What is a Discount Real Estate Brokerage?

As the real estate playing field changes, affordability remains among the top challenges for buyers and sellers.

Sellers must be wary of their biggest closing cost: the real estate commission fee. Buyers, meanwhile, must consider the potential of having to pay their buyer’s agent commission if the seller doesn’t cover the fee.

Finding ways to save becomes a paramount goal, which can be increasingly difficult when dealing with traditional real estate models that may be less negotiable with their pricing. Luckily, alternatives to these brokerages exist, allowing buyers and sellers to potentially reduce their commission costs. 

Discount brokerages offer some of the most competitive rates on the market due to their investment in streamlining the buying and selling process through digital tools or a catered selection of specific a-la-carte services that help minimize commission or other closing costs.

The catch lies in discovering the best one that works for you, as each brokerage works differently and offers different services. 

Below, we’ll help you get started by explaining what a discount brokerage is, how they typically work, and what you should look for. 

What is a discount real estate brokerage?

• Definition of a discount real estate brokerage
• What to look for in a discount real estate broker
• Pros of a discount brokerage
• Cons of a discount brokerage
• What services are offered by discount real estate agents?
• Discount brokerages and commission rebates
• Questions to ask before buying with a discount broker
• Questions to ask before selling with a discount broker
• Alternatives to discount brokerages

Definition of a discount brokerage

The hallmark of a discount brokerage is its cost structure. Whereas traditional listing agents typically charge home sellers a commission that has historically hovered around 5-6% of a home’s sale price, discount brokers offer their services at a reduced rate. 

To do so, many discount brokerages focus primarily on essential services like listing a home on the MLS (Multiple Listing Service) or facilitating contract negotiations while leaving other tasks in the client’s hands, thus reducing their workload and the eventual fee. 

However, not every brokerage works the same way to help people save money.

It’s essential to disassociate the term "discount" with lower service quality. While some brokerages may offer limited services to enable a lower fee, others leverage technology and digital tools to streamline operations and create savings for buyers and sellers. 

Discount brokerages can vary greatly, from offering near-full-service experiences for a low commission rate to more bare-bones operations for a flat fee. Regardless of the specific model, the key appeal lies in the cost savings and greater control over which services you pay for.

What to look for in a discount real estate broker

Finding the right discount brokerage requires more than choosing the one with the lowest fees. 

Service offerings should be your first consideration. While some discount brokers offer full-service support, including MLS listings, contract negotiation, and professional photos, others may only cover the basics, leaving real estate marketing or showing the property up to you. Clarifying what’s included upfront is essential to avoid surprises down the line.

Next, consider the brokerage's reputation. Just because you're paying less doesn’t mean the service should suffer. Reviews of real estate professionals and testimonials from past clients are invaluable resources for understanding how well the brokerage performs. 

Look for real estate brokers with a strong track record of communication, efficiency, and delivering results. Check online ratings and ask for recommendations from friends or family who have worked with discount brokers.

Lastly, pay attention to hidden fees. Some discount brokerages advertise low upfront costs, only to tack on additional charges as the transaction progresses. These could range from fees for professional photography to extra charges for hosting open houses. 

You should never have to be caught by surprise when it’s time to pay up. Read the fine print to ensure the savings are genuine so that you won’t be hit with unexpected costs that could offset the benefits.

Pros of a discount brokerage

While hiring a discount broker has various pros and cons, the most obvious benefit is the potential for substantial cost savings on your real estate transaction.

With a discount brokerage, you can potentially reduce the broker fee, allowing you to keep more money in your pocket—whether buying or selling a home. In some cases, the savings can total thousands of dollars, which is no small chunk of change.

Another major advantage is the flexibility that discount brokerages provide. These firms often let you pick and choose which services you need, creating a more customizable experience. For example, if you're a seller with experience hosting open houses but need help with legal documentation, a discount brokerage will allow you to select only those services that match your strengths and weaknesses. This à la carte approach makes tailoring the real estate transaction to your specific needs easier.

Discount brokerages often embrace technology-driven solutions, speeding up the entire process. Many offer virtual home tours, digital document signing, and automated scheduling—all designed to make the buying or selling process smoother and quicker.

Cons of a discount brokerage

One of the primary challenges is the limited range of services. 

Unlike traditional agents who provide start-to-finish support, many discount real estate agents offer fewer services. For first-time buyers or sellers, this reduced support can feel overwhelming. Tasks like marketing, open houses, and even complex contract negotiations may require more hands-on involvement from the client, adding stress to an already complex process.

Another issue is the potential for reduced customer service. Some discount brokers may take on more clients to keep their fees low, which can result in longer response times and a less personalized experience. Depending on which discount brokerage you choose, you might not get the dedicated attention needed to help you handle a complex deal.

Lastly, certain discount brokers may be limited when handling complicated real estate deals. 

For instance, if your property has unique features, requires significant repairs, or if you're involved in a complicated negotiation, a full-service agent with deep market expertise might be better suited to handle these intricacies.

What services are offered by discount real estate agents?

We’ve already mentioned some standard services, but it’s worth clarifying that a discount brokerage’s service can range from the basics to a detailed, full-service approach. 

As a seller, the most essential service you should look for is access to the MLS, which provides exposure to thousands of potential buyers. Along with the listing, many discount brokers will provide pricing guidance, helping sellers determine a competitive asking price or assisting buyers in making reasonable offers.

Contract negotiations and legal documentation, which ensure that the transaction is compliant with all relevant laws, are common services for both buyers and sellers. 

Additionally, some discount brokerages may offer professional photography or virtual home tours as part of their packages, although these services may incur an extra fee in some cases.

