There are many business models in the world of real estate, and if you’ve followed me for a while, you’ll know that commission rates aren’t fixed. Some real estate agents work with limited service brokerages, while others work for full service ones.
What’s the difference?
Limited services offer their services at a reduced commission rate, while full service brokerages charge standard commission rates. At first glance, you might think that a reduced commission rate would be a bargain as you pay less, but I’ve found that what you net at the end of selling your home is more important than what you pay to get it sold. You could pay someone $6,000 to sell your home and walk away with an extra $20,000, or pay $3,000 to sell your home and walk about with $20,000 less.
How?
An average Realtor will have six transactions a year. An active Realtor will do 30-60. A limited service Realtor has to do more transactions to make up for their reduced fees and so will process 60-100. Naturally, they can’t offer as much availability to their clients when processing that many transactions.
Limited service brokerages that seem a bargain can cost you a great deal more. Their average list-to-sales ratio is 92%, meaning that if they list a house for $350,000, it will likely sell for $320,000. My personal list-to-sales ratio is 100.4%, so I sell homes for what I list them for. I also negotiate strongly on my clients behalf to not pay closing costs, which can be up to a $9,000 savings on top of that.
Monetary reasoning aside, I work with limited service brokerages and know what happens on the back end. It’s difficult to get in touch with them, they don’t schedule home showings, paperwork is delayed at almost every stage, and they charge an upfront fee whether or not they sell your home (and considering the fact that 1/3 of the time homes they list don’t sell, you could be paying that fee out of pocket and get nothing in return).
I have a well-orchestrated process that nets my sellers more money than it costs them to hire me. If you want to know how I can accomplish that, feel free to contact me for a meeting and I can give you my marketing specifics!
