The True Costs of Using Discount or Flat-Fee Real Estate Brokerages

source: illustrationsource.com

Over the recent years there has been a rise in the number of discount real estate brokerages that promote the idea of home owners privately selling their homes, without the professional guidance of Real Estate Sales Representatives. They charge a flat- fee or a discounted real estate commission for limited services. Property Guys, ComFree and Grapevine are among the many discount brokerages that sell the idea of saving money by selling your home privately, when in fact using a discount real estate brokerage is very costly to home owners. The business model of discount real estate brokerages rely on quantity over quality.  Discount real estate brokerages make money is by signing up as many For Sale By Owners (FSBO) as possible and turning them over quickly.  They don't have the marketing dollars or time to ensure maximum exposure of your home and will often convince you to take the first offer, regardless of the quality of the offer.  Once they take your money, you never hear from them again. Leaving you to fend for yourself, without any professional guidance or support. Discount real estate brokerages are the "Wolves of the Real Estate". Sellers beware. Real estate discount brokerages do not provide any advice, information or negotiation tips to home owners. It is no surprise that 90% of FSBO will end up hiring Real Estate Sales Representative to help them sell their home. What real estate discount brokerages don’t advertise are the true costs that are associated with selling your home privately; limited market exposure, costly legal liabilities and money left on table.

Representing yourself when you are selling your most valuable investment could end up costing you more than you bargained for. Real Estate Sales Representatives statistically bring a higher market value offer in a shorter period of time. The common business standards of co-operating with other agents representing, qualified buyers, increases the pool of interested buyers for your home. It is a known fact that the more potential, qualified buyers for any product, the more likely a seller is going receive top dollar for their product.  FSBO listings tend to attract unqualified buyers.  Unqualified buyers haven’t been pre-approved by a mortgage professional and often do not know how much they can afford to spend on a house. These unqualified buyers end up creating false hope in the FSBO, tying up the property for qualified buyers and wasting time. Wasted time is wasted money.  A Real Estate Sale Representative will ask the right questions to qualify buyers so that no valuable time is wasted.

FSBO listings also attract astute investors that are looking for their next bargain deal. Investors typically have more market knowledge than the average home owner and will use their knowledge to present a deal that is beneficial to them. Investors take advantage of the fact that FSBO are not being represented by a Real Estate Sales Representative. The average home owner when negotiating with an investor will end up leaving their hard earned equity on the table.  

I've seen first hand the emotional stress that many FSBO experience. They start out hopeful and then reality sets in. After empty open houses, countless deal that have fallen through, by "potential" buyers, they are exhausted and frustrated.  Selling your home can be a very stressful event if it is not managed properly. Many homeowners recognize this and hire a Real Estate Sales Representative to guide them through this life changing event. For the few that attempt to sell their homes on their own, they experience firsthand the difficult task of juggling all of the details required to sell a home for top dollar and efficiently. Marketing your property, answering phone calls, booking viewing appointments and putting together the legally binding paper work on top of your other responsibilities in life can be challenging. The job of selling your home and balancing life's other responsibilities can take its toll on relationships, finances and your well being. This in turn can result in you losing money and chipping away at your financial future. The longer a house sits on the market, the less likely it is going to receive a full price offer and the more it appeals to the bargain house hunters.

Selling your home isn't over once the agreement is signed and the keys are handed over. Sellers should be aware of the legal liabilities that could arise when selling their homes without the help of a Real Estate Sales Representative. Non disclosure of latent defects is one of the issues that may arise. Latent defects are hidden defects of the home that cannot be on normal inspections. Often times, sellers do not intended to hide  latent defects.  They may think they are immaterial or not even recall certain events that have caused the latent defects.  Regardless this could end up costing them thousands of dollars in legal fees and awarded damages paid to buyer. Real Estate Sales Representatives know the right questions to ask to ensure that all relevant information is disclosed to the potential buyer to avoid legal ramifications.  Real Estate Sales Representatives will also advise you to contact your lawyer for further advice if they feel that additional counsel and protection may be needed.