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Is the Hype about Flat-Fee Realtors for Real?

Is the Hype about Flat-Fee Realtors for Real?

The real estate industry is in a period of deep uncertainty in which the advice to buyers and sellers seems to be full of mixed messages about negotiating down the standard 6% real estate commission as well as the importance of working with an experienced real estate agent. On one side of the argument, you need someone in your corner who knows the ins and outs of the industry, as well as every nuance of the local housing market, specific neighborhoods, and individual blocks. Without this type of resource, you can end up making one of the most important financial decisions of your life with incomplete information.

 

On the other side of the argument is the fact that owning and maintaining a home already takes a big bite out of its appreciation rate over the years. Taking out another 6% of the home equity to pay the buyer and seller agents is, well, it’s no surprise that there’s a demand for discount and flat-fee realtor services. This unmet demand has given rise to discount and flat-fee real estate commissions that have only grown in popularity over the years.

 

Many of the early actors—and even some today—fail to live up to their 6% counterparts. This has created years of cautionary tales and experts warning against using low-cost realtor services. Yet, the underlying demand and high real estate margins have endured and ensured that this segment of the realtor market hasn’t gone away. More recently, what’s really ramped up the hype is a new generation of flat-fee, full-service realtor agencies that are positioning themselves as a more direct competitor to traditional realtors rather than a niche alternative.

 

The Hype Isn’t about the Cost, But the Level of Service and Transparency

Discount and flat-fee realtors have been around for more than a decade. The most basic flat-fee service is a MLS-listing-only fee. In other words, even most of the properties that are For Sale By Owner will benefit greatly from gaining access to the Multiple Listing Service that is the primary gatekeeper for licensed realtors and real estate agencies. Rather, the hype is about companies like Trelora that offer full realtor services, flat-fee commissions, AND full disclosure about the process upfront.

 

Here’s the difference in a nutshell: Rather than finding a niche marketing solution with a variety of listing-only and listing-plus flat-fee service packages, Trelora is looking to disrupt a large segment of the realtor industry with its focus on transparency and a new kind of relationship between real estate agency and buyers/sellers.

 

Peace of Mind vs. Piece of the Pie

Let’s say six months after a home sale, you learn something about the property that means you overpaid or undersold your home. If even one of the comparables about your home is off—location, condition, square footage, right of use—the value of the property can be significantly offered. But here’s the thing, for every story about a hidden problem or asset that comes with a residential property, there are a dozen homes that are known quantities—aside from the inherently unpredictable future of the housing market. It’s a question of peace of mind of knowing what you’re selling/buying vs. getting a slightly bigger piece of the pie. But here’s my answer to this question: The extra money of reduced real estate commissions is definitive; leaving money on the table in the sales price is speculative.

 

Rachel Richardson

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