What Are Discount Real Estate Brokers and Should I Use One?

When sellers cover both agents, the total commission is still around 6% of the sale price. When they don’t, they usually just pay their listing agent, which is often around 3% of the sale price.

How discount real estate brokers make money

Discount real estate brokers make money by charging lower commission rates but handling a lot more transactions. Because they’re working at a higher volume, they focus on efficiency and keeping each deal moving quickly.

Many use team-based setups where different people handle different parts of the sale, instead of one agent doing everything. They also rely heavily on technology and automation to cut down on time spent on marketing, document management, and scheduling.

Some may also earn referral fees by connecting clients with other service providers. The whole model is built around doing more deals with lower costs per transaction.

Pros and cons of using a discount real estate broker

A discount real estate broker can be a tempting option if you’re looking to save money when selling your home. But before deciding if it’s the right fit, it’s important to understand what you may gain and what you might be giving up. Here’s a closer look at the biggest advantages and potential drawbacks.

Benefits of using a discount real estate broker

You pay less in listing fees. Depending on the brokerage you choose and the value of your home, a discount brokerage might reduce your commissions to 1%.

You receive basic real estate agent services. Discount brokerages provide basic services, including listing your home in the local multiple listing service (MLS), general marketing, documentation, contracting, and legal assistance. Some offer additional services for an added fee. The services you choose are provided via a full suite of tools on their online platform.

Drawbacks of using a discount real estate broker

You still have another commission to pay. The listing agent’s commission is only part of the picture. As we outlined in the example above, the reduced commission you’ll pay to a discount brokerage doesn’t include the commission for the buyer’s agent.

You may sell your home for less. Agents who work for full commission are motivated to sell your home for more money. According to HomeLight’s internal data, the top 5% of agents sell homes for 10% more compared to the average agent.

Moreover, those who handled the sale on their own (For Sale by Owner) sold for a median of $360,000, significantly less than agent-assisted transactions that sold for $425,000. As a result, the 1.5% savings you might gain from choosing a discount broker could end up costing you more in lost profits than simply paying the higher commission.

“Homeowners [who] go with a traditional brokerage model tend to make more money on their homes. You can save a percent and lose five percent because you didn’t negotiate well and you didn’t get as many bids as you could have gotten on your property,” warns Dombrowsky.

Your savings may be less than you think. Some discount brokerages may charge hidden fees, or they sell their services a la carte, which can add up and chip away at your expected commission savings. Additionally, if you pay a flat fee or minimum commission, you may end up paying more.

“You’re going to pay a certain fee to list the property. You’ll pick a photo or video package, a digital media package, or a marketing package. Do you want a lockbox? Do you want a yard sign? It’s a menu, and everything has a fee,” explains Ruiz.

You get limited in-person support. For some sellers, the biggest downside of a discount brokerage is the lack of hands-on support, advice, or guidance. Some discount brokerages do offer in-person help, but because their agents often focus on volume to make money, they may not always be as available.

That means the service you get can feel a bit less personal or thorough compared to working with a top real estate agent.

“You don’t have anyone to advocate for you. You’ll be at the mercy of the buyer’s agent, and they’ll be pushing for the best price for their client. Most homeowners don’t have the expertise to negotiate the best price for themselves,” warns Dombrowsky.

You have fewer agents to choose from. Discount brokerages that provide in-person agent services may have a limited pool of agents to choose from, and you don’t always get to choose who you work with.

You won’t have a dedicated agent. You might not get a dedicated agent. Agents at discount brokerages may not know your local market or your home as well, which can lead to a less smooth selling experience. A dedicated agent, on the other hand, can better highlight things like your smart home features, great local schools, and nearby spots people love.

Examples of full-service real estate brokerages

The following recognized brands have built their reputations on providing professional, full-service real estate services from pre-listing preparations to closing:

• Century 21
• RE/MAX
• ​​Keller Williams
• Coldwell Banker
• Compass
• ExP Realty

Services a full-service agent might provide

When you work with a proven full-service agent, you get support from both the agent and their brokerage team from start to finish. Your agent is there to guide you through the process, handle the details, and help market your home. They’re basically your go-to expert, making the whole experience as smooth, fast, and low-stress as possible for you.

Top real estate agents usually go the extra mile to help you sell quickly, with less stress, and for the best possible price. Full-commission agents also tend to offer a lot of services you might not even think about at first. We’ll break some of those down below.

How are full-service real estate brokerages different from discount brokers?

