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1% Commission "Full Service" Real Estate Agents – Are They Worth the Savings?

real estate agents selling your house buying a house buying a home 1% commission real estate agents are they worth it?

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Welcome to My Personal Finance Journey. If you are new here, please read the “About ” or “First-Time Visitor ” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!

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As you’re probably already aware, most real estate agents are paid on a percentage-based commission structure of the overall sale value of the associated home or real estate. Typically, this percent commission is around 6%. with 3% going to the selling-agent’s firm and the other 3% going to the buying-agent’s firm.

Begin mild-ranting about the current real estate agent commission structure… 

Due to the very nature of this commission structure, an immediate conflict of interest presents itself for the buying-agent. This is due to the fact that the buyer wants to pay as low of a price as possible for the property investment, but the agent will receive less money if he or she secures his or her buyer a lower price. Of course, if you find a professional agent, the expectation is that the buyer’s agent will act in your best interest instead of solely for monetary gain. In fact, when I purchased my condominium last year, my full service buying agent acted very responsibly in trying to find me a reasonable place for the best price possible. End complaining.

So, the bottom line is that with regular real estate agents, the seller can expect to give away about 6% of the money he or she receives from the buyer to pay for real estate agent services (this does not include closing fees of course). While 6% may not seem like a ton of money (after all, we pay waiters and waitresses 15% commission on the food we buy), if you are selling your $500,000 McMansion house, you’re looking at shelling out close to $30,000 to the real estate agents in one transaction. Looking at numbers like this, you can really see how potentially lucrative being an effective real estate agent can be!

Recently, while driving my car around town or riding my bike through the countryside, I’ve begun to see more and more “FOR SALE”

signs popping up advertising that the seller of the property is using a 1% commission real estate agent to assist in selling the property. Here in Virginia, one of the popular 1% commission companies I often see is Equity Saver USA.

Clearly, these sellers weren’t all too willing and anxious to fork over the hefty 6% real estate agent fee and were looking for an alternative. In seeing these signs, I began to wonder several things that I wanted to examine in today’s post –

  • 1) Do these 1% commission agents offer similar types of services as regular real estate agents, and if not, what services do they take shortcuts on in order to save money. and 
  • 2) Are these 1% real estate agents able to negotiate good prices for the property sellers?

What Services Do 1% Commission Full Service Real Estate Agents Offer?

All of you have most likely heard the age-old adage that states, “You get what you pay for .”

Translating this to the current investigation, my initial thought would be that if you decided to use a 1% commission agent to sell your home, you’d get a worse service with fewer actions taken on your behalf. However, according to 1% commission agent websites, they are able to offer the same services as 6% commission agents for a lower cost because they use a model that takes advantage of technological resources that were not available 20 years ago when 6% commissions were the norm.

Because of this potential discrepancy, I feel it’s important for us to take a look at exactly what types of services 1% commission agents offer. The following services were listed on 1% commission agent, Equity Saver USA’s, website. The description of some of the services are adapted slightly for increased readability.

  • Upload 10 minutes of full speed online video showcasing your property.
  • Broadcast up to 5 minutes of AM audible sales information to potential buyers listing from their car radio.
  • Automated and extensive use of all real estate and social networking sites, including MLS &
  • 24/7 dedicated phone support and tour scheduling.
  • Mobile office with Internet access, GPS, TV, DVD, satellite radio and leather captain chairs.
  • Use of larger 24″x36″ FOR SALE signs for greater visibility.
  • Online access to all Virginia Association of Realtor approved contract forms.
  • Custom websites dedicated to showcasing your property.
  • Utilize “old fashioned” print, radio and TV advertising when needed.
  • We are designated Realtors. Realtors subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge related to buying and selling real estate.

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