What Are Discount Real Estate Brokers and Should I Use One?
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Jael Batty, Contributing AuthorClose
Jael Batty Contributing AuthorJael Batty is a freelance writer with 23+ years of marketing experience. Her expertise includes marketing and writing content for solar installers, electrical service providers, HVAC contractors, landscapers, and tile installers. Over her lifetime, she has lived in six states, moved 17 times, bought three houses, and sold two.
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Richard Haddad, Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
If you’re getting ready to sell your home, you may be wondering how much real estate commissions will affect your bottom line and if you can maximize your profits with a discount broker. Will you really save money with discount real estate brokers? Will you sacrifice value?
The answer depends on your unique situation, how much time you have to spend on your home sale, and your expectations.
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In this article, we spoke with top-performing agents Robert Dombrowsky, who works with over 85% more single-family homes than the average Fair Lawn, New Jersey agent, and Rick Ruiz, who sells homes nearly 46% quicker than the average Las Vegas agent, to understand the advantages and disadvantages of using a discount broker and compare services and costs against those of a full-service real estate agent.
Let’s get started.
What is a discount real estate broker?
A discount real estate broker is a company or agent that will sell your home for a lower commission than a traditional real estate agent or Realtor®. Discount brokerages offer sellers basic real estate services at a pre-negotiated lower rate of 1% to 2% listing commission or a flat fee.
Historically, the average real estate commission rate has been 6% of the home’s sale price, typically paid by the seller and split between the listing and buyer’s agents. However, the 2024 National Association of Realtors (NAR) settlement reshaped the commission structure, leading to changes in both the percentage and payment responsibility.
Under the new rules, buyers are expected to negotiate directly with their agents. But despite this shift, some sellers still choose to cover the buyer’s agent fees to attract buyers or expedite the sale. If a seller opts not to pay the buyer’s agent’s fee, they only pay their listing agent, usually around 3% of the home’s sale price. If they agree to cover both agents, the total commission may be up to 6%, depending on negotiations.
According to recent NAR data, the median home price in the U.S. is $406,100. If the seller covers only the listing agent’s fee, the cost would be approximately $12,183 (3% of the price). However, if they also cover the buyer’s agent’s fee, the total could rise to $24,366 (6% of the price).
With a discount brokerage like Redfin, which charges a 1% listing commission, sellers typically pay around 4% in total commission (1% for the listing agent and 3% for the buyer’s agent), amounting to $16,244 on a $406,100 home sale. Sellers are able to save more when they choose not to cover the buyer’s agent’s commission, reducing their fees to just $4,061.
Pros and cons of using a discount real estate broker
Benefits of using a discount real estate broker
You pay less on 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
The seller’s (or listing) agent 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. According to HomeLight’s internal data, the top 5% of agents sell homes for 10% more compared to the average agents.
Moreover, those who handled the sale on their own (For Sale by Owner) sold for a median of $380,000 in 2023, significantly less than agent-assisted transactions that sold for $435,000.
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 that 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.
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 potential drawback of a discount brokerage might be the lack of in-person support, advice, or guidance. Some discount brokerages do provide in-person support. However, the agents who work for discount brokers often rely on the volume of homes they sell to make money, which means they may have limited availability.
The services you receive may be less robust or personalized than what you might receive from 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.
There are 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. An agent who works for a discount brokerage may not be as knowledgeable about your local market or your home, which can translate into a less-than-stellar selling experience. In contrast, a dedicated agent will clearly communicate the features of your smart home, the excellent local schools, and the nearby attractions.
Examples of full-service real estate brokerages
The following recognized brands have built their reputations on providing professional, full-service real estate service from pre-listing preparations to close:
- Century 21
- RE/MAX
Keller Williams - Coldwell Banker
- Compass
- ExP Realty
Services a full-service agent might provide
When you hire a proven full-service agent to help sell your home, you receive services and support from the agent and the brokerage support staff from the beginning of your home sale to the end. Your agent is your guide, real estate guru, and marketing expert, helping you to navigate the complex and often stressful journey, making it as quick, profitable, and stress-free as possible for you and your family.
Top real estate agents often go above and beyond to ensure the quickest and best possible experience, the least amount of hassle, and the most profit for you and your family. Full-commission agents typically provide a wide range of services some homeowners might not even have considered. We’ll review some of these services below.
How are full-service real estate brokerages different from discount brokers?
Not all discount brokerages offer the in-person representation of a live real estate agent. The comprehensive services offered by a full-commission real estate agent are often provided as part of your contract with your agent and additional services, such as staging, or at a discounted rate to what you’d pay if you hired a professional contractor on your own.
In addition, the professional services of an agent can help you pay less in the long run.
For example, says Dombrowsky, if a real estate agent hasn’t prepared the legal documentation, your real estate attorney may charge you more to review your documentation.
Examples of discount real estate brokerages
Discount real estate brokerages appeal to home sellers who hope to save money with a lower commission fee, some even offer a flat rate. How much you’ll save by hiring a discount brokerage depends on the purchase price of your home. The examples below are based on a median home price of $406,100.
| Discount Broker | Listing Commission | Listing Commission on $406,100 Sale |
| Redfin | 1% | $4,061 |
| Clever | 1.5% | $6,091.5 |
| 1 Percent Lists | 1% | $4,061 |
| Prevu | 2% | $8,122 |
| Simple Showing | 1% | $4,061 |
| Howzer | 1% | $4,061 |
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 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.
