Lower commissions mean a higher net profit for the sellers, Right?
It may sound logical but it's not always the truth. In today marketplace the so-called "Discounted Commission Companies" advertise that they will "Sell Your Home For Less". Unfortunately many times that is exactly what happens, the home is sold for much less than the appreciating market value and the sellers can end up netting even less after closing costs & repair expenses are deducted from the proceeds of the sale.
The idea of discounted commissions may sound good but it can be an expensive proposition for the unsuspecting homeowner. Most discounters merely place the property in the local Multiple Listing Service and leave the owners to deal directly with potential buyers and possibly their professional buyers agent.
Leaving the sellers on their own when it comes to negotiating the sales contract and addressing all of the required disclosures that must be made in order to protect them against legal actions and liabilities is a risky proposition.
In todays real estate market more than 90% of all active home buyers will be repersented by a real estate agent. Many of these buyers will have Accredited Buyer Representatives (ABR) working as their agent. These agents specialize in negotiating the best deal possible for their clients, the buyer. This presents a disadvantage for the seller with limited or no representation at the time the offer is negotiated.
Is the advertising of your property also discounted? If the only advertising offered is that available through the local MLS then the seller has missed presenting their property to large audience of serious local buyers that are actively seeking their next home.
Advertising and marketing is a big budget item for real estate companies. More importantly, advertising and marketing is the single most important activity that brings serious buyers to your home. Discount brokers spend the largest percentage of the companys advertising budget on promoting their company, not your property.
Another issue that deserves consideration involves the amount of dedication that a discount broker will spend negotiating and renegotiating the offers and proposals until the seller has reached top dollar for their property. Discount Brokerages are volume based businesses. They operate on a lower profit margin with fewer associates and office staff. Therefore many times they are not willing to expend the long hours and countless telephone calls negotiating multiple offers on behalf of the seller.
So be wary if the Discount Company has salaried Agents, little or no Advertising, a limited or inadequate Marketing Program and offers little or no Contact Negotiations, as the saying goes "You'll get what you paid for!". Be mindful if your agent is reluctant to counter-offer or quick to suggest that you accept the first offer made on your property.
The equity that the homeowner has gained during their time of ownership in a property is directly related to the price that a quailfied buyer is willing to pay. The real estate market dictates the percentage of equity based on appreciating and depreciating real estate markets, not on the commission charged by the agent. Don't give away equity that is rightfully yours because you paid a discounted real estate commission and received discounted real estate services in return.
Choose your agent carefully! Use the same criteria that you would use if hiring a Doctor or a Defense Attorney. The sale of your home is a significant financial undertaking that deserves care and diligence.
Not all full service real estate firms are created the same. So be careful and remember that saving two or three percent on the sales commission could ultimately cost you much more in the long run, depending on your particular situation.