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You’re in the market for a home, and think you’ve found the perfect option. However the seller is using an online discount realty service instead of a traditional broker. Is this a red flag? Not as much as you might think. As a buyer, your worries about using an online discount realty service are fewer than if you are a seller.
Sellers may opt to use an online broker for a variety of reasons, but advertised lower listing fees play a big part in most sellers’ decisions, since they are the ones footing the bill for real estate agent commissions.
In fact, this is probably the main reason most sellers opt for an online discount realty service. The online broker promises them that they’ll pay way less in listing fees, and gets them in the door. What they don’t tell the seller is that the services they provide will reflect those lower fees.
In most cases, the house won’t be marketed as aggressively and the seller won’t be getting as much personalized service. This may not matter as much to a seller who feels they are savvy enough to basically sell the house on their own, and they just want the listing to reach a wider audience.
The seller pays the full buyer agent’s commission whether you use a full service real estate agent or a discount broker. The difference is the discount broker will provide a credit at closing which can be used to help cover closing costs, taxes, insurance and daily interest. Depending on the price of the home you’re purchasing a conventional real estate agent may be willing to provide you a credit from their commission as well. This is especially common if you list your existing home with them too.
Dealing with an online discount broker can be a little frustrating if they don’t respond in a timely manner or don’t provide you with a knowledgeable point of contact who can guide you through the buying process. They also may not be as focused on the area you’re looking to buy as a real estate agent and may not have as good of a pulse on the market which could negatively impact how much you end up paying for a home. It doesn’t do you any good to save a few dollars with an agent credit, only to pay 5x that amount in a higher purchase price.
Having a clear understanding of the services a discount broker provides is a must if you decide to go this direction. Not all discount brokers are the same and their level of service can vary greatly from one company to the next. Will you have one point of contact or several? Have they done many transactions in your area and do they understand your market? How much are they going to credit you and is it much better than a full service option? These questions are just a few questions that you need to have answered prior to making your decision.
Whether you’re a buyer or a seller your own knowledge and expertise in real estate should be considered when deciding which option you choose. If you’ve sold several homes and you live in tract housing with similar homes that are selling quickly a discount broker may prove to be a good option and save you money.
If you’re a first time homebuyer and don’t understand the homebuying process choosing an experienced real estate agent that can hold your hand throughout the process is likely your best bet.
Regardless of which option you choose you should do your research and be confident and comfortable with the person you are working with, as homebuying is one of the biggest purchases you will ever make.
We’ve fine-tuned the preapproval process to make it one of the easiest experiences you’ll have in the whole home buying process. Buying a home should be fun and exciting, not stressful. Get preapproved today!
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon and Washington.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.