Since all brokers have identical legal qualifications and obligations, the development of discount and flat rate brokers is a positive sign - if only because cracks in the hourglass system of competition have begun to appear.
However, the purchase of any service requires an exchange of values. Price alone may not be a sufficient inducement to use alternative brokers if other conditions are not acceptable.
Alternative brokers are distinguished not only by their pricing structure but by their cooperative emphasis. A seller may be expected to show the house or erect signs provided by the broker. The broker should contribute specialized services such as contract preparation, marketing skills, help with financing, and possibly paid advertising.
The cooperative aspect of alternative brokerages raises a very difficult issue. There is no practical method to determine when a home has been sold as a result of the exclusive efforts of either the seller or broker. Given this situation, and alternative broker will seek assured compensation in the event of a sale during the listing period - something which can only be done with an exclusive right to sell listing contract. Sellers in this situation should be certain to exclude known potential buyers from the listing agreement.
While increased competition can only benefit consumers, alternative brokers are not an unmitigated blessing in all cases. Sellers should be aware of several practices when dealing with alternative brokers:
Relationship: Is the alternative broker tied to a full-fee broker? There is nothing wrong with this except in cases where a seller, if dissatisfied with the efforts of the alternative broker, finds that during the listing period the only other choice is to use the related full-fee firm. This problem is usually heightened by a long listing agreement.
Designation: Some alternative brokers may be self-described as "home-owners associations." Such designations, when not accompanied by adequate clarification, may unnecessarily cloud the true role and purpose of these organizations. If a "homeowner association" wants to help sell your house you might ask how often they have elections and for copies of their newsletter and charter.
Hidden Costs: Some alternative brokers may charge additional fees for specific services. Be certain that you are aware of all potential costs.
Peter G. Miller has taught a course in how to sell houses, with or without out brokers.