Real Estate Matters: Savings with discount brokers not as high as you might expect

October 4, 2013

I’m considering selling my home, and feel that it’s a desirable home at a good price point. But I also believe that since my home is so sellable and the local market is so strong right now that I should be able to sell with a discount broker.

But I have a few questions. If I use a discount broker to list my property, will other agents show it? Is the commission split in half? What’s the catch?

Discount brokers price their services in many different ways. Some give the buyers’ agent a full half commission and take either a flat fee, a flat fee plus a small percentage of the sales price or a smaller-than-normal percentage for themselves.

And with pricing being all over the map, you have to ask a lot of questions. While the level of service varies, keep in mind that a discount brokerage isn’t really designed for a lot of hand-holding. And that means first-time or nervous sellers should think carefully before signing on.

When you haven’t done something before, you tend to need more help. But if you’re experienced, using a discount broker can help save some money.

In many situations, you might not save that much money using a discount broker. If you would typically pay a 5 percent commission to a full-service broker, you’ll still pay about 2.5 percent to the buyer’s agent plus another 1 percent to the discount seller’s agent or whatever amount you have agreed to pay. There may be additional fees for signage and documentation.

Your savings might be 1 to 2 percent, or $1,000 to $2,000 on a $100,000 house. Some discount brokers advertise their base service for several hundred dollars. That might include only listing your property on the local multiple listing service. But that’s probably all you’ll get. So, if you decide to go that route, you might consider yourself to be a for-sale-by-owner that has listed the property on the local MLS. Be aware that if you don’t plan to pay the buyer’s broker a fee, you might not see much action coming from other brokers that see the listing.

There are several online services that allow you to sell your property without an agent. You can even list your property (for a fee) in the MLS for your area and that service will then upload your property to all of the big listing Web sites like Trulia and Realtor.com. You can log onto Zillow and add photos of your property and write up the house.

We haven’t suggested listing by owner in a while, but the market is so hot in so many places, that if you feel inclined to take on the entire job of being seller and agent, the rewards might be worth it.

Just don’t underestimate the work. When you’re selling your home, even if you have an agent by your side the entire time, it’s still pretty time-consuming.

Ilyce R. Glink ’s latest book is “Buy, Close, Move In! Samuel J. Tamkin is a Chicago-based real estate lawyer. If you have questions, you can call Glink’s radio show (800-972-8255) any Sunday from 11 a.m. to 1 p.m. Contact Glink and Tamkin through the Web site thinkglink.com.

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