Flat Fee or Full Commission Real Estate?

by | BiggerPockets.com

Buyers and Sellers of real estate today have many more options then they did in the past. Not only can you go FSBO, or with an agent, you now can pick from a variety of agent options. While the trend of late has been a reduction in commissions from the full 6% of past times to 5% and below, the newest mania is in flat-fee commissions. Help-U-Sell and others use this commission strategy.

The full-commission companies claim “you get what you pay for,” in their downplaying of flat-fee companies. They will tell you that you won’t get the same level of service, and that you won’t get the top price that they can get you.

I haven’t used a flat-fee company to do any deals, but I’ve definately had my share of bad agents work with me and charge steep 6% commissions. I’ve seen agents making hundreds of thousands of dollars a year in commissions treat their clients like they were a dime a dozen.

I recommend everyone keep all their options open when considering real estate companies to work with. Don’t let the big brokers scare you away form the new – smaller companies. It is the same tactic the big brokerage firms used when E*Trade, Ameritrade, and the other online discount brokers started to steal market share. Just make sure you know what you’re getting when you interview an agent, and you’ll be fine.

If you’ve got an opinion on the subject, feel free to leave a comment below . . .

About Author

Joshua Dorkin

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and Inc.com.

1 Comment

  1. Great Blog!
    The industry is definitely shifting. It’s funny, I was just making the comparison of the real estate industry to the stock trading industry yesterday. More specifically, how did E*Trade emerge as the dominant force. How did they find a way to ride and expedite the industry’s transition?

    The U.S. Justice Dept.’s Anti-Trust Division is pushing harder and harder to reduce the 6% standard commission paid to brokers. They realize a housing recession is imminent. Reducing the commissions paid to brokers who do not provide sufficient value for their earnings will help absorb the blow to consumers that a recession will inflict.

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