How it Works
Why not use a Discount Realtor?
Under the traditional model of a Real Estate Company, the listing and the selling Realtor Broker split the commission of either 6% to 7% of the price of the home or commercial property. Some of the major realty companies that I’ve worked for have also charged a transaction fee of $500 on top of the regular commission fees. For an example if you take a $500k home or commercial building and calculate the commission, $500k X 6% = $30,000 plus the transaction fee = $30,500 – this would be your total commission.
Last year real estate commissions paid to Realtors was estimated at 50 billion dollars according to besmartree.com. So this is how real estate commission is figured. Since the commission comes out of the sale, assuming you have no mortgage and your house sold for $500k, you would receive $469,500 instead of the full $500k. If you have a mortgage this would also be deducted.
Realtors have control over the most important tool in selling your real estate property, the Multiple Listing Service. The M.L.S. is the top producer in getting your home or commercial property sold. Newspaper ads, open houses and fliers do not compare to the M.L.S. According to the National Association of Realtors, 87% of all real estate is sold through the M.L.S.
Real estate commissions are negotiable but if you talk to the major realty companies they won’t own up to it. They have a standard based fee commission of 6%. When you mention “discount realty” to a “major realty company” the most common answer you will receive is “You get what you pay for”. How can a commission based on percentages be anything besides a seller-rip-off? The time and services provided by a standard fee broker do not increase based on the property value – that is absolutely ludicrous!
Now, why use a Discount Realty?
They have the same required state broker’s license and are bound by the same code of ethics.
There is several type of Discount Realty’s – I will tell you about them. Some will charge a set fee to sell your home which is based on a per transaction bases; example: Assist-2 Sell and Help-U-Sell
Flat fee listings (which seems to be a growing trend): These companies charge a “listing fee” between $200 and $600” to list your house on the M.L.S. I feel this is very important. Some will also belong to a listing service that will list your home on all the major websites like Zillow, Trulia, and Realtor.com. This is what we do at D&M Discount Realty, as it is the best tool to sell your home. As I stated prior, according to the National Association of Realtors 87% of all real estate is sold from the M.L.S. Another important fact that I find interesting is; according to the National Association of Realtors found that 92% of buyers use the internet to start their search process for a new home.
There some national Flat Fee companies, but I feel that you will have better results using a local flat fee broker. They are more in tune with the local housing market. At D&M Discount Realty we offer a free market analyses which helps you price your property. As well as a list of all the resources needed to help sell your home, example: home inspectors, handyman services, Mortgage Companies, staging companies, etc.
You will be asked to sign an Exclusive Agency Listing contract: A contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller and the seller agrees to pay a commission to the buyers broker if the property is sold solely through the efforts of the buyer broker. If the property is sold solely through the efforts of the seller, the seller is not obligated to pay a commission to any broker. In signing this contract you will be asked how much commission you want to pay the buyers broker if a real estate agent sells your home. My suggestion would be 2.5%. I have tested 3% vs 2.5% and have found no difference in the time it takes to sell a home. Please remember commissions are negotiable, if you want to pay more you can?
When you agree to a flat fee contract you will also agree to show your home yourself to prospective buyers, but you also reap the rewards too; no commission if you sell your home yourself. If a realtor brings a buyer, he will show your home and if the realtor is successful and brings you a buyer you will owe this broker a commission of 2.5% or 3% that’s a whole lot better than 6%.
Paper work: At D&M Discount Realty we offer a service that we will do all of your paper work for $500. From the start to closing, price negotiations, repair notices, seller’s disclosures forms, opening escrow and review of closing documents.
Now let’s check the cost difference
The best scenario is that you sell your property yourself. Your cost on the same $500k home = your cost if you use D&M Discount Realty is $239. To list your home on the M.L.S. and all the major websites and $500 if you want us to do the paper work. Total cost $739 vs the 6% broker commission and transaction fee cost of $ 30,500. A savings of $29,821!!! Enough to buy yourself a new car or a great vacation!!!! You will also have closing cost, but you will have the same closing cost on the 6% standard broker.
The second best scenario is a realtor sells your home. Your cost if you use our company on the same $500k home is 2.5% to buyers broker = $12,500, a $500 paperwork fee, a $239. Listing fee, total cost is $13,235. A savings of $17,261 over the traditional 6% Real estate broker fee!!! Still not a bad deal!!! You can use it to pay some of your closing cost and still take a nice vacation!!!
Either way you look at it. It’s clear that Technology is changing the real estate Landscape. Not everyone has the time or wants the extra work to do the discount route, that’s why here at D&M Discount Realty we came up with the 1% listing fee. What we do is- we list your home on the M.L.S. and all the major websites, plus we handle all the showings and paper work for you. This is how it works; you agree to pay us a 1% listing fee and a 2.5% buyer’s broker’s fee.
So let’s check out the cost to you on the same $500k property: Selling cost $500k X 3.5% (1% to us 2.5% to buyer’s broker – total 3.5%) = $17,500. A savings of $13,000!!