Discount real estate brokers

The Sarasota Herald Tribune recently wrote an article on a new discount real estate brokerage in Sarasota. The article made it sound like this was a new business model that no one has tried before. Discount brokerages have been around a long time. If you talk to the Realtors that have been in the business for many years they will tell you that this way of doing business becomes popular with a hot real estate market when homes sell quickly and there is downward pressure on real estate commissions.

The discounters won't have it as easy now that the market has cooled down. The days of sticking a sign in the yard and getting an offer within a day or two are over. That kind of market will eventually be back but for now it is gone. Properties are taking longer to sell which makes the Realtors spend more in advertising, do more open houses, mail out more just listed cards, etc. The cost to market a property is increasing.

Many people in the general public believe Realtors are overpaid and that it is too expensive to sell a home. Here is an excerpt from a 2005 article from the National Association of Realtors about Realtor incomes:

"But the median income of sales associates actually declined about 8 percent to $38,300 from $41,600 in 2002, largely because of the influx of new licensees who typically take years to get up to speed in their earning potential, say NAR research analysts. Between 2003 and 2005, NAR membership grew about 26 percent, from 876,195 to 1,102,250 members."

Here are some things to ponder if you are thinking of listing your home with a discount broker.

• That business model requires the broker to sell numerous properties. Will you receive the service you need for a successful sale that gets you top dollar for your property?
• Many agents hate working with sellers that are represented by a discount brokers because they don't do all of the tasks necessary to lead to a successful transaction. Will Realtors show your home when there are so many other homes on the market that are represented by full service agents?
• Discount brokers typically need to sell properties quickly because they cannot invest too much time or money for the smaller commission. Is there a chance that they will try to get you to underprice your home to move it fast?

Remember often times "You get what you pay for."