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Traditional vs Discount Real Estate Brokers

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Traditional vs Discount Real Estate Brokers

Apart from the potential commission savings, many of the differences between traditional and discount real estate brokers can be disadvantages for home sellers. Selling with a discount brokerage can have its disadvantages, such as:

  • Less support and service during the sale.
  • A limited selection of agents and fewer experienced team members.
  • Some discount brokerage agents are salaried. This can mean less incentive than a commission-based agent.
  • Discount brokers can have bad reputations, making it more challenging to sell your house.

Some discount brokerages offer less support and service

Knowing what a discount real estate broker does to make up for their reduced rates, such as having more clients per agent than traditional brokers is key to understanding how they can save you money when selling your home.

If a single agent has to handle 3-4x as many customers as an average realtor, it will limit their ability to provide the same level of support and attention.

Discount real estate brokers often use a team-based model instead of traditional 1-1 service models. They handle all aspects of the sale remotely via mobile apps and online dashboards.

Avoid limited-service brokers masquerading as full-service brokerages

Discount real estate brokerages, such as Door.com, don’t offer dedicated or in-person support. Instead, the entire process of selling your property is done remotely, either online or by phone. Their agents will advise pricing, staging, and disclosures without seeing the property.

It all depends on your personal preferences and how effective the company’s technology and approach are. However, this does not mean you will get less expert, hands-on support.

When there are fewer agents available — the agent experience is mixed.

Redfin, the largest discount real estate brokerage, has a limited number of agents in each market. As a result, you don’t always control who you work with, and you could be given to a newly licensed agent.

Prioritize the best agent over the lowest-priced

Although you may want to get the lowest rate possible, you must find the right agent with the right experience. You want to find a person who is a good fit for you and an agent with a lot of experience selling homes in your price range and locality.

If a broker has only one or two agents in your local area, the chances of you checking all boxes are slim. You could pay more to be paired with an agent who has little or no experience or with the wrong kind of experience.

 

Salaried agents may not have the same incentive

Discount brokerage agents are usually full-time or part-time employees and earn a salary.

Traditional realtors work primarily on commission. They are paid only if the sale is successful. Therefore, they are motivated to sell your home quickly and at the highest possible price. 

On the other hand, salaried discount agents get paid regardless of whether or not your home sells. Some companies offer competitive pay and bonuses. In addition, some agents who work for discount brokerages will go above and beyond to help their clients.

This is simply another risk that you should consider when making decisions.

Negative reputations of discount brokers can be a liability for your sale

Brokers that offer discount real estate services are disrupting established pricing norms. This is directly impacting traditional agents’ income.

It’s not surprising that many traditional agents aren’t warm and fuzzy about discount brokerages. Unfortunately, this negative sentiment can be a significant hindrance to your ability to sell your house quickly and at a high price.

Some traditional agents have stated that they will actively steer their clients away from discount brokerage listings.

These brands may have the ultimate goal of lowering costs for consumers. The goal is to sell as quickly as possible and make as much profit as possible.

These companies are to be commended for their cost-cutting efforts. Nevertheless, you might think twice about listing with a highly stigmatized company, at least temporarily.

While some of these differences can be disadvantageous, others depend on individual factors such as customer service preferences and experience.

Not to be overlooked is that every discount brokerage in real estate is unique. As a result, each company has its unique risks and benefits. If you are considering hiring a discount real estate brokerage or agent, shop around and compare several options to ensure you get the best value for your needs.

 

The bottom line: Should you use discount brokers?

A discount broker is a good option for most home sellers. Brands like Change Realty provide great customer service and big savings. We recommend discount real estate brokers because they offer a similar experience as working with traditional realtors. This makes them an excellent choice for most people.

Nevertheless, there are some discount brands that you should not consider. Companies that offer fewer services and less support than traditional realtors should be avoided. Although these “limited-service” brands may advertise low rates, you will be faced with risky service compromises that could limit your savings.

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