HousingWireHousingWire
Consumers listing a $400,000 property for sale could save up to $10,000 in broker fees by using a “low-fee” brokerage firm, according to a report published Monday by the Consumer Policy Center (CPC).
The report, written by CPC fellows Stephen Brobeck and Wendy Glich, examined both flat-fee brokers (who list a property on the MLS for a flat fee that typically ranges from $100 to $500) and low-commission brokers (who provide sellers with full personal service at a discounted commission rate).
According to the study, sellers who use an agent that charges 1.5% to list a property will spend $6,000 less in brokerage fees to sell a $400,000 home compared to a seller who uses an agent that charges 3%.
Sellers who use a flat-fee broker can save even more — up to $10,000 on the sale of a $400,000 home. But this comes at a cost, as the seller must be willing to take even more responsibility in preparing their property and negotiating a deal with a buyer.
Additionally, the report cites evidence that “homes sold by brokers do not have higher average selling prices than comparable homes sold by the owners themselves.”
Despite the potential savings, a national survey of 588 representative homeowners showed that only 24% believe that the best way to sell a home is through a for-sale-by-owner (FSBO) listing, or with a discount or flat-fee broker.
In addition, the survey found that 82% of respondents were concerned about a discount broker not providing all the services they need to successfully sell their property. Some of this concern appeared to dissipate when the broker was classified as low fee and charged only 1.5%, as 42% of survey respondents said they would “definitely” or “probably” use this type of broker.
“Many low-commission brokers work with successful, full-time agents who are either employed by the brokers or by independent firms,” Brobeck said in a statement. “There is every indication that, for significantly reduced fees, many low-commission agents provide the same quality of service offered by successful traditional agents.”
When it comes to evaluating low-commission brokers, the report said consumers should look for the availability of full in-person services — including initial meetings, home inspections, showings and closings — and agents with good client reviews who offer commissions of 1.5% or less.
CPC’s analysis found that the one low-commission brokerage that met all of these criteria is Clever, which also gives sellers a choice on which agent they work with.
Other strong contenders included Ideal Agent, which has a typical fee of 2%, along with Trelora, Simple Showing and 1% List. All four of these companies “appear to meet all of the criteria except wide availability,” and they “employ a relatively small number of experienced agents and brokers who serve limited areas.”
“The expansion of different types of flat-rate services has provided new opportunities to owners wishing to sell themselves,” Gilch said in a statement. “The fact that major MLSs and portals, such as Zillow, no longer segregate FSBOs from Realtor listings helps these sellers immeasurably.”
