Franchise Brokers Association

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The Advantages of Working With an Independent Real Estate Broker

Are large real estate franchises better at selling homes than independent real estate brokerages? Everyone knows that brand recognition is an important part of marketing. Big franchises have large budgets to run advertising on TV and other media, and many of these franchises have been around for decades.

However, independent real estate brokers have gained ground in the market over the last decade, largely thanks to the Internet. Online listings have become a huge factor in buying and selling homes.

Consumer Reports tackled this issue in their September 2008 survey on real estate brokerages. Their survey indicated that there is no difference in satisfaction level from sellers working with independent brokers vs. the major franchises. However, the survey did show that independent brokers were more likely, and had more freedom, to lower commission rates when asked.

This information is not all that surprising. Today’s real estate market is far different than the market franchises dominated thirty years ago. Over half of the brokerages in the business today are independently owned rather than franchised, according to the 2009 National Association of REALTORS Member Profile. Competition is fierce, buyers are more savvy, and the Internet allows anyone to search the MLS (multiple listing service) of homes to find promising properties in their price range. Much of the legwork that agents used to do has been eliminated.

What might be surprising to learn is that independent real estate brokers, despite their “boutique” image, often offer cost savings over the big-name franchised agencies. Because independent firms do not have to split their commission with a franchise, they have more latitude to negotiate and be flexible over commissions and fees. The Consumer Reports survey validates that independent brokerages are competing directly with the franchises by actually lowering commissions far more often than franchise agents do.

Franchised agents typically charge between 4 and 7 percent with the national average at 6 percent for a home listing. Franchises brand themselves as offering more services than independent brokerages, and tout being listed with their extensive referral network as being worth the money. But does paying a higher commission to see your property make sense in today’s Internet-driven real estate market?

The Consumer Reports survey looked at the difference in services between an agent that charges a 3 percent fee vs. a 6 percent fee. The variances they found are, overall, fairly negligible. A noticeably higher percentage of the brokers who charge the higher commission rates placed newspaper ads, but, on the other hand, a slightly higher percentage of the homes placed with agents who charge 3 percent sold within the first month. Most of these discounted brokers are, by necessity, independent rather than franchised.

Statistics show that franchised agents don’t sell more properties than non-franchised ones. The track record of the individual agent or broker you work with matters far more than the name behind them when it comes to getting results. Finding the right discount independent real estate broker can mean saving thousands on commissions and listing fees while still getting the level of service you need to quickly and effectively sell your home.

About the Author

Red Dot Real Estate
is an independent real estate broker representing White Rock and South Surrey, B.C. townhomes and single family homes. Red Dot offers lower MLS listing fees and expert advice for buyers and sellers, as well as customized marketing programs for developers and home sellers.Powered by
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