DISCOUNT BROKER? HOW DOES A BROKER QUALIFY TO CLAIM THAT THEIR FEES ARE "DISCOUNTED"?

INQUIRING MINDS WOULD LIKE TO KNOW. . .

Just what is a discount broker??? 

Glenn Robert posts a very interesting article today about discount brokerage models, specifically Redfin. 

Seems to me that, to be a discount anything, there must first be an amount from which the fee is discounted.  Since all real estate commissions are negotiable, how can a fee be discounted until the fee is established?  Establish a fee and then discount it???  Is the fee established by the real estate broker?

EXAMPLE:

Broker Policy:  Our listing fee is XX% of the sales price.  (THEN), that fee can be discounted by offering a lower fee under certain circumstances.  To qualify as a discount listing office, sellers may be offered a fee schedule based on the services they wish to buy, such as:

MLS ENTRY ONLY.  Broker agrees to enter the home for sale in the MLS.  That's a very limited service for which there may be a specific fee, but does it qualify as a discounted fee? 

SELL A HOUSE AND BUY A HOUSE.  Seller agrees that the broker will also represent the owner/seller as a buyer's agent in the purchase of another property.

LIMITED SERVICES.  Buyer agrees to look at homes with listing agents or open house and only uses the "buyer's agent" when they have elected the home they wish to buy.  The buyer is looking for a walking keypad, not a buyers agent.

LISTING FEE DOES NOT INCLUDE BUYER'S AGENT FEE.  We see advertisements for broker/agent web sites that "discount listing fee".  The web site doesn't always specifically state that the discounted fee pays for the listing side only, ($1,500 discounted listing fee)!   It may be in the small print of the listing agreement that the discount listing fee doesn't include a co-op for buyer's agents.  GOOD LUCK WITH THAT!

BROKER POLICY often dictates minimum listing fees charged and co-ops offered.  With the discount brokerages, the fees are often small up front, but if the consumer wishes more services, the fee can be increased accordingly, if that broker offers the requested service such as:  attending home inspections, settlement meetings, etc. 

ACCORDING TO GLENN, and I'm sure he's correct, the broker he mentions, Redfin, is in the process of changing their business model to offer MORE SERVICES FOR BUYERS AND SELLERS!  Glenn further states:

"We (he and his broker) talked a little about the company and how they have slowly been changing their business model by rebating less to buyers, by offering more service to buyers and sellers"

WHAT'S THE MESSAGE HERE?  For all of the angst expressed over the years by the so called full service brokers about how to compete with the discount brokers, it appears that the discount brokers are now coming closer to the full service brokerage model and the comprehensive services offered by the majority of brokers/agents to manage the needs of real estate buyers and sellers, which is what most of us have been doing, are doing now and will always do. 

Fascinating:  Offering rebates to buyer to hit the road and find the home you wish to buy, then call me, is not appealing to home buyers as much as the traditional real estate agent who provides the home buyer with:

• Home search services (we're more than a walking key pad).
• Financing consultation and/or referrals based on the home buyer's needs.
• Competitive price evaluations for buyers and sellers.
• Contract services to prepare and manage the offer and negotiation for the buyer or seller.
• Managing home inspection services.
• Managing escrow and closing services based on the buyer and seller needs and local customs.

Most experiences agents and brokers establish their fees for buyers, sellers and referrals without discounting.

FULL SERVICE REAL ESTATE OFFICES WILL EARN FULL COMMISSIONS FOR OUR SERVICES TO OUR BUYER AND SELLER CLIENTS.

                                                                             

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988. 

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