Smart home selling includes finding the best service and value but it gets tricky when you’re trying to find the most affordable route. Some sellers want to avoid paying commission but the alternative offering a “fee” offer much less value and can cost more. Avoiding commission sounds like a way to save but the alternatives are misleading. The companies offering an “alternative” to paying commission charge a “fee” and that’s were the difference is. The main thing to consider is “fees” are paid upfront and “commission” is only charged when your home sells.
In this article, I’ll point out the important things to understand and most importantly what the alternative companies do.
Value – the worth of something in terms of the amount of other things for which it can be exchanged or in terms of some medium of exchange.
Full price real estate brokerages
Full commission real estate brokerages/Realtors vary but they’re generally regarded as the most expensive option. However, and unknown to most consumers, there are full-service real estate brokerages and Realtors offering a more affordable commission. A lower commission company offers the best value because they provide full service and you only pay when your home sells.
Lower commission real estate brokerages
The majority of homeowners planning to sell their home would like the most affordable route. But some homeowners worry a lower commission rate Realtor® will provide less service. Even full price Realtors® say to sellers, “you’ll get what you pay for when you hire a lower commission Realtor®.” They say this because their higher commission rate is threatened but a reduced commission Realtor® is obligated to provide the same professional services. Some Realtors® have more experience than others but even at a lower commission, a licensed Realtor® provides the same services. Smart home selling includes asking the Realtor® you’re interviewing how experienced they are. Is it safe to hire a Realtor® offering a lower commission rate? Yes, and why wouldn’t you if it’s a better price for the same service?
Why would a Realtor® offer a lower commission rate to homeowners?
Why do some Realtors® offer to sell homes at a lower commission rate? Because it’s smart business for them. They might earn less commission on each transaction but if they offer a great service at a great rate their business will grow. The only consideration to be aware of hiring a lower commission Realtor® is if they can often have too many listings. One person can only do so much and if a listing Realtor® has too many listings services can be neglected. One service that might definitely be neglected with too many listings is the marketing of your home.
The best Realtors®, and what makes them better, whether full price or lower commission, is their marketing. If you can find a Realtor offering lower commission and offering an exceptional marketing system you’ve found exceptional value.
Do all Realtors® offer exceptional marketing? No, very few offer more than just the MLS listing. The MLS is the most powerful marketing medium to help sell your home but additional marketing is the cherry on top and will help your home sell faster and at a higher price.
Imagine finding a full-service Realtor® with an exceptional marketing program who also offers affordable commission? They’re out there but you need to know what to look for.
The difference between a Realtor® and the companies offering an “alternative.”
The number one thing to understand in this case is the difference between “commission” and “fees.” The second most important thing to compare is what’s offered in both cases. And the third thing to investigate is where home buyers come from and how they are searching for their new home.
The most important thing to be aware of comparing “fee” over commission value is the “fee” is paid upfront. It’s spent even if your home doesn’t sell. The fee appears less than the normal commission (but is the same as some lower commission Realtors®) and appears to be a value but what if your home doesn’t sell? When you hire a Realtor® you will only pay the commission if your home sells.
What do the “alternative” to commission companies offer for the fee they charge? They provide you with a spot on their website and a sign for your yard. And if you pay a higher fee (upfront) they’ll have a real estate brokerage post your home to the MLS.
If the real estate “alternative” company is able to post to MLS won’t that now equal the value a Realtor® offers? Having your home listed on the MLS does increase the chance it will sell but it is still paid upfront and non-refundable but there is more to understand.
The reason the “alternative” companies advertising is misleading is that they avoid the buyer-Realtor® commission conversation. Most people planning to sell their home don’t understand the interconnection of real estate transactions. A person paying the “alternative” companies listing fee is looking for assistance selling and they assume the service they are paying for is equivalent to a Realtor®. Especially if they’re paying extra for an MLS posting. But everyone has to understand how buyers fit into the transaction?
Where do home buyers come from?
The majority of home buyer choose the assistance of a Realtor® when making their purchase. When I say majority I’m not suggesting a 60% majority. Over 99% of home buyers are working with a Realtor®. Why wouldn’t they, it’s the best way to be sure you’re handling your real estate purchase correctly. Remember, it’s a complicated transaction selling your home and it’s something most people only do rarely. Also, because buyers don’t pay a Realtor commission directly the service and assistance they offer is very attractive. However, a buyer Realtor® assists in a home purchase they expect to earn a commission for their expertise.
If over 99% of home buyers are working with a Realtor. If you choose not to offer a buyer Realtor® commission, imagine how small the actual market is you’re trying to sell to? Smart home selling includes understanding how real estate transactions work.
This is why homes for sale “by owner” or with a “real estate alternative” company not offering a commission to a buyer Realtor® sell much lower and much slower if they sell at all. Studies show a paltry 25% success rate selling other than professionally and sale prices are on average 23% lower than asking price.
When you call one of the alternative sights for more information they might recommend offering buyer Realtor® commission but their catchy advertising conveniently leaves that out.
What is the best smart home selling value?
With a little research and understanding, you’ll see the “alternative” companies offer very low value. Comparing the real estate “alternative” company fees + buyer commission to an affordable commission Realtor® you’ll find the price almost the same. The advantages of selling with a low commission Realtor® is you only pay a commission when your home sells and the Realtor® does the trickier work.
Searching, you’ll easily find a full-service Realtor® using a selling commission equal to the real estate “alternative” companies. And by doing this you’ll have a licensed Realtor® representing you, marketing your home and doing all the work. That’s smart home selling!