Low cost, flat fee real estate services have rapidly gained popularity in the past 3 years as companies race to innovate while brokers slash fees to attract top producing agents. The traditional brokerage model of stealing as much as 50% of agents’ commissions is dying as brokers now offer extremely competitive rates for real estate agents. Companies like Realty ONE Group & HomeSmart offer agent fees as low as $250 per transaction.
Marketing expenses have also drastically dropped in recent years with improved technologies that allow agents to target specific audiences with laser precision, fast, and for a fraction of the cost of traditional marketing. For example, a $40 Facebook ad we recently ran had a reach of 11,000 people, produced 4 phone inquiries, and 1 offer before lunch.
With reduced marketing overhead and decreased transaction fees, agents and brokers willing to innovate are competing for business like never before by deeply discounting their professional service fees. Just how big are these discounts you ask? U.K. power house PurpleBricks who launch in 2017 in LA offers a $3,200 flat fee listing service, Howzer in Philly is touting a 0% listing commission, and RedFin in Seattle boasts a 1.5% listing service with a .75% buyer rebate. Keep in mind, these are NOT limited representation "help-you-sell" type services. These are 100% full service professional real estate agents that likely do more deals per year than your REALTOR®. Low cost models are creating more opportunities and allow agents to spend more time selling and less time prospecting. What do they all have in common? They are saving their clients a grip of money and expanding at a blazing pace.
Coming soon to the Phoenix market in February will be Gilbert based start-up firm Housso offering a flat fee of $2,995 for their full service listing plan and Utah based company Homie offering a more remote selling experience for roughly $1,500.
The old adage "you get what you pay for" is quickly losing credibility as more and more homeowners ask why it traditionally costs them $24,000 to sell a $400,000 home (6%).