Wednesday, March 16, 2005

The Myth About Discount Brokerages

There's lots of buzz about those companies that offer flat rate fees to sell your home. There might be a little more to this than the obvious. First, the flat rate does not include putting your home in the MLS. Most of us would agree that the more competion you create for an item that is in short supply, the higher price you will receive. That's the law of supply and demand. So, if you decide to go with a flat rate company, in addition to the flat rate, you will need to offer a commission to the cooperating broker. That commission is usually the same amount that full service brokerages offer in the MLS to the cooperating broker.
Next, we have the foundation that flat rate brokerages build their business on. Volume. An agent that's working on volume may not lose as much when one of their listings sits on the market for a few months. Even more, they are paid the same amount, even if you end up accepting an offer for $15,000 less than your listing price.
A full service agent is there to negotiate the highest price for you and sell your home in the shortest amount of time. After all, the full service agent gets paid based on the final purchase price of your home.
When choosing an agent, be sure you take everything in to account. You may save a few thousand dollars in commissions, but you may end up losing more than a few thousand at the close of escrow.


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