Would You Use A Discount Broker? Calling All Flippers/Investors

Question

I’d like to start a new kind of real estate brokerage. It would dually represent buyers and sellers and charge a total commission of no more than 0.6%. Instead of depending on buyer agents to drive prospects from house to house, prospects would tour houses themselves, and unlicensed “door-openers” would admit them. The listing agreement would include within the commission property photos, a set number of “door-opener” tours, some hours of phone/Zoom consultation with a licensed agent to set a listing price and discuss offers, counter-offers, and closing mechanics. Ideally AI could improve the property analytics that shape listing prices, a competitive advantage over other brokers. While this brokerage would start in Ann Arbor, I would want it to expand to all of Southeast Michigan, then statewide, and ultimately nationwide.

As flippers/investors, would you be interested in listing with this brokerage? Why or why not?

Taylor Dasch · Answer

I personally wouldnt work with a discount broker on the list side as there is a decent amount of money that goes into presenting a good listing. I consider myself a discount broker, listing at 1.75% on my side but my listings still have professional photos, videos,open houses, and marketing. The marketing isnt that important in my opinion but the professional photo/ video is a huge game changer and I dont believe that someone is going to make much profit at .5% on the listing side. Also, in TX at least, only licensed agents are allowed to show properties and some of them even have locks specific to realtors. Unless you are talking about selling your own listings that way. I am not sure of the rules on that. But what you stated seems like it could be a good idea. Best of Luck!

James Kerson · Answer

Say there’s a way to sidestep the door-opener issue. Not sure how, but let’s assume. I’m making a few assumptions: 1) at least some buyers and sellers will accept much less agent handholding than commonly assumed, 2) the primary value that agents add is a) pricing guidance and b) advising clients on offers and counter-offers, and 3) there’s no truly compelling reason why North America has the highest average commissions in the rich world. If I’m right, why should real estate commissions be higher than, say, Charles Schwab commissions?