Full Service Brokers are Worth Every Penny
Ricky Flores
Father. Realtor. Coach. Go Getter. Entrepreneur. Nothing Worth Having Comes Easy
In the real estate world, there are two types of brokerages, Full Service and Discount. Discount brokerages provide buyers and sellers with an array of discounts and to some, the appeal of paying less to sell or buy a home is appealing. There will always be a place in our industry for these types of brokerages but what could you be losing out on by going this route?
The best reason for choosing a Full Service broker is by thinking of them like a parachute, better to have it and not need it than need it and not have it. Real Estate transactions involve lots of moving parts, numerous legal documents and can at times be the cause of litigation between two parties. Wouldn't you want to have the very best parachute if you were jumping out of a plane? Same logic applies here. If someone is willing to give away their money to earn your business, whose interests do they have other than their own?
I pulled statistics in MLS for 2017 Sales in Menlo Park and Woodside and compared Alain Pinel Realtors, a Full-Service broker, to a discount broker who offers rebates to buyers. In Menlo Park, Alain Pinel Realtors represented buyers in over 21% of all transactions, whereas the discount broker represented buyers in 1.8% of transactions. That's a significant delta! In Woodside, Alain Pinel Realtors represented buyers in 28.5% of transactions, the discount broker represented ZERO buyers.
The data tells us a couple of things. 1) Buyers trust a full-service brokerage more than discount brokerages in these two very different markets. Menlo Park listings sell quickly, often receive multiple offers and require a level of attention that only a knowledgable agent can provide. Woodside listings last longer on the market but the price points can often be in the tens of millions of dollars. 2) If you include the 20-25% of homes that sell off market, you can see what I'm getting at.
For buyers hoping to save a few thousand dollars, discount brokerages are obviously appealing but consider the amount of houses that you lose out on over time. With the prices of homes steadily increasing, you're COSTING yourself money by trying to save a few bucks. Is the discount really worth it?