Straight Facts About Low Commission Real Estate Agents


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In today’s market, real estate agents charge a commission fee that typically runs from five to seven percent of a home’s sale price. However, as new real estate models become more popular and widespread, commission rates have started to experience a decline and so-called low commission real estate agents have emerged.

In this article, we will look at the current reality of the real estate commission structure, explore the topic of low commission real estate agents and discover if you should consider using one’s services the next time that you decide to sell a property.

So what is the current state of low commission real estate agents?

Nowadays, sellers have the option of working with lower commission real estate agents who only charge a flat-fee, offer a discount, provide only MLS-services, or work out of a new discount real estate brokerage.

Any time a home sale occurs, there are two types of commissions that must be paid: the buyer’s agent commission and the seller’s agent commission. If a Realtor is lucky enough to serve as a seller’s agent and find the buyer for the home, then they will receive both commissions. In most areas, a seller will pay six percent in total real estate commission (three percent to the listing agent and three percent to the buyer’s agent).

Sellers usually think that a real estate commission percentage is written in stone and non-negotiable but in some situations, this is not the case and the fees are negotiable. Although many larger brokerages will refuse to deviate from the fee, others might consider it. In fact, if you shop around then you can find a low commission agent or even an online broker who charges substantially less.

We Negotiated Lower Realtor Fees For You

ISoldMyHouse.com has negotiated significantly lower commissions with some of the best real estate brokers so you don’t have to. We will match you with a top local agent in your area that will sell your house (without sacrificing service) for a much lower fee!

 

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What Is A Low Commission Real Estate Agent?

 

A low commission real estate agent is the same as any other real estate agent, but they charge a cheaper commission rate which can often save you up to half the typical six percent commission charged by other agents. Saving three percent could save you thousands.

  • Low Commission Real Estate Agent: You might hesitate in choosing a low commission real estate agent because you are worried about their qualifications. However, a low commission real estate agent is just like other traditional agents. They are licensed but only charge a lower commission. Depending on the agent, they might offer full services, or, in some situations, they provide only limited services for a lower commission. You’ll need to discuss exactly what services you are receiving prior to deciding.
  • Flat Fee (Discount) Brokerages:  With a flat fee (also called a discount brokerage), you will receive a similar service, but it might not be identical. You’ll also need to discuss exactly what services you are receiving prior to signing a listing agreement.

In most cases, the low-cost commission is only altered for the seller’s agent and not the buyer’s agent. The buyer’s agent continues to receive their standard 3 percent. Only the discount brokers take a lower fee on the listing side. The reason behind this is to incentivize buyer’s agents to continue to show your home instead of other homes. In this way, you don’t have to worry about your property receiving under-exposure and you continue to get the same level of service.

1) Low Commission (Percentage)

Sometimes lumped in the general category of discount agents, low commission (percentage) listing agents are in no short supply these days.

Typically they will be paid a 1% or 2% listing fee and offer a set package of services for selling your home the same way as a 3% listing agent (6% total).

Many of these agents offer a full range of services similar to a traditional real estate agent, but with a little less hand-holding.

Below is a table showing common home prices and the cost of a traditional realtor commission fee vs. a low realtor commission fee. As you can see, there are substantial savings involved if you opt to take the low commission realtor option.

Home Sale Price  Traditional Realtor  Commission Cost * Low Realtor Commission Cost **
$150,000 $9,000 $6,000
$250,000 $15,000 $10,000
$350,000 $21,000 $14,000
$450.000 $27,000 $18,000
$550,000 $33,000 $22,000
*Based on 6% total commission
**Based on 4% total commission

2) Low Commission (Flat Rate)

In certain markets, you will have the option of a low commission (flat rate) agent. The agent will sell your home for a flat (fixed) rate that will usually range from $3,000 to $6,000 (although other rates are often agreed upon). Typically, the flat rate is set based on the value of the home and the level of service that the agent will be providing. In such a situation, there is no percentage listing commission. Everything is simply placed as a flat, predetermined fee.

If you decide to go with a flat rate agent then you’ll want to take the time to learn about the level of service that you will be receiving prior to hiring the agent because it can vary significantly between providers. Always take the time to look over the contract closely so you know what to expect. Certain services such as the initial consultation, any professional photography, signage placed in the yard, advertising, scheduled showings, various types of marketing, and more may or may not be included in the flat fee. If they are not included, they might bend end up paying extra for such services which could cost you a substantial amount of money. It is imperative that you read the fine print any contract that is made with a flat fee agent.

