In August 2024, a legal settlement was reached regarding commissions paid to real estate agents representing home buyers. As a result, home buyers in most markets will now be required to sign agreements with their agents before touring homes, and buyers will have the opportunity to negotiate their agents‘ commissions. This change will have a significant impact on both home sellers and home buyers, as it introduces a new level of transparency and negotiation into the real estate market.
One of the key costs associated with selling a home is the commission paid to the real estate agent. While traditional listing agents typically charge between 2% and 3% of the home’s sales price for their services, there has been a rise in popularity of brokerages that offer significantly lower fees. These discount real estate brokerages use the internet to connect sellers with agents who are willing to accept lower rates in exchange for a higher volume of clients.
It is important to understand the differences between real estate agents and brokers when considering working with a discount brokerage. Real estate agents assist clients in buying and selling homes, while brokers have additional training and licensing that allow them to oversee other agents. Both agents and brokers can work for brokerages, but brokers also have the option to work independently.
Discount brokerages operate by connecting sellers with agents who are willing to accept lower rates, often in exchange for a larger volume of clients. The level of savings and the payment structure offered by these brokerages will vary depending on the brokerage chosen. Some examples of discount brokerages include Clever Real Estate, which matches customers with local agents who agree to commissions of 1.5%, and Redfin and Houwzer, which use in-house agents that charge commissions as low as 1%.
When considering working with a discount brokerage, it is important to ask about the details of the services offered. Some discount brokers may forgo certain time-consuming services in order to take on more clients, while others may claim to provide the full range of services offered by traditional agents at a reduced fee. Services that may not be included by some discount agents include home staging, personal attention, and extras such as brochures and multiple open houses.
Researching company websites, reading consumer reviews, and understanding local market conditions can help sellers make an informed decision about working with a discount brokerage. In a hot real estate market where homes sell quickly, sellers may not need all of the marketing and extras traditionally provided by a real estate agent. However, in a buyer’s market where homeowners are competing for buyers, sellers may prefer to work with an agent who has fewer clients and more time and resources to devote to their listing.
When considering working with a discount brokerage, sellers should ask potential agents about their track record, any limits on the services they offer, and their knowledge of the local market. It is also important to inquire about any credits or incentives for which sellers may qualify, such as discounts through networks like Homes for Heroes.
In conclusion, the recent legal settlement regarding commissions paid to real estate agents representing home buyers has introduced a new level of transparency and negotiation into the real estate market. Sellers now have the option to work with discount brokerages that offer lower fees in exchange for a higher volume of clients. By understanding the nuances of what a discount real estate brokerage can offer, sellers can make an informed decision about whether this path is right for them and their home.