The High Cost Of Discount Brokers

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Everyone loves a discount, right? Well, everyone thinks they do, at least. Studies have shown that customers of discount brokerages (you know, the ones that list your home in the MLS but do no other marketing) do end up getting a discount, but it’s in the form of a substantially discounted offer for their home on average. That’s not exactly the kind of discount they were expecting.

Full service brokerages provide some necessary ingredients to the home selling process, and that’s timely market information, brand and online marketing exposure, and foot traffic. Just listing a home in the MLS is not the end of what’s necessary to sell a home these days, it’s the beginning.

The pricing of the home is critical, and brokers who handle enough transactions on a daily basis are able to give some good advice on pricing. There’s nothing wrong with starting out aggressive on the price to test the market, but the problem with discount brokers is that no one is there to monitor the market and inform the seller of changes that might help him sell his house.

Typically, discount broker listings are overpriced significantly, to the point that it won’t sell. What usually happens is that the owners hold out as long as they can, then get desperate and either lower the price too much, or accept too low of an offer out of desperation.

Then there’s the issue of having someone to follow through on the paperwork and other escrow checklists during the course of the sale. Without a dedicated agent working for you who has “skin in the game,” there is little or no incentive on the part of the discount brokerage to go the extra mile to walk the transaction through to closing. They got their fee and you’re on your own.

As a result, there are a lot of hidden costs associated with discount brokerages, like failed transactions, which increase desperation and the likelihood of accepting a lower offer later, higher up front marketing costs like online and offline advertising that would typically be part of a commissioned agent’s overhead costs, and more.

While we encourage owners to explore any options they want to explore before talking to us, we’re confident we can deliver a much better sales experience. If you have any questions about our marketing plan and what all we do for you when we start marketing your home, please don’t hesitate to give us a call!

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