Almost always, a flat rate real estate agent will end up listing your home on the MLS so that the listing is automatically shared with other agents on the database and websites. The MLS is crucial because it puts your listing’s information on websites and across the internet for widespread distribution so your property receives the highest level of visibility and you stand a far greater chance of getting plenty of showings so your house sells.

With a flat fee agent, you are frequently required to pay part of the fee upfront because it covers the expense of the marketing and any administrative expenses incurred by the brokerage or agent. The remainder of the flat rate is paid at closing. However, on some rare occasions, the entire amount must be paid upfront. You’ll need to go over all the information prior to signing any papers or entering a contract with the agent.

Also, remember that with a flat rate agent, you remain responsible to pay the buyer’s agent fees which will range from 2.5 to three percent.

3) The Hybrid Model

Recently hybrid real estate brokerages have emerged. They are a sales alternative that charges flat fees instead of commissions. Also, they offer different a la cart services. If you want perks when selling your home like a glossy brochure or an open house, then you will be expected to pay extra with a hybrid brokerage versus a traditional real estate office. Also, the fees vary dramatically between hybrid brokerages.

The term ‘hybrid’ was coined because the brokerages provide services of traditional brokerages with discount firms. Certain things like advertising and sale negotiation are different. Commissions are adjusted, especially if it is a down market or for certain customers (although traditional brokerages have been known to do these practices too). You’ll encounter many different models when shopping for a hybrid brokerage firm.

4) The 2-for-1 Model

The 2-for-1 model eliminates listing fees. Basically, you will have a real estate agent who offers to sell your house for free but there is a stipulation. The requirement is that you buy a house from them too so that they can then collect a commission. As a seller, you will receive free representation along with no-cost marketing. Your house will be added onto the MLS and be actively listed on other real estate websites. You might even get professional photography and, in some cases, videography. Yard signs and all the required real estate contracts are also executed.

Basically, a seller must become a buyer and use the same real estate agent to purchase their new house. Without a doubt, the seller who is selling and buying will save a great deal of money and often pay absolutely no commission. The 2–for-1 model is rare and difficult to find but it does exist.

5) No Commission (Flat Fee MLS)

The no commission (flat fee MLS) is a no-frills service that lets your home be listed on the MLS and all real estate websites and databases but provides no other services. With no listing commission, the house is usually sold as a ‘for sale by owner’ listing. The fee that is paid is basically used to list the property on the MLS and other websites. It is not used for anything else. This form of service is often offered online, and you can go through the entire process using your computer.

Once the house is placed on the MLS, it will stay on for the specific time allotted by the listing agreement. When you decide to go this route, the home seller is always referred to as the ‘selling agent’ and is responsible for marketing the home and taking care of all necessary contracts. You’ll need to oversee yard signs, photography, advertising, and all final negotiations that involve the buyers and the buyer’s agent. In addition, the seller must pay the buyer’s agent’s commission fees.

If you decide to go with a no commission home sale, then you’ll need to take care of just about everything yourself, so you’ll need to have some knowledge of the process of real estate sales in your area. It is an excellent option if you have the knowledge, skills, and time. You can save a great deal of money.

6) Buyer Rebates

Buyer rebates (also called commission rebates) happen on the buyer’s agent side. The real estate agent who is working with the buyer agrees to return a portion of their commission back to the buyer. The buyer then has the option of putting his money towards a down payment, buy points on a mortgage, pay closing costs, or take a regal of cash at the time of closing. Buyer rebates are not legal in states (as of publication they are legal in only 40 states). You’ll want to check the state’s website for real estate regulations so you can see if it is legal in your location. With this type of real estate broker, the seller is usually not impacted because they experience no discount.

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Low Commission Real Estate Agents Vs Traditional Realtors

 

To save money, many home sellers are considering if they should go with a low commission real estate agent vs a traditional agent. Nowadays, low commission agents are not a scam and they are a very viable option. Clearly the main consideration is that you will pay a lower cost than using a traditional agent.

However, with a traditional agent you will receive an entire package of services that you might not get with a low commission agent such as the following:

  • Work closely together
  • Offer advice
  • Print brochures and flyers
  • Schedule photography
  • Place lockbox on property
  • List on MLS
  • Market home
  • Place sign on property
  • Schedule all inspections
  • Negotiate repairs
  • Handle the closing
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Are Low Commission Real Estate Agents Reputable?

