Do Full Service Listing agents offer value over discount brokers?

Question

Do Full Service Listing agents offer value over discount brokers? Is there any public research outlining whom the additional value is delivered to and whether they are guaranteed to generate a higher sales price?

Jonathan Minerick · Answer

Every study I've seen shows that commission-based, full-service agents are not worth it:

National Bureau of Economic Research: "Our central finding is that a seller’s use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent, which is consistent with the presence of a fairly severe principal-agent problem." https://www.nber.org/system/files/working_papers/w13796/w137...

Hendel (Northwestern University): "Our key finding is that Realtors do not offset the cost of their commission; they do not get you a higher price." https://insight.kellogg.northwestern.edu/article/the_superfl...

Nadel: "..consumers would benefit most from a fee-for-service approach - combining flat fees, hourly fees, and bonuses, including percentages of extra value create." https://papers.ssrn.com/sol3/papers.cfm?abstract_id=942348US Dept of Justice: "...fee-for-service MLS-only packages, can potentially save thousands of dollars on commission payments." https://web.archive.org/web/20150220050703/https://www.justi...

Dan H. · Answer

My view is it depends on the level of experience.   Someone that purchases of sells an OO property every 7 to 10 years should use a full service agent.   If you close on properties regularly and are familiar with the process, the full service agent is not necessary.

At this time I have purchased as more properties without an agent than with an agent.   However, I would highly consider using a good agent if I was selling a property.

Good luck

Henry Lazerow · Answer

For single family houses it matters less, you throw it online with a lockbox and it sells as long as not priced stupidly. For multi units you want someone who knows the local buildings and how to handle multi unit inspections/repair requests. They can save you 10's of thousands in negotiating inspection requests and helping guide you towards the most qualified/quality offer. Also you pay for their network! I have sold around 50 million of 2-4 units in Chicago and sell a signficant percent to my internal network before they even hit the MLS, this gets you pre-vetted buyers and you get to market it as new twice.

I got around $4 million of 2-4 unit listings of one client who is local and actually a licensed realtor themselves but works full time job. Even they saw the value in full service agent. I have a teammate and its quick to schedule showings, open houses, answer questions, negotiate, etc.

Russell Brazil · Answer

I own both a full service sales team, and I own a flat fee MLS listing service (in a different market). 89% of our customers from the flat fee company dont end up selling their property and end up listing with a traditional agent. 73% of those customers we refer ourselves to a full service agent.

James McGovern · Answer

@Russell Brazil care to share your analysis as to why others are failing with flat fee MLS services?

James McGovern · Answer

@Edgar U. What in your mind comprises EVERYTHING? Will they paint rooms that need it? Will they scrub the moss off the roof or mow the lawn?

Edgar U. · Answer

Yes, tons of value. A full service listing agent will do EVERYTHING for you as a client and the property. A discount broker you'd have to fend for yourself and do all the things that you think are "easy" that an agent does.My clients don't have to do anything besides sign purchase/sale agreements when a buyer or seller is secured. Sometimes, I may not get them the price the initially wanted and that is fine, I take care of handling all else though buyer B.S., showings, marketing, negotiations, etc. If I had the time/resources I would go discount brokerage though, just keep in mind that you are doing EVERYTHING.

Do Full Service Listing agents offer value over discount brokers?

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