans, strategies and tactics that are systemized and sometimes automated to streamline their efforts. This allows them to offer serious benefits without sacrificing client care and support.
Benefits of Selling Your Home with a One Percent Commission Realtor
Sell Your Home for Less But Make More – Sounds counterintuitive right? Because a One Percent Commission Realtor charges less, you save money at closing. This allows you to sell your house at a lower asking price, thus making it more attractive to buyers, while still coming out ahead at closing. Best of all, listing low means you’ll likely get MORE offers, and the potential for a ‘bidding war’ amongst the prospective buyers, thus raising the sales price even higher.
Full Service (mostly) – In many cases, a one percent commission Realtor will offer a very similar range of services as does a “full service” full-priced agent.
Money – This one is a no-brainer. Do the math on your own property to see just how much you’d save. It’s likely a LOT. That said, always compare this against the services offered and see what you are willing to sacrifice (if anything) to save on commissions.Learn how to sell a house and save thousands with ISoldMyHouse.com.
How To Find a Reputable One-Percent Commission Realtor?
Ok, so you’ve decided to look into hiring a One-Percent Commission Realtor. But where do you find one?
You have a few options:
- Check out our agents. We can put you in touch with reliable services to help you market and sell your property for top dollar fast.
- Negotiate fees with a traditional real estate agent
- Search online for discount brokerages online that specialize in 1% or discount fees
What Services a 1% Commission Realtor Must Offer
Just because you’re getting a deal doesn’t mean that you should compromise on the “must haves”.
1. Pricing Assistance
All 1% Commission Realtors should provide a comparative market analysis and corresponding advice and consultation on pricing your home to sell.
2. Professional Marketing
Marketing is a pillar of a Realtor’s game plan. You’ll want to make sure that your property will be adequately promoted and marketed in a professional manner using techniques with a track record of success.
3. Negotiations and Contracts
Unless your job involves you negotiating and scouring over legal contracts for a living, this is one area best left to the professionals.
4. Escrow & Closing
The escrow and closing process are two aspects of a real estate transaction that need to be meticulously handled.Learn how to sell a house and save thousands with ISoldMyHouse.com.
Alternatives To A Discount Real Estate Broker
For Sale By Owner
The FSBO (for sale by owner) route, as the name suggests is one that involves the “homeowner” selling the property on their own. Although this method offers the biggest cost savings, it comes at a price.
Those selling their own homes are responsible for every aspect of the sale from pricing and listing for sale, to hosting open houses, marketing the property, negotiating a deal, reviewing contracts and more. It’s a lot of work, and in many cases, you’ll still want to hire an attorney to handle drafting and reviewing contracts. In some states, a real estate attorney is required by law.
Selling To A We Buy Houses For Cash Company
Companies that buy homes for cash offer a fast, simple and streamlined method of selling your home. By cutting out lenders, cash buyers can often put literal cash in hand of the seller in days.
That said, they often offer this convenience at a price. Cash buyers are generally looking for investment properties that they can sink more money into in order to increase its value before resale.
As such, they are a great option for those looking to sell a home “as is” without needing to make repairs.
Selling To An iBuyer Company
iBuyer companies are a relatively new player in the real estate market. An iBuyer Company leverages technology to analyze your property based on market data in order to determine a fair market price. This is known as an automated valuation model (AVM).
Based on this valuation model and provided pictures by the seller, iBuyers will make an offer to purchase the home (often sight unseen). This is a cash offer and is often non-negotiable.
Using a Traditional Real Estate Broker
Traditional real estate brokers are a tried and true method of selling a home. They offer a full range of premium services and support. In exchange for this “white glove” experience, clients can expect to pay full commission rates.Learn how to sell a house and save thousands with ISoldMyHouse.com.
Final Thoughts Regarding 1% Real Estate Agents
The one percent real estate agent model has skyrocketed in popularity, with no signs of slowing down soon. As homeowners look for new and innovative ways to market and sell their home at a discount, the 1% agent model will no doubt continue to be a popular option to consider, just be sure to ask the right questions before hiring an agent.
As technology continues to improve and assist agents with streamlining processes and leverage marketing opportunities, outdated real estate methods will fall to the wayside or be forced to evolve with them.
About the Author: Kris Lippi is the owner of ISoldMyHouse.com, the broker of Get LISTED Realty and an official member of the Forbes Real Estate Council. He actively writes about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, Fox News, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as other major websites. Read more about us here.