 

Yes, low commission real estate agents are reputable. However, as with all business transactions, you’ll always want to research by reading reviews, checking their performance and asking agents the tough questions.

How To Verify a Low Commission Agent Is Reputable

  • Do they provide information detailing the exact services your will receive?
  • Is their website user friendly and informative?
  • Search the internet to check out their online presence
  • Do they have positive reviews?
  • What does their current listings and previous sales history look like?
  • Are they a member of the Better Business Bureau?
  • Are they a leader in the real estate industry?
  • How long have they been active in the real estate business?

Please Note: ISoldMyHouse.com has negotiated lower commissions with traditional real estate brokers so you don’t have to. We will match you with a top local agent in your area that will sell your house (without sacrificing service) for a much lower fee! Check out how it works here.

Can I Negotiate Real Estate Agent Commission Fees?

 

Historically, it was supposed to be a no-no to negotiate commission fees. The fees were set by the brokerage. Although, in slow times or when there was a significant downturn in sales many brokerage firms would offer lower commission rates. In recent years, the practice has changed, and more people are coming forward to try to negotiate real estate agent commission fees with an agency. In some cases, they will go lower but in others they will hold firm.

We Negotiated Lower Realtor Fees For You

ISoldMyHouse.com has negotiated significantly lower commissions with some of the best real estate brokers so you don’t have to. We will match you with a top local agent in your area that will sell your house (without sacrificing service) for a much lower fee!

 

Find An Agent Near You!

 

Alternatives To A Discount Real Estate Broker

 

If you have decided to not go with a discount real estate broker, then you do have additional alternatives. Some options might work better than others depending on your unique circumstances.

For Sale by Owner

A for sale by owner (FSBO) option means that the seller must take all on all the responsibilities involved in selling the house. This includes inspections, showings, appraisals, negotiations, and marketing. The one downside to FSBO is that your home will not be listed on the MLS, so you’ll need to figure out how to market the house.

To market your home, you might want to try the following:

  • Zillow: This is a leading online real estate marketplace where buyers and agents list houses.
  • Craigslist: A free classified ad website, it features many things like housing, jobs, items, community, gigs, discussion boards and more. It is free to list a house on the site. However, you’ll have to list the house in each individual state and region which can become time consuming if you are trying to reach a large audience.
  • Facebook Marketplace: Facebook Marketplace is a place where you can sell your home in a specific region.

Selling to a We Buy Houses for Cash Company

There are many legitimate ‘we buy houses’ companies such as the We Buy Ugly Houses company. Most of the leading companies have a website that you can visit to enter all of the information about your home but some require you to call a phone number to talk directly with one of the buyer’s representatives. On rare occasions, an investor or some other individual will also advertise that they are willing to buy houses fast for cash.

Once you contact the buyer, they will then schedule someone to come view your home or they will make a cash offer without even seeing the house. The offer is always less than fair market value but it’s a great option if your home requires a great deal of work to sell and you need to make cash quickly. Usually, the company buying the house for cash will take on all the needed repairs on the property, so you don’t have to worry about it. Also, such sales involve a cash close so the close is relatively quick. In many cases, an all-cash close can take place in 14 days or less.

Selling to an iBuyer Company

An iBuyer is somewhat the same as ‘we buy houses for cash’ company in many ways. The iBuyer is always an online company that purchases homes. You enter all of homes information into the database and they will either give you a cash price immediately or have a representative contact you for a walkthrough. Nowadays, iBuyers have become exceedingly popular for anyone selling a difficult property that requires expensive repairs or for someone who need to move their property quickly for cash. Choosing and using iBuyers is remarkably simple. Check out Opendoor, Zillow Offers and even Redfin for solid options in this category.

Using a Traditional Real Estate Broker

Despite the many home sale options such as using a low commission agent, many sellers still opt to use a traditional real estate broker. Usually, they choose to use a real estate broker because they want someone who is skilled in home selling and who will handle the sale forms from start to finish. Sometimes, sellers just don’t have the time to handle things or the process is too complicated in their area. Having a traditional real estate broker handle the sale and listing the home on the MLS offers much-needed peace of mind and convenience. However, please remember that with a traditional real estate broker then you need to pay a full commission rate.

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