Once you have made the big decision that it is time to sell your home, comes the next big decision. Should you hire a discount brokerage or a full service firm? As you can see from all the recent ads, discount real estate brokerages can be very enticing. Their technology looks exciting. Most importantly, they promise to save you thousands of dollars in Realtor fees and commissions.
When considering agencies, it is always a good idea to read the fine print before signing a listing agreement with any brokerage. “How much is the listing fee” is not the only big question! “What am I getting for this fee” is just as big of a question to ask.
Currently, there are 3 discount real estate brokerages doing business in our housing market. They offer a 1% fee for listing a property. Reading the fine print, you will discover that this does not cover the Buyer Agent’s fee. Since most homes sell more quickly by cooperating with other brokerages*, keep in mind you will still need to pay the “2-3%” to a buyer agent, as stated in the fine print.
In addition, these discount brokerages offer “a LOCAL Real Estate Professional” to list your property. Do your homework with these companies! How local is local? In many cases, these agents are assigned territories that include 4-5 counties, with offices an hour away from your property! While technology solves some of the distance problems, how can you expect an agent in Jersey City to have the knowledge about your property, your neighborhood, and your town in Somerset County? Will an agent located an hour away be available to show your property when that buyer is sitting in front of your home and calls that agent for an immediate showing appointment?
When considering a discount brokerage, its important to understand IF your property will be listed in Multiple Listing Systems, and WHEN it will appear in MLS, and if there is an ADDITIONAL CHARGE to put your property in MLS? To maximize exposure for your property, the sooner it appears in MLS, the better! Unless you decide not to have your property in MLS, the law requires it be entered into MLS within 48 hours of signing the listing agreement.**
Next come the crucial question of HOW and WHERE your property will be marketed. While 80% of buyers will start searching online for a home, 90% will purchase using a local Realtor®***, which is why having your property listed in MLS is so important. Ask the agent if print advertising and direct mail marketing will be provided. Finally, ask the agent if the marketing effort will continue for the duration of the listing agreement.
Once you accept a purchase offer on your property, will the agent from the discount brokerage be available to ensure the buyer complies with all contract milestones, such as conducting a home inspection and getting a mortgage? Buying a home in New Jersey is rather complicated, so sellers and buyers benefit from the guidance of a Realtor® right up until closing.
When considering a full service brokerage, always remember that realtor commissions are negotiable. There is NO additional fee to renew or extend the listing agreement, feature 25 digital photos of your property, or shipping for lockboxes and signs, as there is with some discount brokerages.**** Actually, an experienced Full Service Realtor® will offer you the same level of online marketing and better support for your listing, from appointment setting, property showing, providing customer feedback, to negotiating the best contract terms of sale based on expertise NOT automation.
Finally check the track record of discount brokerages versus full service firms. Remember FOXTON’S discount brokerage? It took our housing market by storm in 2003. By 2007, it closed its doors and turned over property listings to full service agencies***** In addition to not cooperating with other brokers to sell homes in MLS, Foxton’s was investigated by the NJ Department of Banking and Insurance in 2005, when it was determined that hidden fees were being charged to consumers on real estate transactions.******
*Garden State Multiple Listing
**Garden State Multiple Listing Agreement
***NAR Buyer Survey
****Contact Diane Belcuore for details
*****New York Times September 2007
******The Real Deal, November 15, 2007
© 2018 Diane Belcuore
Posted on November 26, 2018 at 8:46 am by Diane Belcuore