Not all discount brokerages offer in-person support from a live real estate agent. With a full-commission agent, many services are included in your contract, and extras like staging are often discounted compared to hiring contractors on your own.

On top of that, working with an experienced agent can actually save you money in the long run. For example, Dombrowsky says if your discount broker doesn’t prepare the legal paperwork properly, your real estate attorney may end up charging more just to fix or review everything.

Examples of discount real estate brokerages

Discount real estate brokerages attract sellers looking to save money on commission, and some even charge a flat fee. How much you save depends on your home’s sale price. The examples below use a median home price of $429,300.

How to choose a discount real estate broker

If you decide to partner with a discount real estate broker, make sure you’re getting the most out of their services. Here are a few tips to help you pick the right one:

• Research the broker’s reputation: Look for reviews and testimonials to gauge past clients’ experiences. A strong track record is key, even with a discount broker.
• Check the services included: Some discount brokers offer limited services, so make sure they provide what you need, like MLS listing and marketing.
• Understand the fees: Know exactly what you’ll pay. Some brokers charge extra fees on top of the discounted rate, so get clarity upfront.
• Get a clear marketing plan: Ensure the broker will market your property effectively, even if they’re not charging a full commission.
• Ask about their experience: You want someone who knows the local market, even if they’re offering a discount. An experienced broker can make a huge difference.

Real estate services: Full-commission brokerage vs. discount brokerage

In the table below, we break down the basic and more custom services you might get from a discount brokerage and a full-service agent. What you actually get from a discount brokerage depends on the company you choose.

Who might benefit from hiring a discount brokerage?

Some sellers choose discount brokerages to save on commission fees, while others are simply looking for lower-cost options. The right choice depends on your needs and expectations. If you fall into this group, a discount brokerage may be a good fit for you.

If you’re selling “as is.”

According to Dombrowsky, if your home needs a lot of repairs or updates and you don’t plan to fix them, you might use a discount brokerage to sell it “as is” to a cash buyer. In cases like this, you’ll likely get a lower offer anyway, and there’s usually no back-and-forth negotiating with investors, so you may not need the full range of marketing and hands-on services a traditional agent provides.

That said, it’s still important to know the minimum fee so you don’t end up paying more than you would with a full-commission agent.

If you’re selling FSBO

If you’re planning to sell your home FSBO and skip working with a traditional agent, a discount brokerage can help fill in the gaps. They’ll usually handle things like listing your home, marketing it, and the paperwork. And they do it at a lower cost than a full-service agent.

If you’re an involved seller

If you’re a hands-on seller who likes to stay involved in the process, a discount brokerage might be a good fit. You may already have the knowledge and confidence to handle parts of the sale yourself. In that case, you can still get support where you need it without going full-service.

»Learn more: Not sure if a discount brokerage will actually save you money? Use the Real Estate Agent Commission Calculator to compare costs side by side and see what you’d really pay with different options.

Who might not benefit from hiring a discount brokerage?

A discount brokerage isn’t the right fit for every home sale. Some sellers need more hands-on help and a bit more guidance throughout the process. Here’s who may not benefit from using one.

If you’re selling a high-end property

If you’re working with a luxury home, a discount brokerage may fall short of what you need. Many full-commission brokerages already offer lower commission rates for million-dollar homes because the higher sale price still means a strong payout, even at a reduced percentage.

Plus, luxury homes often need more marketing, staging, and pricing strategy to attract the right buyers. Having a full-service agent can make a big difference in how smoothly and quickly the sale goes.

If you’re selling a low-priced home

Discount brokerages that charge a minimum fee may end up costing you more for less-than-comprehensive services than you’d get from a full-commission brokerage. For example, the full 3% listing commission on an $85,000 home is $2,550, whereas a $3,000 minimum fee is actually 3.5% commission.

If you need a home-selling champion

If you want a lot of certainty around your sale and just prefer someone to handle everything for you, a discount brokerage might not be the best fit. Some sellers prefer that their agent is fully on it from start to finish. In that case, a full-service agent is usually the better choice.

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At the end of the day, discount real estate brokers can be a good option for some sellers, especially if saving on commission is the main goal. They tend to work best in simpler situations or for sellers who are comfortable handling more of the process on their own. But they may not be the right fit if you want more hands-on guidance, strategy, and full-service support.

Every home sale is different, and what works for one seller might not work for another. The most important thing is knowing what level of help you need and what you’re comfortable managing yourself. If you want extra confidence and support, you can always partner with a top local agent through HomeLight to help you get the best possible outcome for your sale.

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