The level of personalized attention can vary significantly between discount brokerages. Some offer full-service experiences at a reduced cost, while others focus solely on the transaction's most basic aspects. It's essential to review what’s included in the fee and understand which tasks you'll need to manage independently.

Discount brokerages and commission rebates

One of the lesser-known perks of working with certain brokerages when buying a home is the possibility of commission rebates. 

Commission rebates allow a portion of the buyer’s agent commission to be returned to the buyer at closing, effectively lowering the overall cost of the transaction. The rebate can help offset closing costs, increase your down payment, or even cover moving expenses. For buyers, commission rebates can significantly impact affordability, especially in markets where every dollar counts.

However, commission rebates are not available in every state, so it’s important to check local regulations in your area before taking advantage of this perk. In places where they are allowed, some brokerages bolster their service model by offering commission rebates to buyers. 

For example, Prevu utilizes its Smart Buyer Rebate to offer buyers a rebate of up to 1% of a home’s final sale price if a seller offers compensation to a buyer’s agent. 

Questions to ask before buying with a discount broker

• What is your experience representing buyers?
• What is your commission rate if a seller doesn’t offer to pay a buyer’s agent?
• What services do you provide compared to a traditional buyer’s agent?
• Can you provide references from previous buyer clients?

What is your experience representing buyers?

Never hesitate to ask the questions that matter when searching for the right brokerage. A potential broker should freely and comfortably give you the highlights of their experience, what kind of deals they recently closed, and how they approach challenging negotiations and specific price points. 

What is your commission rate if a seller doesn’t offer to pay a buyer’s agent?

Though it’s still common for a seller to offer buyer’s agent compensation as an incentive for potential buyers, you may face a scenario where that concession isn’t offered to your buyer’s agent. This is where you want to read the fine print of the buyer representation agreement of the agent you choose to work with. 

If a seller offers no compensation, ask the agent to clarify all the specifics of the commission rate. The buyer rep form should also clearly outline this buyer’s agent rate and how it can be affected by specific scenarios (e.g., the seller is willing to cover a portion of the buyer’s agent fee, or not). 

What services do you provide compared to a traditional buyer’s agent?

It’s great to come prepared with your research, but nothing beats hearing directly from the agent why you should choose them over traditional brokers. Ask them to make clear comparisons and why their service is worth considering.

Can you provide references from previous buyer clients?

We all want reassurance when engaging in a transaction of any kind. Hearing first-hand from actual clients who worked with the agent in the past will give you a good idea of their work ethic, how they handled specific situations, and what you can expect from them when representing you.

Questions to ask before selling with a discount broker

• What is your experience as a listing agent?
• What is your commission rate for listing?
• Do I have to pay a buyer's agent commission?
• What services are included in your listing?
• How will you market my property?

What is your experience as a listing agent?

Listing properties isn’t just about uploading some pictures and writing a description. Ask the agent to provide details about their most recent sales, their challenges, how they handled them, and whether they’ve worked with price points similar to your property’s.

What is your commission rate for listing?

It may be a no-brainer, but being as upfront as possible about compensation should be your number one task. Ask the listing agent to break down their fees and explain how they structure their rate.

Do I have to pay a buyer's agent commission?

A seller can decide to pay a buyer’s agent commission depending on their specific scenario. In many cases, it provides a significant incentive and can attract a larger pool of buyers with agents. Ask the listing agent to go over this tactic with you and cover what that will entail regarding expenses.

What services are included in your listing?

Be specific about the services you’re looking for so that you know what to ask. If you feel comfortable marketing your own property, for example, but aren’t comfortable with negotiations, ask if the listing agent offers a specific rate that adjusts to your needs. 

How will you market my property?

This step is one of the most important when selling a home, so be sure the agent is transparent about handling this aspect of the transaction. This includes how they promote the home, stage it, and use platforms like social media. 

Can you provide references from previous seller clients?

Reading Google reviews is a great way to determine whether previous clients were satisfied, but it’s even more important to hear from a past client directly. Asking for references is a great way to get a more detailed idea from a third party about how the listing agent works and handles complex situations that may come up during the home sale.

Alternatives to discount brokerages

If you aren’t keen on searching for the right discount brokerage, or simply can’t find one that works best for you, it’s worth considering some alternative real estate models. 

Flat-fee brokerages, for instance, simplify the process even further by charging a fixed price rather than a percentage of the home's sale price. This can be especially appealing for properties at higher price points, as the cost savings can add up significantly. 

However, the level of service provided can vary. Some flat-fee brokerages offer comprehensive support, including MLS listings, negotiations, and contract drafting, while others might limit their involvement to basic administrative tasks. The key advantage here is the predictability of costs since you know upfront how much you'll be paying regardless of the final sale price.

Another option to consider is flat-fee MLS websites, which allow you to list your property on the Multiple Listing Service for a one-time fee. This grants sellers access to a broader market without the traditional agent commission. The trade-off, however, is that you’ll need to handle most aspects of the sale yourself. 

Marketing, open houses, negotiations—you’ll be responsible for managing each part of the process. This option is best suited for those who are confident in their ability to sell a home and who simply need the MLS listing to reach potential buyers.

For those who prefer the most hands-on approach, selling For Sale by Owner (FSBO) is another common alternative. 

Selling FSBO means bypassing real estate agents altogether, allowing sellers to avoid a listing agent commission entirely. While this option maximizes profit potential and gives you complete control over the sale, it also requires you to manage every detail of the process, from pricing and marketing to handling contracts and negotiations. 

This route is ideal for homeowners with a solid understanding of the real estate market and the time to dedicate to a sale, so be sure you do some research about what it entails to sell a home on your own before taking on this task by yourself.