Alternatives to Traditional Real Estate Brokers

There’s nothing wrong with choosing a traditional route when buying or selling a home, but it may be worth considering if that route means losing out on savings.

The real estate landscape has been changing rapidly as alternative avenues for handling real estate transactions began to appear. These options include everything from tech-enabled brokerages to discount brokerages to flat-fee MLS services. 

Each approach can offer a fresh way for buyers or sellers to handle their real estate needs, whether by taking advantage of discount brokerages, where services can be negotiated with great flexibility, or unlocking extra savings through commission rebates.

Below, the team from Prevu highlights the most popular alternatives to traditional real estate brokers that buyers and sellers should know about. This includes how to find them, what to look for when considering them, and how to identify the pros and cons of which might be best for you.

Top alternatives to traditional real estate brokers

• For sale by owner
• Flat-fee MLS services
• Rebate brokerages
• Discount brokerages
• Flat-fee brokerages
• Transaction brokers

For sale by owner

Though it may be a challenging option for homeowners who lack real estate chops, selling your home for sale by owner (FSBO) can offer a huge perk: avoiding real estate agent commissions completely.

Homeowners who choose to sell their homes solo avoid the services of a real estate agent, meaning that they don’t have to worry about negotiating a commission or eventually paying it at closing.

While this can result in huge savings, the downside is the workload.

Selling a home on your own isn’t as simple as taking some photos, uploading them on a listing website, and hoping for the best. The primary goal is to vet qualified home buyers; without the professional network of an experienced listing agent, that goal can be difficult to achieve. 

Be prepared to receive many emails and phone calls from potential buyers who just want to window shop and listing agents who want to market their services. You’ll also have to have a flexible schedule to organize open house showings and property tours. 

If you’ve got some real estate experience under your belt and are willing to handle the work, the FSBO route can be a great alternative to a traditional listing agent. 

Flat-fee MLS services

Any seller interested in the FSBO option should immediately consider using a flat-fee MLS listing service.

One of the biggest challenges of selling your home without professional help is properly marketing your property. Multiple Listing Service (MLS) is the largest audience to advertise your home to many potential agents and buyers, but only licensed brokers can access the MLS. That’s where flat-fee MLS services come in.

These companies offer the benefit of listing your home on an official MLS without engaging the full service costs of a real estate agent. While you have to pay a fee, you can still enjoy the benefit of avoiding an expensive real estate commission when you sell your home.

The catch is that each flat-fee MLS service works differently. The typical upfront fee simply to list your property can range anywhere from $100 to $900, depending on the product offered. For many of these services, that price only includes a basic package, which may have a limited number of photo slots, shorter listing duration before renewing, and limited customer support.

It’s crucial to explore as many of these websites as possible before settling on what suits your needs. The good news is that the process is very customizable; some flat-fee MLS companies offer "a la carte" services such as professional photos, closing support, and additional professional services. This allows sellers to select the services they need most while handling the rest themselves. 

Rebate brokerages

Rebate brokerages are some of the best alternatives that both seasoned and first-time homebuyers can use to unlock significant savings when buying a home. 

In simple terms, a commission rebate is a portion of the buyer’s agent’s commission paid by the owner that is given back to the buyer after closing on a home purchase. 

Modern brokerages like Prevu Real Estate invest in a streamlined, tech-forward approach to homebuying, which enables the company to pass along savings to buyers via rebates. This includes a digital homebuying platform that puts more control in the buyers’ hands without sacrificing the expert advice of the company’s salaried agents.

Depending on the final purchase price of a home, buyers working with Prevu can receive up to 1% of that purchase price via the company’s Smart Buyer Rebate. 

These extra savings can offset hefty closing costs, help buyers furnish their new home, or fund renovations.

Discount brokerages

Discount real estate brokerages are another cost-effective alternative to traditional real estate brokers, catering to home sellers looking to save money on commission without completely forgoing professional assistance. 

Unlike traditional brokers, who typically charge a high commission based on a percentage of the property's sale price, discount brokerage models operate on a model that offers lower total commission rates. At first glance, this may seem similar to flat-fee brokerages (we’ll discuss these later) or flat-fee MLS services, but there is an important distinction between them.

The services provided by discount brokerages are structured differently and can sometimes be more flexible regarding what they offer clients than flat-fee brokerages. 

Some offer a full-service experience at a reduced rate, handling everything from listing the property to negotiating with buyers and closing the sale. Others might offer a more modular approach, allowing sellers to choose specific services based on their needs, such as only handling the listing or providing support during negotiations. 

However, it's important for sellers to carefully evaluate what services are included along with these lower rates. 

Some discount brokerages may not provide the same level of hands-on service or marketing exposure that traditional brokers do, which can affect how quickly a property sells and the final sale price it achieves. 

Flat-fee brokerages

Flat-fee brokerages represent a distinct alternative within the real estate industry. They differentiate themselves from traditional and discount brokerages by offering a fixed-rate commission model rather than a percentage-based commission model.

This structure appeals to homeowners who prefer a straightforward, predictable cost, regardless of the final sale price of their property. Unlike discount brokerages, which may offer variable rates or tiered pricing based on the level of service, flat-fee brokerages charge one set price for a package of services, making budgeting simpler and often more transparent.

The services included in a flat-fee arrangement typically cover the essentials of the selling process, such as listing the property on multiple listing services (MLS), handling basic marketing materials, and providing some level of support during negotiations and closing. However, because the fee is fixed, the depth of these services can vary. 

For instance, sellers might find that some flat-fee brokerages offer minimal marketing or less personalized attention than a traditional brokerage might provide for a higher commission.

This model is especially beneficial for sellers who are confident in their ability to handle parts of the selling process themselves, such as hosting open houses or negotiating with buyers, since the flat fee covers only the broker's specific services. 

Transaction brokers

Transaction brokers act as neutral third parties in real estate deals, facilitating the transaction without exclusively representing either the buyer or the seller. 

This model is particularly beneficial when a buyer and seller want to conduct a transaction with professional oversight but without the advocacy typically provided by traditional agents.

The primary role of a transaction broker is to ensure the process runs smoothly and legally. They assist both parties in negotiating the terms of the sale, prepare and file the necessary paperwork, and help meet contractual and regulatory requirements. 

However, unlike traditional agents, transaction brokers do not provide guidance or advice based on the interests of one party over the other. Their goal is to help both sides reach a fair agreement efficiently.

Working with a transaction broker can be a cost-effective alternative for sellers and buyers who are comfortable handling negotiations themselves and making independent decisions about their interests. 

Transaction brokers are commonly used by buyers and sellers who already know each other, have ironed out the broad terms, and simply need the paperwork to be prepared and ushered to the closing of the transaction.