Chris Dunham~The Real Estate Guy!: Taboo topic in our Industry - Lets talk about discount brokers

Taboo topic in our Industry - Lets talk about discount brokers

Lets talk about discount brokers - Taboo topic in our Industry

Do discount brokers negatively affect the Real Estate Market. That is a powerful question. This topic is such a sensitive one as we (Realtors) have been told for years we are not allowed to discuss commissions. Thing is, that is the number 1 item to come up in any discussion with every potential seller since I have been in this industry (20 years). Its the number one objective we as listing brokers, must overcome, when doing our listing presentation. Time after time we are battling against a "Flat Fee Brokerage" or a "Discount Broker" as our competition. To make sure you understand what a "Discount Broker" is, in my experience, its a broker who lowers the co broke fee from what I feel the "normal" fee is (at least in Arizona) of 3%.


So to be clear, a home is listed for sale and the listing broker is offering a 2.5% commission to the buyers agent instead of the normal (my normal anyway-am not going to assume everything thinks like me and/or agrees with me) 3% commission. A "Flat Fee" brokerage, sells your house for just that, a "flat fee" typically (again, in my experience) $795 to $999. I have seen some advertising (which is discussing commission, ironic right) stating, "I'll sell your house for $2500" what they don't disclose to the consumer, that is just the listing broker side, the consumer still pays the buyers commission, misleading right? These types of brokerages put a bad taste in my mouth.


Because I am a Realtor, I have the unique advantage to view year to date statistics, now, I don't like boring people with numbers, but since are essentially discussing numbers, herer we go. Since January 1st, 2019 there have been 5,910 properties listed and sold with a co-broker fee of 2.5% or less.The breakdown is as follows. Of these 5,910, the average market time was 61 days with an average List price per square foot of $203 and an average sold price per square foot being $199

Lets compare to those that offer the "normal" as I like to call it, 3% or higher, there have been 25,570 properties sold year to date. The average market time for homes with a 3% co broke is 64 days. The average list price, per square foot was $172 while the average Sold price per square foot was $168.

So the difference between these two "statistically speaking" is nothing really, same sort of market time, virtually the same split between list and sold price. So what's the point of this blog?

Simple really, the numbers do tell a story, but you don't see is the quality of product. Quality of the "agent" hired to list, market and sell your home. Now, not all discount brokers or flat fee brokerages do shotty work, but there are those that do. The old saying, you get what you pay for is true in every sense of the phrase. Some agents will go into a listing appointment ready to beat anyone else's pricing, which, if that is their strategy, so be it. But the amount of money being left on the table for buyers agents is astonishing. In Arizona, most agents (my opinion) handle both buyers and sellers, I myself am about 50/50. So lets take the discounted commission and drop the fat number of money that is left on the table, of the $1,751,252,724.00 sales volume for the discount broker or flat fee brokers, So check this out, the potential commission left on the table, year to date, $8,756,262!

Over $8 Million Dollars left on the table. Now, I understand this $8M went into the sellers pocket and looking at pricing out of the gate, versus what the price sold for as well as if there were any price drops and costs paid is next to impossible for me to research with the sheer volume of sales this year. Combining the discount brokers with the traditional ones, total sold volume in 2019 (so far) is north of $9 Billion Dollars.

So what does all this mean?

Discount and flat fee brokers are NOT having any real impact on our market, aside from putting a bad taste in some Realtors mouths. They will come and go, as they often do when the market begins to correct itself, which it always does. For those agents that may be reading this, newer or veteran, don't sell yourself short, you are worth every dime you charge as long as you work for it, do what you say you're going to do and deliver on your promises. I recently won a listing over a "Flat Fee" Brokerage.

So when it comes down to it, its not about the "money" for every seller out there, its about the quality of work, the ability to get the job done, put the most money in the sellers pocket, in a reasonable amount of time right? Right! I LOVE going into a listing appointment where I have been told I am in competition with another brokerage, in fact, I welcome it!

Knowing I can beat anyone at any time is powerful. I know when I set up an appointment I am getting the listing, its the mindset I have. Selling houses is what I do. I don't make appointments to waste my time and the sellers time, I set appointments to secure the business, do my job and get the "product" sold as efficiently as possible.

After all, I am the Real Estate Guy® and I am a full service broker. I go above and beyond my clients expectations, always have, always will.






Chris Dunham
"The Real Estate Guy!"®


"Equal Housing Opportunity"

Brokered by eXp Realty Arizona

Comment balloon 0 commentsChris Dunham • March 27 2019 04:13PM