The Downfalls of Hiring a Discounted Brokerage

Selling a home or hunting for a house can be an overwhelming process. And while discount real estate websites that promise refunds or credits can be a helpful resource and seem like a good value proposition up front, they tend to fall short in many ways. In this article, we’ll take a look at the major differences between these discount broker sites and professional real estate agents to help you make an informed decision as you prepare for the buying or selling process.

It won’t come as a surprise to anyone that most buyers and sellers are now starting their search online when they decide to make a move. As the 2016 National Association of Realtors® Profile of Homebuyers and Sellers report says that “for 44% of recent buyers, the first step that they took in the home buying process was to look online at properties for sale.”[1] Though looking online offers a nice starting point and a chance for buyers to start to get a feel for their desires in a home, it can only take you so far.

5 Things You Should Know Before Using a Discount Broker Site:

1) You will work with more than one broker

Most sites have a different agent for each listing which means there will be no continuity from showing to showing, and you may end up having to repeat your wants and needs over and over again. These agents are essentially there to help you access a property, and when you do decide to make an offer, you will be redirected to yet another agent for assistance.  

2)  Scheduling can be a headache

If you want to tour multiple properties, it is difficult to accomplish in one day, as scheduling the appointments online offers limited time slots. This can be especially frustrating if you’d like back-to-back appointments within one neighborhood or area.

3) The offer process and negotiation or lack thereof

Some people choose discount broker sites because they know what they want to offer and just need someone to “write it up.” But it’s important to know that discount broker sites are incentivized by customer service, so you may not be getting accurate advice. In a home purchase or sale, thousands of dollars can be lost. For buyers, an experienced broker will negotiate terms and provide sound advice to help provide an outcome that wins. For sellers, an experienced broker would not leave money on the table by not having a tailored and strategic marketing plan.

4) There are no full-service agents

Oftentimes discount broker sites hire agents to work exclusively with buyers or sellers, which narrows the scope of their knowledge and experience. The benefit of working with a professional and experienced broker is that they understand both sides of the process and provide invaluable information on what you need to succeed. Furthermore, because it's a numbers game for these brokerages, their agents are less accessible.

5) They tend to value quantity over quality

From a buyer’s standpoint, discounted brokerages are known for writing a lot of offers and winning few. Agents are overwhelmed as they write multiple offers and it becomes a game to see how many offers they complete rather than producing quality winning offers. They may not take the extra time to explain all of the forms, potential scenarios, or help you create a game-winning strategy. These agents also might not have developed relationships with listing agents, which often provide insight into what a seller is looking for. In today’s market, blindly writing an offer based only on your needs and wants without market insight or knowledge is often unsuccessful because our market is facing fierce demand and limited supply. Why waste the one shot you have at getting your dream home?  

PROFESSIONAL REAL ESTATE AGENTS

The benefits of hiring a licensed and professional real estate agent are many. We are able to instantly access listing information, which includes more insight on a property than what is publicly listed including offer review dates, whether a unit is owner-occupied, specific showing times and restrictions, and certain items a seller may be looking for. In today’s competitive market, these notes prepare you to help create a timely and effective offer. Moreover, we are able to access key documents including pre-inspection reports, sewer scope reports, seller disclosures, and other attachments that help our clients make informed decisions and allow for complete due diligence prior to making an offer, which becomes increasingly important when buyers are caught in a multiple bid situation.

On the selling side

Though a discount broker site seems like it will help decrease your expenses, having a true expert on your side will increase profits beyond what you’ll save using a discounted brokerage. On the selling side, consider the following scenarios:

Scenario 1: A discounted brokerage claims they can sell your home for $800,000 with a "refund" of $12,000.  Once you list, they go through a standardized process of listing and marketing based on their algorithms, print a few flyers and become the point of contact for any interested buyers. Due to a lack of a sound marketing strategy, the home could sit on the market for days, losing leverage and collecting another mortgage payment.  Because the Seattle market is hot, the home eventually sells but 40 days later.

Scenario 2: A true broker has toured and seen other homes similar to yours, and knows that a computerized algorithm is not everything: there are special qualities to your home and market demand means strategic pricing is key. They will go out of their way to create a tailored marketing plan with a variety of outlets including targeted digital advertising, broker’s opens and public open houses, videos and professional photography, and garner exposure across a global network.  The broker is not only the point of contact for interested buyers, but also becomes your champion, negotiating the best terms for you. The house sells in one week at $900,000. In this scenario, the broker may earn a higher commission but the seller accrues a gain much more than the $12,000 ”savings” from Scenario 1.

At the end of the day, the saying holds true that "you get what you pay for."  A driven, honest and experienced agent goes a long way in the field. Calyx is uniquely positioned to help clients with the purchase or sale of a home, working with unsurpassed integrity and a comprehensive approach backed by the brand heritage, award-winning marketing and white-glove service that only Realogics Sotheby’s International Realty provides.

Read more on how Calyx provides value for you in your real estate needs: Buyer's Guide & Seller's Guide

Thinking about making your next move? Contact me today for a complimentary appointment to discuss your next endeavor.

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[1] https://www.nar.realtor/reports/highlights-from-the-profile-of-home-buyers-and-sellers