Generally the term ‘one percent’ is associated with being part of an exclusive and prestigious group. What I want to discuss today is listing agents who charge a 1% commission versus a full service commission, which is generally 3%. These agents are not part of a prestigious club, but are discount real estate brokers.
Recently, a past client told me they chose to list their home for sale with another agent to “save 2%”. I looked at them in absolute amazement, wondering how two intelligent and college educated people could be so naïve.
The net profit on the sale of a home is NOT proportionate to the fees charged to sell the home.
- Agents who charge 1% do not have the expertise to compete for a listing based on the value of their services. They can only compete on price. Is that the type of skill set you want representing you in the sale of your home?
- Can a less skilled agent negotiate the highest possible price for your home?
- Can a less skilled agent negotiate the best terms when it comes to potential repairs? Are the sellers opening themselves up to potential liability further down the road?
- Will a discount agent have the funds available to spend on marketing your home? Will they take their own MLS photos or hire a professional photographer? A professional presentation of a home matters.
When my former clients told me they got a good deal because their agent charged them only 1%, the first thought that popped into my mind was that I could have definitely sold their home for 5% more, which would have put 2% more money in their pocket. As proof of my line of thinking, my clients asked my opinion about certain aspects of their transaction. They clearly did not have confidence in the discount real estate brokers they were working with.
When it comes time to sell your home, you should be thinking about your net profit versus the fees charged. What’s important is the amount of the wire transfer going into your account when the sale closes.