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The Potential Drawbacks of Hiring a Discount Agent

Is it wise to hire a discount agent when buying or selling a home? I can understand wanting to save money to perhaps give yourself a leg-up, but you should think carefully before doing so.

San Diego is a tough market for buyers right now, which means there is a lot of competition and many multiple offer situations happening. If you’re a buyer and you choose a discount agent to represent you, that agent generally won’t have the necessary relationships with other agents and the necessary resources or team in place to support the things you need to be successful.

An agent who discounts themselves is already more or less telling you what they’re worth. They can’t negotiate on their own commission to hold themselves accountable to normal standards. If they can’t negotiate on their own commissions, how well will they negotiate on your behalf?

When sellers look at multiple offers and they see a discount brokerage among them, whatever offer that discount brokerage brings to the table won’t be taken as seriously as other offers that are similar or better. This is because if all offers are the same, the determining factor is the likelihood that offer from the discount brokerage will close. As a buyer, you might not take that kind of thing into consideration, but the seller’s listing agent will. They’re looking at your lender, your agent, and whether you have the capability to close.

If you’re a seller, hiring a discount agent comes with its share of drawbacks as well. For one thing, when they list your property, putting in on the MLS is generally all they’ll do. Because it’s a seller’s market, you’ll still receive a few offers. However, if they’re not marketing the property, they’re not creating as many offers as they could. You also run the risk of not selecting the right offer to close, along with many other things.

 

If a discount agent can’t negotiate on their own commissions, how will they negotiate for you?

 

I understand that hiring a discount agent is the easiest way to get a little bit of money back, but what you save pales in comparison to what you might lose. If you’re a seller, you might save $4,000 on a 1% commissions discount for a $400,000 house, but you’ll lose $10,000 because that agent couldn’t negotiate a better price for you. If you’re a buyer, what’s that discount really worth if your agent is getting shut down every single time? You might get the kickback, but you’re not getting the home.

I’m in the business, so I speak from experience when I tell you this. If you talk to any other real estate team that does a significant amount of business, they’ll tell you the same thing. A discount agent might be able to get you the home you want, but very rarely does that actually happen. As a consumer, I want you to understand what you’re really getting for that discount.

If you have any questions about this topic or anything else in the real estate world, don’t hesitate to reach out to me. I’d be happy to assist you.