WHAT IS A "DISCOUNT BROKER" AND FROM WHAT IS IT DISCOUNTED?
This post inspired by a post by an ActiveRainer - Discount Real Estate Brokerages And Why They're A Bad Idea . The title was changed to include FSBOs - For Sale By Owner & Discount Real Estate Brokerages...
Seems to me that the pejorative "Discount Broker" when applied to brokers who charge less then most is no more and no less than a way to disparage brokers who, while operating a legal business, simply charge less for what they do than the traditional listing broker who offers "Full Service".
If the consumer wishes to perform some of the duties associated with listing their home for sale, why does that reflect negatively on the listing broker?
BTW, lest anyone think I'm favoring one business model over another, my company has no horse in this race because we are not a listing company. We are a Buyers' Brokerage. Ah ha! "One of them", I heard snickered.
DOES DISPARAGING YOUR COMPETITION GIVE YOU MORE CONSUMER APPEAL? It appears, no, it is perfectly clear that many real estate entities practice competition through negative advertising. Does that appeal to the average home buyer or seller? I don't really know. I know it works for political advertising, not a model that most REALTORS® would follow or one with which we would want to be identified. In fact, disparaging another REALTOR® violates the COE. Of course disparaging a business model is different, isn't it???
What is a Discount Broker? I just reviewed 11 Help You Sell web sites and the word "discount" is not included. So, on what fact situation can they be accused of being a "discount broker" in the pejorative??
What is Full Service Broker? Many traditional brokerages and their agents advertise Full Service. Yet, we regularly see reports by agents, brokers, buyers and sellers that they or their agent didn't do this or that and left the consumer to "help themselves" in matters of appraisals, home inspections, pricing, brochures, advertising, settlements, etc. These agents/brokers fail to perform certain duties in the interes of "risk reduction". Sadly, when an agent or broker avoids duties they increase the risk of damage to their client. Where is the line "full service" and "less than full service". Or, should their listing contract disclose that the broker charges a full service fee but will limit representation to XYZ??
NOTE: Many agents and brokers today employ an agreement for "Fee for Service" which charges specific fees for specific services. These companies clearly and admittedly offer less than "full service" yet they do not receive the negative advertising reserved for listing companies who charge flat fee listings or who simply charge less than most brokerages.
HA! About the only thing disparaged more than the "Discount Broker" is the "FSBO", almost as though the home owner who wishes to sell their home without the help of a real estate broker is a threat to the very existance to all listing agents and brokers.
So, kindly explain to me what identifies a "discount brokerage" and how is it different from a "full service" except that it usually has a lower fee to the consumer and a listing agreement that states clearly the services to be performed for $XXX and the additional fees for XYZ.
So, back to the beginning. "WHAT IS A "DISCOUNT BROKER" AND FROM WHAT IS IT DISCOUNTED?"
I believe I have the answer. The fee is less than what the complaining agent or broker charges, therefore it must be discounted. Mmmm. Seems to me that, if the fee is what it has always been, albeit lower than average for all listing brokers, it isn't "discounted".
It is simply what it is, lower than most.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
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