What services will you get with a 2% rate?
If the 2% real estate commission sounds too good to be true, it might be — depending on what you need and expect from your agent. Don’t assume that you’d get the same level of service as a seller who’s paying the full commission rate. Talk with the agent to find out what services he or she provides for the reduced rate and request a written breakdown so you can see what’s included line by line.
For example, the house selling down the street at a 6% commission rate might have the advantage of a 3D video tour, professional staging, dozens of professionally shot photos, social media promotions, and frequent communications from the agent. As a result, it could end up selling for a higher amount that could exceed what you would have saved with the discounted commission.
If you’re just looking for an MLS (multiple listing service) listing and bare-bones representation, and you have the experience to provide the bulk of the marketing and promos yourself, a 2% agent might be acceptable for you. But if you prefer the full-spectrum service you’d get with the standard commission rate, think twice about cutting corners.
Keep in mind that you can interview multiple real estate agents before you hire one. One idea is to compare the services of your 2% commission rate agent against the services of a top local agent apples-to-apples to see if the trade-offs would be worth it to you.
What are the risks of using a 2% commission agent?
Quality, cost, and speed are the top criteria people consider as they make their spending decisions. The general rule is you can’t have all three. Although there are exceptions, typically you sacrifice one for the other. When you opt for cheap or fast, you don’t always get quality. So if you prioritize a lower commission fee in your agent search, quality and speed could be affected.
Here are the top risks to consider when working with a 2% commission agent:
You lose in negotiations
Mario Avalos, a HomeLight Elite Agent who has 15 years of experience selling homes in Miami, Florida, sees a sprinkling of 2% commission agents in his market. In his experience, any agent charging 2% will likely lack the same level of knowledge for how to negotiate when selling a house that full-priced agents have.
“If an agent values themselves that low, they probably don’t have the confidence or expertise to negotiate effectively with buyers,” he says. “The buyer will likely end up bringing down the price, which could offset the savings from the lower commission.”
You don’t receive dedicated service
An agent who offers discounted rates across the board may need to take on a larger number of clients to make up the difference. If that’s the case, they might have to allocate less time and attention to each client. This may mean that they could be slower to respond to your communications and offer less guidance than you expect.
If you want an agent who is laser-focused on selling your house, can offer personalized service and quick responses, and can afford to invest in the “bells and whistles” when marketing your home, you may be disappointed by what you’ll get in exchange for the 2% commission.
When you pay an agent the full commission rate, you can typically expect dedicated services. A dedicated agent will thoroughly research the comparative market analysis (CMA) they use to help you price your home. They’ll walk you through the sale, provide recommendations that will smooth the process, advise you on the pros and cons of each offer you receive and each step you take, and provide expert advice through any rough spots of your transaction.
“I do my CMAs by hand, and it takes me three days before I get a price back to the seller,” says Hill. “I don’t just pull tax records, slap a price on it, and move on. I’m going to do my calculation and compare it against what the computer says, then I’ll go back and pull costs from the neighborhood specifically. I’m evaluating the lot — the acreage, the upgrades, and the updates.”
A real estate agent fully dedicated to your needs will pull out all the stops to make sure you have a satisfying sale. You may even be able to ask them to take complete charge for a stress-free experience.
You undersell your home
According to HomeLight’s home sales database, the top 5% of agents sell homes for 4.8% more than the average real estate agent. A top performer is going to be in tune with what local buyers seek and how to make your home irresistible to them. They’ll also bring hyper-local expertise to more effectively market nearby walking trails, coffee shops, or neighborhood amenities. When buyers ask about crime and school districts, a top agent will point them to the right resources to get the information they need.
But a 2% commission agent is still cheaper, right? Well, let’s say hypothetically you do partner with a top agent versus an average one. The top agent helps you maximize the value of your home with spot-on pricing, strategic prep, and a strong marketing strategy that helps you generate tons of interest. Suddenly, the house you would have sold for $300,000 goes for $330,000 — the 10% bump credited to the special expertise of the agent.
In this scenario, the agent’s added value (the additional $30,000) would exceed the cost of the standard 6% commission, amounting to $19,800 on a $330,000 sale. While it’s not guaranteed an agent will add a certain amount of value to your list price, our data shows that top agents consistently earn their seller clients more than their peers, helping to offset and even exceed their commission fees.
