When it comes to selling your house, there are several choices ranging from doing everything yourself – to hiring a team of professionals to manage the entire process for you. Somewhere in the middle you will find Flat Fee and Discount Brokers. In this post we will cover the hybrid approach where you hire a real estate broker, select from a menu of a la carte support services and drive most of the process yourself.
Discount Brokers with A la Carte Service Options
Most of these brokers will tout that you will save thousands of dollars by using them. Who doesn’t want to save money? I will even concede that sometimes discount brokers beat out full fee agents because real estate may be the only business arena where idiots and experts get paid the same amount… Please do us all a favor and investigate your choices thoroughly – you never get a second chance to make that first impression on the market.
The challenge is to make sure you actually end up saving the money you are hoping to save if you go this route. Read the wording carefully in the descriptions of what a broker is offering to do for you. Take a highlighter out and mark phrases like “upon request”, “help you”, “support”, “assist”, “optional”, “small fee” and “other services” – these are the a la carte items that can add up. Less is not more – less is less.
Another challenge is that houses are all unique – especially in the Atlanta marketplace where square footage is unreliable and houses vary greatly even within the same neighborhood. Amazon can’t comparison shop a model number for you online and let you pick the best balance of low price and highest merchant review rating. Selling a house is more akin to auctioning off a vintage car that has been restored. The whole goal should be to create a sense of urgency with the buyer pool so you get the most money and the most favorable contract terms. The actual sale price for a particular house is determined organically through a bidding process with interested buyers. It’s a process driven by strategy, condition and marketing. Differing strategies will result in differing levels of buyer enthusiasm and thus differing sale prices. The difference may not be huge. It doesn’t have to be – it will only take one misstep to melt away your savings of a couple of percentage points.
Now, you may be saying “This guy is biased”. No doubt, I am. I am pro-business and I believe I am pro-seller. The flat fee or discount broker business model is definitely a win for the broker. The broker gets paid up front regardless of whether your house sells or not. The broker can also leverage your sign calls into buyer leads where there is a higher profit margin. The question is how much service is someone going to get for $500 – especially when that $500 is paid up front? If the broker makes more money off of converting buyer leads than selling your house, the lure of those leads would be very strong – perhaps compromising the primary objective. That may not be a big issue for you as long as you know this going in. You use the broker; the broker uses your house. You both could win. The broker will for sure.
Another concern has to do with liability since most legal action arises from the buyer side of the equation. Proof of this shows up in contract form revisions as they address new litigation outcomes (something that is happening at least once a year now). Any business model that promises to coach you on how to shrewdly fill out disclosure forms OR how to talk prospective buyers out of getting their own representation so you can save thousands of dollars should give you cause for pause. Hell hath no fury like a Buyer scorned… On average people move every 8-10 years. Will it really be worth it if you end up in a lawsuit?
Here are some other key aspects of the process to consider:
- Multiple Listing Service (MLS) – One of the first objectives in selling a house is getting it listed on the MLS. It is common to see fees ranging $400-$500 for this. In the Atlanta marketplace, we happen to have two overlapping MLS’s. Check to make sure your property gets into both of them.
- Property Disclosures – These should be filed out as forthrightly and honestly. Some brokers offer to guide you on how to fill out these forms to save money. Be careful.
- Lockbox – the Supra infrared lockbox that most agents use usually costs extra.
- Professional photos – Usually costs extra.
- Professional onsite staging services – Usually costs extra.
- Contract Forms – Although the Georgia Association of Realtors (GAR) contract forms are copyrighted, most brokers will provide you with GAR disclosure forms to complete. Ask about personal access to someone experienced to go over your offers when you get them. And, how they plan to handle multiple offers if you get them.
- Listing Syndication on the Internet – most internet syndication is automatic these days. This makes the professional photography and staging crucial. Bad photos upload just as fast as great ones. It is also important to go back later and enhance your pages once the automated processes are finished. You will probably have to do this yourself.
- Pricing and Selling Strategy – this is usually up to you. I don’t know how anyone outside of real estate does it. We preview competing properties, crunch numbers, interview buyer agents on recent sales and build a case for our pricing that will ultimately be presented to the appraiser. This process takes time, experience and fresh market knowledge. It is probably one of the most crucial aspects to selling your house!
- Business Hours – Since no one agent can genuinely be available 24/7/365, get a commitment for who will be accessible to you and when. Real estate matters are time sensitive and deadlines matter. Make sure your agent texts, monitors email and has the ability to gather signatures electronically so you are not chasing down a printer or a fax machine.
- Flyers – Typically you get a template so you can make and print your own. Don’t skimp here – it will cheapen you and your house.
- Showing Feedback – Many brokers have automated systems for this. If the broker you are considering does, make sure your home’s template questions are ones that will actually result in meaningful feedback. Most buyer agents we know despise these systems because the questions are so generic and uninspiring. After a day of showing 10-15 houses, the houses all run together. I know when we get a couple of personal emails and 12 automated generic emails, we respond to the personal ones first because they seem to actually care about what we thought.
Stay tuned for part 3 of this series, we will cover Full Fee / Full Service Brokers.
Curious about Part 1? Here it is: Avoiding For-Sale-by-Owner Pitfalls