You're shopping for a brokerage to list your home when your eye catches a "list for less" ad. Then you see another brokerage advertising "choose the services you need and pay what they're worth". Are both companies fee discounters; and if so, how can you determine what each will provide?

It's the latest trend in the real estate homes industry --- fee discounting and unbundled services. And while both can potentially save you money, there can be a vast difference in what each provides. Differentiating is important because the last thing you want to do is (to quote Ben Franklin) be penny-wise and pound-foolish only to find that you have not reached your desired results---selling the house.

By definition, a real estate discount brokerage charges a lower fee to take your listing and market the property. In comparison, a brokerage charging separately for each service or task is unbundling services to provide you with only the services you need while charging fair value for each.

Here's an example of the difference between discounted and unbundled services. We go to a bakery where whole pies and pieces of pie are sold. A freshly baked pie will cost us $7.95. One piece of pie (unbundled) will cost $2.50. We return tomorrow to find that one of the pies did not sell. It's now marked down to $5.00 (discounted) to compete with the fresh pies even though the discounted-price pie required the same amount of ingredients and cost the same to make as the fresh pie.

At first glance you may think that the discounted fee approach will provide you with the most benefits at least cost. But all that glitters is not necessarily gold! The discount brokerage may charge you less to list your property, but fail to tell you what their package of services excludes. It could be a less-significant service like holding an open house or a more-major service like failing to assist in negotiations once a buyer is found. The discount brokerage's purpose is to lure you to list with them in the hope that your listing will sell quickly and their costs will be reduced. Thus, it's under the guise of costing you less. Unfortunately, many consumers gravitate to the lowest financial common denominator before discerning this critical difference.

What IS the harm in not having the services/tasks available to you when you need them? Potentially a lot. Since you're locked in (by a listing agreement) to the discount brokerage, you may not be able to seek the additional outside services you require. And even if you could locate the services you need, those providers may not be willing nor able to contribute the additional tasks since you have a brokerage agreement with the discount broker.

In our next installment of this topic, we'll cover what to ask, when to ask it and how to evaluate whether you're prepared to forego various tradeoffs as a seller in order to obtain that golden nugget---a lower cost to sell your home.

Published: October 6, 2000

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Julie Garton-Good, DREI “The Frugal HomeOwner™” As a syndicated newspaper columnist, author and international speaker, Julie Garton-Good DREI, C-CREC™, is called “America’s Home Affordability Expert”, addressing more than 25,000 persons annually on topics of real estate industry trends and home affordability. She is the author of five real estate books and is the sole two-time recipient of the international "Real Estate Educator of the Year" award from the Real Estate Educators Association. In 1997, The National Association of Realtors® nominated Julie as one of the fifty most influential people in the real estate industry. She shared the list with only three other women.