Some home sellers may want to hire a full service agent but not want to pay a 6% brokerage fee. Hiring realty companies in Raleigh, NC can cost you up to 6% of the total purchase price. This would be $12,000 if you are selling a $200,000 house which is a lot of money! Also, the brokerage fee is calculated on the gross sales price of the house and the net sales price. That means that you will pay $12,000 on a $200,000 sales price not including closing costs, and any monetary concessions made during the negotiating process.
Ok, so it’s expensive to sell a house with a full-service real estate agent, but what about discount and flat fee realty companies?
Many of these companies will only charge you 1% of the gross sales price, so, from our example above, a $200,000 sale price would mean a $2,000 fee to the realty company; not so bad, sometimes you have to spend money to make money. Is that it? A $2,000 brokerage fee and you’re done? Not quite! The function of the MLS is to advertise a house for sale in Raleigh, NC to other agents. The methods of advertising houses for sale vary from state to state but follow a similar format. Agents in Raleigh will expect to be paid anywhere from 2% – 3% of the gross sales price of the house. If you weren’t offering to pay the buyer’s agent then why would they bring you a buyer? Now, instead of paying only $2,000 on the sales price of your $200,000 home, you’re now looking at $8,000 if you’re paying 1% to the discount firm and 3% to the buyer’s agent. The question you have to ask yourself is: is it really worth it to pay $8,000 for limited service?
What Is a Limited Service?
This means that the discount firm will most likely not give you any advice on pricing, marketing, staging, negotiating, and handling of contracts, or any of the other components that are so critical to finding a buyer in this uncertain real estate climate. This also means that the limited service company will push a lot of their work onto the buyer’s agent, which has a tendency to persuade them to take their buyers elsewhere.
The National Association of Realtors is currently using an eleven-page offer to purchase and contract. This is a contract that was drafted by attorney’s to protect the brokers involved in the transaction from liability. Unless you are an attorney yourself, this would be an extremely difficult document to interpret. Remember that the buyer’s agent represents the bargaining position of their buyer in this transaction, not the seller!
Why Use a Limited Service Realty Company?
You can gain exposure by getting your property in the MLS as opposed to just sticking a sign in the lawn. Also, you will save money with the discounted commission. This can be important if you own a home that does not have a lot of equity. It really depends on your level of experience, and comfort, with selling a home.
I’ve written a few articles on the best practices for hiring a real estate agent if you decide to hire a company that provides full service.