What Is a Discount Real Estate Broker?

There is always a cost to selling your home, including the commission paid to your real estate agent.

While some listing agents might charge between 2% and 3% of the home’s sales price for their services, brokerages that promise to sell your home for significantly lower fees have become more popular in recent years. By understanding the nuances of what an agent at a discount real estate brokerage can offer you, you can decide if this path is right for you and your home.

What is a discount broker?

While real estate agents and brokers are similar, there are important distinctions. Real estate agents assist and guide their clients through buying and selling their homes, while brokers have undergone additional training and licensing that enables them to oversee other agents. Both agents and brokers can work for brokerages, though brokers can also work independently.

A discount brokerage uses the internet to connect sellers with agents willing to accept lower rates, usually in exchange for a larger volume of clients. The level of savings and the payment structure you can expect as a seller will depend on which brokerage you choose.

How discount brokers get paid

When comparing your options, be aware that the commission might also be split between the buyer’s agent and the listing agent. So if you go with a low-commission listing agent, you may have to negotiate with a buyer to establish expectations for how their agent’s fee will be paid.

Agents can either be part of the brokerage’s network, or they can be employed by the brokerage directly. Clever Real Estate, for instance, matches customers with local agents who agree to commissions of 1.5%, while Redfin and Houwzer use in-house agents that charge commissions of as low as 1%.

What are the tradeoffs with discount brokers?

It’s important to ask about the details when comparing offers from potential agents. For example, some discount real estate brokers keep their rates low by forgoing certain time-consuming services to take on more clients. Other low-commission agents claim to provide the full range of services you’d receive from a traditional agent at a reduced fee.

Examples of services that some discounted agents may not provide include:

• Home staging. While many traditional agents are happy to help you visually prepare your home to sell, some discount real estate brokers may not include this as part of their offerings.

• Personal attention. A discount broker could likely be working with many clients at once, potentially leading to less individual attention and slower response times.

• Extras. Many sellers find touches like brochures and multiple open houses to be instrumental for getting good offers, but not all discount real estate brokers will provide these.

Determining if a discount broker is right for you

Researching company websites, searching for consumer reviews and learning about your local market conditions can help you make an informed decision about working with an agent from a discount brokerage.

Know what kind of market you're in

In a hot real estate market, where homes tend to sell quickly, you might not need all of the marketing and extras traditionally provided by a real estate agent to sell your home.

However, if you sell in a buyer’s market, where homeowners are competing for buyers, you may feel more comfortable working with an agent that has fewer current clients and more time and resources to devote to your listing.

Find a brokerage that operates in your area

Discount brokerages cover select territories, and you will want to find one that serves your area. Even large national brokerages may be newer to your region, so finding one that has a history of working with homes similar to yours in your area may help you feel more comfortable as a seller.

Depending on what you’re looking for, you can search for terms such as “discount real estate broker,” “discount real estate agent,” or “flat-fee real estate agent,” plus your location. In addition, many brokerage websites will list the territories they work in or let you enter your ZIP code to see your options for agents near you.

Questions to ask potential agents

If you are considering working with an agent that charges below-average rates, some questions can help you make a selection with confidence.

• What kind of track record does the agent have? Many discount brokerages and referral services will allow you to get to know prospective agents and ask them questions. Because they might be working with a high volume of clients, you may want to dig deeper into their experience beyond the number of homes they’ve sold. For example, asking whether they’ve worked with clients whose homes were similar to yours, or who had special circumstances similar to yours, may help you feel more confident in making a selection.

• Are there any limits on the services they offer? The agent should tell you if there are any tradeoffs in exchange for their lower commission. You may be responsible for tasks that a traditional agent would typically handle, such as hosting the open house or negotiating the sale. If any services are a la carte or if you’ll be referred to an outside vendor, that will likely mean additional costs to you on top of the agent’s commission.

• What can they tell you about your market? A prospective real estate agent can be a great source of information about the overall selling process and your local market conditions. You should be able to get a sense of comparable local home sales and what you might expect from potential buyers, such as what they’re looking for and how fast other homes are selling.

• Do you qualify for credits or incentives? For example, if you’re in a profession that supports your local community, such as teaching or health care, you may qualify for discounts through networks like Homes for Heroes.

» MORE: How to find the right real estate agent for you