For the masses, having a REALTOR list your home, work the phone calls, and handle the ton of paper that needs to be handled, schedule appraisers and inspections, does not equate to what they consider a unreasonably high commission. What is not added into that is the several different costs in selling a home. Marketing is the biggest, when on average it could be anywhere from $5,000 to $17,000 to do basic marketing, and with more advanced marketing it could cost more. You also have the massive set of tools that are put into the fold that are used like the Multiple Listing Service, Syndication, Social Media Marketing, and standard marketing or sharing of data between realtors. You also have additional costs that come with it in the photography, Matterport, and various other video creation. It can get quite expensive.
Then, in comes the 1% listing service. The costs are still there to take care of all of that, however what happens is that if you have a $100,000 house you might be shocked to learn – your 1% listing fee ($1,000) is due as soon as you sign the contract, you are responsible for the entire marketing enchilada (much like a FSBO), and you don’t get any legal protection from Errors and Omissions. Oh, and by the way – you are on the hook for marketing, cleaning, inspections, title attorneys, social media, phone calls, the only thing the will do for you? Put it in the Multiple Listing Service.
But let’s break it down even more. Here’s a quick rundown of everything you’ll need to do with a discount brokerage:
- Prepare your home for sale
- Price your property right
- Stage your home
- Market your home
- Find qualified buyers
- Respond to serious buyers quickly
- Negotiate the deal
- Hire a real estate lawyer
- Finalize and file the correct paperwork
Seems like a lot, huh? You will pay $1,000 marketing fee just to have it listed. You do not get any kind of advisor to call because it isn’t selling, you get no professional representation. And if your listing has a un-truth in it such as “AC is like new” and is 30 years old – your on the hook.
The other low-cost listing service is the flat fee limited. What they do is list it on the MLS, take some pictures, do minimal marketing and by the way, you are still on the hook for most of the other items listed above.
Both of those options come down to listing on an MLS, and then you are basically a For Sale, By Owner. But if you want to have expanded services, then you may be required to pay a fee for nearly everything that you request.
Discount Brokerages mean one thing. Discounted and Limited Services. Plain and simple.
While price obviously needs to be a consideration when evaluating discount or 1% listing fee services, the most important thing to assess is how much value you’ll be getting in exchange for the fee. When buyers know you’re working with a discount realtor, they’re more likely to submit lowball offers and play hardball at the negotiating table.