Full-commission brokerage vs. discount brokerage (in terms of service)
In the following table, we’ve compared and contrasted basic and custom services you can expect to receive from a discount real estate brokerage, full-service real estate agent, and listing service. Which additional services a discount brokerage offers depends on the company you hire.
| Top real estate agent | Discount real estate broker | |
| Provides a comparative market analysis (CMA) to help you price your home | Yes | Yes |
| Lists your home on the multiple listing service (MLS) | Yes – Detailed | Yes – May be limited |
| Provides online marketing services | Yes | Yes |
| Provides additional marketing, such as social media posts | Yes | Maybe |
| Places their listing on custom websites and networks | Yes | Maybe |
| Provides paid advertising that drives prospective buyers to your listing | Yes | Maybe |
| Provides custom flyers and signage | Yes | No |
| Evaluates your home | Yes | Maybe |
| Provides live in-person representation | Yes | Maybe |
| Suggests where, specifically, you should clean, declutter, depersonalize, and repair your home | Yes | No |
| Assists in staging or hires professional staging services | Yes/Maybe | No |
| Hires a professional photographer or virtual video services | Yes/ Maybe | Maybe |
| Provides referrals to a network of reputable contractors who can be scheduled sooner and often at a discount | Yes | Maybe |
| Schedules showings | Yes | Maybe |
| Hosts open houses | Yes | No |
| Evaluates and negotiates offers on your behalf | Yes | No |
| Schedules inspections, appraisals, and additional services | Yes | No |
| Negotiates repairs and contingencies | Yes | No |
| Hires a real estate attorney | Yes | Yes |
| Guidance and support through complex or stressful stages of your home sale | Yes | No |
| Provides solutions and contracts that can be customized for your unique home or situation | Yes | No |
| Coaches you through the transaction and closing | Yes | No |
| Helps you coordinate the move-in date | Yes | No |
| Assist with the purchase of your next home | Yes | Maybe |
FAQs about discount real estate services and commissions
What is a limited-service agent?
Limited-service agents offer lower commission fees by providing only some of the traditional services offered by a full-service agent. Unlike the larger discount brokerages offering a wider range of services, a limited-service brokerage might not offer expected services.
The services a limited-service agent must provide vary from state to state. Some of the services that may be omitted include scheduling showings, presenting all offers, advising sellers on the merits of offers, negotiating, and developing counteroffers.
What is a flat fee MLS listing service?
When you hire a real estate agent, they have access to MLS, where they post your property for sale. If you’re not using an agent and selling FSBO, you can pay a flat fee to an MLS brokerage company that will list your home on an MLS site. Unlike a discount brokerage, a listing service provides only one service: listing FSBO properties into the local MLS for a flat fee.
Can I negotiate a discounted commission with a traditional real estate agent?
Real estate commissions are absolutely negotiable. Many agents come to the seller’s home prepared to negotiate because they know they’re competing with other agents and the newly popular discount brokerage platforms.
In short, some real estate agents are prepared to negotiate a lower rate and still provide more comprehensive services.
“Today’s consumers are used to lower costs. The advances in technology have added efficiencies and made it easier for agents to provide full value at scale. And competition in this hot market has also reduced rates.
“Because the market value for homes today is a lot higher, there’s a lot more room for the agents to charge a discounted commission and still be compensated handsomely,” explains Ruiz.
Will I really save money with a discount real estate broker?
Whether or not you will save money with a discount brokerage depends on what you define as saving money. Because a top agent typically sells homes for more, the amount you pocket in profit on your home sale may be less with a discount brokerage than it would be with a full-commission agent.
Other factors that play a role in savings include the value you put on your time and customer experience.
“At the end of the day, there’s a balance. You have to ask: Do I want that Realtor that’s willing to work for that rock-bottom compensation?” says Ruiz.
Do discount brokerages represent homebuyers?
Many discount brokerages offer commission rebates to homebuyers. While this may equal money in your pocket after your home sale, be aware that a rebate isn’t applied to the cost of your home, and you’ll pay mortgage interest on the full amount.
Should I hire a discount brokerage to sell my home?
Whether or not you should hire a discount brokerage is a personal decision that depends on the level of service you expect and whether you’re aiming for the highest possible purchase price. To better help you in your decision, we put together a list of the types of homebuyers that might benefit from the services of a discount brokerage:
Who might benefit from hiring a discount brokerage?
- If you’re selling “as is.” According to Dombrowsky, if your home is in poor condition and in need of extensive repairs or remodels that you won’t be providing, you might use a discount brokerage to sell “as is” to a cash buyer.In this case, you’re going to get a lower offer regardless, the investor won’t be negotiating with you, and most of the personalized services and marketing provided by a full-service agent may not be required. However, in this case, it is best to understand the minimum fee so you’re not paying more than you would with a full commission.
- If you’re selling FSBO. If you plan to sell your home via FSBO, without the in-person services of an agent, a discount brokerage can provide the listing, marketing, and documenting services you’ll need at a reduced rate.
- If you’re an involved seller. If you’re a hands-on go-getter with the knowledge and expertise to add value to your own home sale, you may prefer working with a discount brokerage.
Who might not benefit from hiring a discount brokerage?
- If you’re selling a luxury home. Many full-commission brokerages already offer a discounted commission for million-dollar homes.
- 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’re a seller who wants or needs a high level of certainty regarding your selling objectives, or a feeling of confidence that you’ve hired a real estate professional who will take the entire ball and run to the home-selling endzone, you may not want to use a discount brokerage.
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