Selling your house? Consider a discount broker

Jean Chatzky TODAY Financial Editor • Profile • E-mail

Want to take advantage of the housing boom but don't want to forfeit a chunk of your profit to a traditional realtor? “Today” financial editor Jean Chatzky offers tips for using a discount broker to sell your house.

So you're ready to sell your house. You don't want to attempt the transaction without a broker — listing in the local classifieds rather than the multiple listing service, posting a for-sale-by-owner sign, organizing your own open house (heck, you don't even want to be there for your own open house).

But the thought of paying a realtor 5 percent or 6 percent of the purchase price — that's $30,000 to $36,000 on a $600,000 house — in a market in which many places still sell themselves is galling as well. 

There is an in-between alternative. In the last several years, discount brokers have made great strides in real estate. These brokers are not all horses of the same color. Some offer a full menu of traditional brokerage services — think Annette Bening in “American Beauty” — for a percentage or two less.

Those at the other end of the spectrum charge a flat fee of $500 to $1,000 to do little more than maneuver your home onto the MLS (multiple listing service), which in turn gets it on important Web sites like Realtor.com. Combined, according to Steve Murray of RealTrends.com, they still only represent about 2 percent of real estate sales nationwide.

And traditional realtors across the country are engaged in a fight to be sure it stays that way. A handful of states (including Texas and Kentucky) now have laws on the book that prohibit brokers from putting homes on the MLS unless they also provide other services like receiving offers and negotiating contracts.

How do you decide if a discounter is your best bet? “It's really a personal choice,” says Jessica Swesey, managing editor of Inman News Service, which covers real estate exclusively. “There are no hard and fast rules.”  Still, here are some general guidelines:

• The MLS is key. Think about the way people shop for homes today. They go on the Web, surf to a site like Realtor.com, or even to local brokerage sites. They type in their price range, look at a few photos, take a couple of virtual tours, then print out listing sheets on the homes they want to see and hand them (or email them) to their broker.
  
  Consumers have the information at their fingertips and are driving the transaction. But they can't drive over to your house unless it's on the MLS because that's where all those Web sites — from Realtor.com to the local ones — get their listings. Unless you have an extraordinarily long time horizon or are just floating a trial balloon to see what sort of offers come in, getting on the MLS is worth paying for.
  
  
• Think about the temperature of the market. Many markets around the country, Swesey notes, have seen a “return to balance.” They're no longer strong sellers markets anymore, though they're not quite buyers markets either.
  
  If your market is cooling down you'll know it from the greater number of listings in the paper and online, the longer it's taking even great properties to sell, and the lack of a frenzy at open houses.

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In a market like this, you may decide it's worth paying a full-service broker with a brand name to list your house, and not just for the additional service you'll receive. Full-service brokers — who still do the biggest share of the business — don't particularly like showing houses on which the commissions are discounted. In a balanced market, they have a greater ability to pick-and-choose which homes to take their customers to.

• Consider your own experience. If you're a veteran home seller and are willing to do the work necessary to get your house in shape to sell, and then show it yourself, a discounter may be just fine for you. The reality is, someone has to do the work. Just as with almost every other task these days, it's up to you just how much you want to outsource.

Jean Chatzky is an editor-at-large at Money Magazine and serves as AOL's official Money Coach. She is the personal finance editor for NBC's "Today" show and is also a columnist for Life magazine. She is the author of four books, including 2004's "Pay it Down! From Debt to Wealth on $10 a Day" (Portfolio). To find out more, visit her Web site, www.jeanchatzky.com.

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