Beware: There’s a Difference Between Discount Brokerage and Unbundled Fees-For-Services

When listing your home, you may be tempted to gravitate to the lowest-priced services by using a discount broker. But before you spend that “found” money, be sure you obtain answers to some potentially pricey questions.

As seen in Part I of this article, there’s marketplace confusion for consumers and real estate professionals concerning the difference between discount brokers and unbundled, a la carte real estate services. While unbundled services provide you with what you need, when you need it, the fees are based on fair value for the services you use. Contrarily, discount brokers provide services at an overall lower price hoping to work with volume quantities of consumers. Many times, however, the discount broker fails to tell the consumer the important exclusions and gaps in the services provided. That’s why it’s vital you pose the following questions before deciding if discount-priced brokerage assistance is right for you.

QUESTIONS TO ASK A DISCOUNTED-FEE BROKER:

1) What services will I get? Ask the discount broker to enumerate exactly what you’ll receive in the package. Ask about placement of the listing in the multiple listing service, the amount of advertising to expect as well as open houses or other marketing services provided.

2) Which services won’t I get? This is the most important question you can ask since the discount brokerage contract may fail to enumerate the exclusions to the services. These could include that you’ll be expected to show the home on your own to prospective buyers and that once a buyer is found, you may be required to negotiate with that buyer (and his agent) on your own behalf. If any or all of the exclusions are tasks you can’t or don’t want to perform, listing with a discount broker isn’t for you.

3) If I need additional services later, how can I obtain them? If they are available, what will they cost? Even if you are willing to live with the exclusions to the initial contract, you need to know if and/or how you can obtain them in the future? It could prove problematic if you’re signed to a brokerage agreement with a discount broker unwilling or unable to provide what you needed later on. Additionally, it’s wise to find out the cost of additional services in order weigh the overall costs, time, and effort on your part to that of listing up front with a full-service broker.

4) How can I gauge if I can handle the excluded tasks on my own? This is a question that’s often overshadowed by the anticipation of saving money using a discount broker. But unless the discount broker analyzes your situation and potential ability to perform the tasks that will be excluded in the brokerage package, you may find yourself overwhelmed mid-stream, unable to navigate to a successful and closed sale.

In our next and final installment of this article, we’ll cover what to ask an unbundled, a la carte brokerage to determine if you can really save money accessing only the services you need, paying what they’re worth.

Published: October 9, 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.