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Discounted & Limited Service Listings

How does a real estate company offer “Discount Fees”?   State Real Estate Commissions don’t really like the term “discount”- since there is supposed to not be a “standard”, or “typical” fee.  The US Federal Trade Commission insists on no set fees in order to maintain fair trade.  So, on what standard is the discount based?  Let’s therefore leave the term “Discount Brokerage” aside.

If Company A offers a bundle of 10 services within its “Full Service” listing agreements, how can Company B offer all 10 of those same services for 1/3rd of Company A’s  fee?   The answer is, if all other aspects of the operations are the same, it will be difficult.

Un-Bundling the typical “full service” listing contract, and offering a “Menu of Services” can allow a company to accept less in commission percentage ( or a small Flat Fee)  for serving the Listing Side.  Maintaining a good commission for the Buyer Agent side is a good idea, however.  There are agents who select the properties to show Buyers-  after reviewing the commission potential of each!!!

If the Un-Bundled service means that the Owner/Seller has elected to negotiate on their own behalf, this will potentially yield an advantage to the Buyer thru his/her agent’s representation of the Buyers.  Remember the old saying, “an attorney who represents himself has a fool for a client”?   With a real estate transaction, self-negotiation isn’t quite that harsh, but a Seller without negotiation assistance may miss some key points relating to competitive advantage.

Some firms offer Sellers the un-bundled option of negotiation assistance for an hourly fee.  In one example of a Sold transaction, the company RESS received just under $900 for listing, negotiation, and attending the closing.  The Buyer’s agent received close to $3,600.  The Seller client saved $2,700 vs. the total fee if the listing had been Bundled at 6%.

Why would a company choose to do a reduced fee for un-bundled services?  It relates to the amount of time an agent expends vs. the amount of money he /she expects to earn.  Inherent in being paid via commission is the assumption the listing will sell and close.  If all listings closed with the original agent, the commissions could be less a percentage.  Reality is that not all listings will close with the original listing agent – and so the commission earned on the one that does close has to also cover the work done on the one(s) which do not.

Advance Flat Fees for the Seller / Listing side of the transaction eliminates the “gamble factor” for the listing agent, and therefore typically affords less expense for the Seller Client.

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