Selling a home is one of the most significant transactions in a person’s life. For many, it is the highest-value asset they own, and selling a home is not something that should be taken lightly.
As such, once you’ve made the important decision to list your home, the next most important decision is who will be the real estate professional you engage to help facilitate the transaction.
On paper, the idea of working with a real estate agent who offers discounts on commission might seem like a good idea. After all, spending less on commission means more profits for you and a higher net, right?
Unfortunately, this is often not the case, and working with a “discount agent” comes with some risk you may or may not be aware of.
In this post, we’re taking a look at discount real estate agents and whether or not it’s a good idea to work with them when selling your home.
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First, What is the Definition of a “Discount Real Estate Agent?”
Real estate is a highly regulated industry. We have the Canadian Real Estate Association (CREA), the Ontario Real Estate Association (OREA), the Real Estate Council of Ontario (RECO), and various real estate boards, of which the Toronto Regional Real Estate Board (TRREB) is the largest one and would represent properties in the immediate GTA. Each one of these boards and organizations holds agents and brokers to certain standards.
These standards are here to protect consumers and provide fair and equitable service for all. However, there are some aspects of real estate that are not completely mandated by a regulatory body.
The professional fee for service, otherwise known as the Real Estate Commissions for the Listing Brokerage and for the Cooperating (Buyer) Brokerage for example, are often decided by the individual agent/designated representative of a Brokerage, of which a Seller may wish to negotiate.
In some cases, agents may try to entice sellers to list their homes with them by offering a lower commission than what may be typical in a particular area or what a full-service Realtor’s fees would be.
It’s simple math. If you are selling a $1 million home and one agent says the total fee for service amounts to 5% (2.5% on the listing side and 2.5% to the Buyer brokerage) and another agent says they will charge 3.5%, the lower commission seems like a better deal on paper.
When we discuss “discount agents,” we are referring to agents who undercut their fees in order to secure a listing. Often discount real estate fees equate to discount results and this is where you’ll want to be cautious as to what exactly their service entails and what their track record of success is.
Learn more about choosing a great real estate agent to sell your home with these posts next:
- What are the Benefits of Working with a Boutique Real Estate Team?
- Questions to Ask Your Realtor®
- Why Social Media Matters When Selling Your Home
Reasons to Be Wary of “Discount Agents”
On a high level, the adage “discount fees equate to discount service and discount results” sums up the situation fairly well. Let’s take a closer look at some of the primary differences between working with a “discount agent” and a full-service Realtor.
The Business Model is Different
Discount agents are usually affiliated with Discount Brokerages. These business models prioritize transactions, not cultivating lasting relationships that inspire client retention and a fantastic client experience.
What They Say is Not Always What they Do
Almost every agent will say they include professional photography and staging. However, the quality of that work comes into question when we’re talking about discount agents. For instance, you could hire a photographer for $200 or a photographer for three times as much. Even if they are shooting the same property, which photographer do you suppose would be more thorough and deliver better quality photos?
Similarly, staging a home should go far beyond de-cluttering, de-personalizing, and adding a few throw cushions here and there. Discount agents simply don’t have the resources to access professional stagers with warehouses full of furniture, art, accessories, linens, and more.
Tanya was featured in the August 2024 issue of BUZZ Digital Magazine. Read the full article here to learn more about her approach to building relationships and providing an incredible experience for all.
What is Included in the Fee?
Real estate agents work on commission. From the time you engage a Realtor’s services, this could be months of pre-planning, providing guidance on repairs and improvements made to sell for a higher price. All before the point in time when the property is ready for the next step which could include home staging, professional photography, professional videography, architecturally drafted floor plans, and other marketing assets.
The fees when selling your home amount to the preparation and work required to list and market the home. Working with incredible stagers, photographers, and videographers costs money. However, these things are necessary to ensure your home is presented in the best possible light.
Furthermore, marketing costs money. Whether it’s through paid social media advertising, beautifully designed and printed brochures, printed postcards, or features in digital and print magazines, all of these marketing strategies come with a price.
So when you pay a real estate agent for their services, it’s more than just paying to have them represent you in the transaction. You are paying for a fully bespoke listing and marketing strategy.
The better your home presents and the better it is marketed, the better chances your home will have of selling at a higher price in a shorter time.
A discount agent who charges a lower commission is likely not working with the best service providers in the area. They are also not likely working with a significant marketing budget. And if that’s the case, your home may sit unsold or sell for considerably less than you hoped.
Home preparation is of the utmost importance when selling your home. Here are some blogs to help you get started:
- 5 Essential Steps When Preparing Your Home For Sale
- When is the Best Time to Sell Your Home?
- 5 Home Upgrades that Provide High Returns
Are They Experienced?
Experience and track record are two things that should apply to any agent you are working with. However, when it comes to discount agents, they are often lacking in both.
In some cases, discount agents might work part-time, or perhaps they simply don’t have the achievements or results that will win them a loyal client base, which is why they resort to discounting their service in the first place.
Consistent, high-performing results warrant a “full-service” listing fee.
When selling your home, it’s essential that you work with an experienced agent who has proven time and time again that they can exceed your expectations and get superb results in any type of market.
How is the Service?
Full-service real estate agents pride themselves on the hundreds of hours of work we do to prepare a property for sale. While a discount agent might list a home on the MLS® and wait for it to sell itself, a full-service agent with a sharp pulse on the market will be proactive, maximizing their marketing efforts, calling their database, promoting your listing to their network of buyers.
A proactive agent will provide you with timely updates, pivot the strategy if needed, and will advocate on your behalf when it comes to negotiating, compared to the passive discount agent who will likely not do these things.
In a hot Seller’s Market, where properties are listed and sold within hours, this type of behaviour might go unnoticed. However, it’s when we get into a Balanced or Buyer’s Market that you will feel the difference. Buyers have more selection, and home preparation, marketing, communication, and follow-through become essential to a successful sale.
Wondering how to make your home stand out when inventory is high? Read our blog about it right here to learn more.
What Happens After the Sale?
Discount agents focus on transactions. Not relationship building. They are not invested in providing an exceptional client experience. Why would they overcommit and work harder for less money?
If your property sells, they will probably move on to the next client. They rarely stick around to offer support after the transaction. A full-service agent, on the other hand, is committed to cultivating relationships, not only do they care about your current purchase of sale, but they care about you and your family. They get to know you and understand your needs now and goals for the future.
Why A “Discount Agent” Might Cost You More Money
Many Sellers who opt for a discount agent believe they are saving money. However, when you consider the time and expense of having your home on the market, compounded by the consumer perception of a home that has been on the market for a while, you can see that Sellers who work with discount agents might be leaving a lot of money on the table.
An excellent full-service Realtor is going to sell your home faster and negotiate a higher-priced sale. The simple fact is that better preparation, better marketing, and better service will always result in your home selling faster and for more. Even with a higher commission fee, you will net more on the sale and feel confident heading into your next chapter.
Here at The Tanya Crepulja Team, we go above and beyond with attention to detail, more so than the average agent. By investing in fine details and a customized approach, our clients consistently get better results.
Do you have questions about selling your home with The Tanya Crepulja Team? Get in touch with us directly by filling out the form on this page, calling us at 647-293-3785, or emailing us directly at tanya@thetcteam.ca.
