💡 Did you know that when it comes to buying a home, you actually have options? In fact, you typically have three of them:
The traditional route
First, you can go with a traditional real estate agent. This is a real estate agent who will meet you, find and send you listings they think you'll like, show you the properties, and walk you through the closing process. In exchange, they'll typically receive a commission of anywhere from 2-3% of the sales price for their services.
Going totally DIY
You can also purchase a home completely on your own without the help of an agent at all. If you go this route, you’ll want to call a real estate attorney to draw up your offers and contracts, just to make sure all your legal bases are covered.
Choosing a hybrid approach
Finally, you can also opt for a discount realtor. These agents offer the best of both worlds: reduced fees (and more money in your pocket), plus the expertise and knowledge of a proven professional.
So, what exactly is a discount realtor?
A discount realtor is exactly what it sounds like: a real estate agent that offers lower pricing (or some other sort of financial incentive) to their buyers and sellers. They might list or help buy properties for a flat-fee, reduced commission, or they may offer buyers a commission rebate (essentially cash back) at the end of the transaction.
Here are how some of the most popular discount realtor models work:
- Commission rebates or refunds - Traditional real estate agents get 2-3% of the sales price. On the commission rebate model, a discount realtor would take that percentage and then give the buyer a cut of that money back. Rebate-based discount realtors typically offer anywhere from 10% to 50% back on their commissions.
- Flat-fee - Rather than charge a percentage of the sales price, these discount realtors require a flat-rate for each listing or sale they complete. These flat fees are usually $3,000 or more, depending on where the agents operate.
- Reduced commissions - On the selling end, these are realtors that offer to list a property for less than the traditional 6% commission fee. On the buying side, they’re agents who will give up a portion of their commission fee in order to negotiate a lower home price or put toward the buyer’s closing costs.
- Tiered services - Some discount realtors offer different service levels, each with a different commission fee or flat rate. The cost typically depends on the level of service and responsibility the agent will have in the transaction.
- Exchange fees - This model is rarer, but some discount realtors will offer a reduced fee to sellers if they agree to buy a home currently in their portfolio.
Even in the discount realtor world, pricing (and savings) varies greatly from agent to agent. It really depends on the technologies, team, and processes the agent has at their disposal, as well as the overall volume and efficiency of the agent.
Essentially, the more sales they’re able to complete in less time, the more likely they’ll be able to offer deep discounts that save their clients cash.
The benefits of using a discount realtor
Obviously, there are lots of benefits to using a discount realtor -- many of them cost-related.
For the buyer, using a discount realtor means:
- Potential cash-back refunds and rebates to help with closing costs or renovations and furnishings
- Help with negotiations and the nitty-gritty details of the transaction without having to deal with hiring and paying for a real estate attorney
- An easier, faster sale since discount realtors need to be efficient to make money on their lower-priced services
There are benefits to the real estate agent, too. In a world where many homeowners are doing the initial legwork themselves -- using tools like Zillow, Trulia and Homes.com to find properties all on their own, many buyers think agents aren’t worth that 6% fee they once commanded.
Discount realtors are able to offer these savvy clients a lower fee, but still give them the help they need to get across the finish line without having to invest the time in buyers who may not be truly ready to transact yet.
Pay less, get less?
There are obviously advantages here, but what about the cons? Does paying less mean you get lower quality services?
Despite the assumptions, a discounted fee or commission rate doesn’t mean an agent is cutting corners.
In fact, it usually means they’re doing things a little bit better than their competitors.
Technology has done some amazing things for real estate, and when used right, it can shave days off the buying and selling process and make finding, touring, and finally purchasing that dream home infinitely easier. It even makes agent support and communication more efficient.
Why not go it alone?
There is still that third option when buying or selling a home: you can do it yourself.
The tech is out there. You can browse listings online, take 3D, virtual and video tours -- and even make an offer all using your computer, tablet, or mobile device. But what you don’t get in that process? Real, local knowledge and hands-on support.
You might save a few dollars on the commission fee, but remember, you’re also forgoing:
- Expert negotiations - Agents are trained to negotiate on your behalf, and they know what homes are worth in your area. They also know how to help you stand out in a bidding war.
- Local and industry knowledge - They can give you on-the-ground guidance during showings, open houses, and home tours.
- Legal assistance - Realtors know how to craft persuasive offers that get you noticed, and their iron-clad contracts protect both you and your financial investment.
Without the expertise, guidance, and legal knowledge an agent comes with, completely DIY buyers can end up leaving money on the table -- or worse, paying more than they should.
Which discount realtors are out there?
As more buyers look to lower the cost of homebuying fees, the use of discount realtors is rising.
Here are just a few of the most popular discount real estate agent options on the market today:
- Open Listings, a commission-rebate based solution offering 50% back to buyers
- Redfin, a reduced-commission agency that lists homes for 1% commission fees
- Purplebricks, a flat-fee tool that will list properties for $3,200 each
- Reali, which blends the flat-fee and commission-rebate models
- REX Real Estate Exchange, a commission-rebate platform that offers 50% back
- Padxchange, a commission-rebate platform that offers 50% back
Which discount realtor to choose
So how do you choose the right discount realtor to go with?
Potential savings aside, you’ll also want to look at the level of service and attention your option offers you. Are there real experts available to answer your questions and address your concerns? Does it require a tedious phone call, or is there an app or dashboard you can use to contact them instantly?
- Their team - What sort of experts do you have access to? Agents? Attorneys? Data analysts?
- Service area - Do they operate in the city you’re looking to buy or sell in?
- Tech - What tools do they offer you? What tech do they have at their disposal?
We understand that buying a home can be emotional and stressful, so the last thing anyone wants is to feel that a pushy agent is just trying to make a paycheck.
In the end, you want a discount realtor that cuts costs -- not corners, so make sure you’re choosing someone with the technologies, teams and processes to do the job better (not just cheaply).
Looking for a discount realtor? Use Open Listings to house hunt 24/7, book tours on demand, create offers online, & get paired with a top-rated local real estate agent. We've helped smart homebuyers buy over $1 billion worth of homes and save millions. Plus, you'll get back an average of $9,604. when you buy with us.