If you're trying to save money when buying or selling your home, you may consider working with a limited service real estate agent. While their lower fees are appealing to some, their reduced services can end up spelling trouble for many buyers and sellers.
Updated July 2nd, 2019
With so much information accessible via the internet, more buyers and sellers feel they don't need all the services that a traditional real estate agent provides. Instead, they're seeking alternatives that put them at the helm of their home sale and relegate the real estate agent to a support role.
One of these alternatives is the limited service real estate agent. Unlike full-service real estate agents who help the buyer or seller through every step of the real estate process, a limited service real estate agent only performs services that their client explicitly requests (and pays accordingly).
Why work with a limited service real estate agent?
So, why choose a limited service agent over a full service one? The answer comes down to money: buyers and sellers don't want to pay for something they think they can do on their own.
However, looking at an agent's fees doesn't give the full picture. You can sometimes save on commission fees by working with an agent in a limited capacity, but full service agents will usually be able to get you a better price for your home.
For buyers, this means that you may save on commission but end up paying more for your home. For sellers, this means that your commission savings may be a trade off for a lower selling price.
Clever provides the best of both worlds: full service real estate agents at limited-service prices. Instead of the usual 6% commission, sellers can expect to pay only 4%. That 2% savings can mean thousands of dollars in your pocket.
Want to learn more? Get in touch with us.We'll be happy to provide you with a free, no-obligation consultation and answer questions you may have about your upcoming real estate plans.
What is a limited service agent?
A limited service agent is precisely what the name implies: a real estate agent or real estate broker that offers a lesser amount of real estate or brokerage services for a reduced price compared to a traditional realtor. They perform only the services selected by the client, which includes listing the property in the MLS (multiple listing service), making some basic signs, setting up a lockbox, marketing, and some limited consultation time for pricing strategy and negotiations.
A limited service agent is generally not very involved in the home buying or selling process, and may or may not be present for the closing. Overall, the seller is on their own for showing the home, marketing, pricing, negotiating counteroffers, and often even paperwork.
Working with a limited service real estate agent can only be done when the agent's representative discloses to the client that the agent is acting as a restricted service agent. The representative must also provide both a list of the specific services the real estate licensee will contribute and a list of standard services that the agent will not provide.
Pros of Limited Service Agents
(Sometimes) Lower fees: Compared to a traditional realtor, limited service agents charge lower fees since they provide fewer real estate services.
More direct control: If you enjoy taking control of situations, working with a limited service listing agent will provide you the satisfaction of feeling like you got the job done yourself.
Choose what services want: If you need help doing a comparative market analysis but think you'll be fine negotiating on your own, you can work with your agent only when you feel you need help.
Cons of Limited Service Agents
Reduced service: Many potential buyers and sellers think they're fine on their own until something pops up that they can't handle. Unless you're experienced in real estate, it's better to work with someone who will help you each step of the way.
Lower selling price: When you don't sign on with an experienced professional, you miss out on the expertise they bring to the table. Full service agents exist for a reason: they can generally get buyers a better deal and help sellers gain a higher profit from their sale. Sometimes, selling with a limited service agent is like selling your house FSBO (For Sale By Owner), which tends to lead to lower profits.
They're not necessarily cheaper: While most times, a limited service agent will be more affordable, a full service agent from Clever will list and sell your house for just $3,000 if it sells for under $350,000, and 1% if it sells for more than that threshold. Buyers in 40 states are eligible for a $1,000 home buyer rebate if they work with a Clever Partner Agent. These savings are significant and add up — especially when you consider the bargains and profits you'll likely miss out on.
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What Services Do Limited Service Agents offer?
Limited service companies and discount brokers offer either a reduced commission, flat fee, hourly rate or some other combination of reduced services and a discount.
At the extreme, you may find a “listing-only agency” which provides a flat fee MLS listing. This means the listing broker will place a listing on the MLS and nothing else. Listing on the MLS is one part of the home selling process that can't be done on your own, as MLS rules stipulate that only licensed brokers can make listings on the service.
After putting the property in the MLS, the buyer's agents and buyers can contact the seller directly. Sometimes these agents offer hourly rates for any additional services the seller may want later or a package of services at a discount.
Remain cautious when agreeing to work with a limited service real estate agent. Be sure you are clear on what services they offer, and which ones you want to take care of on your own.
Alternatives to Limited Service Agents
Clever offers many of the perks of a limited service agent like reduced fees and MLS listings but without skimping out on service. Clever Partner Agents are top-notch full service real estate agents from major brands like Keller Williams, Century 21, and RE/MAX. Each Partner Agent has pre-negotiated a reduced fee of just $3,000 for homes that sell for under $350,000, and 1% for homes that sell for above that threshold.
For buyers, Clever has pre-negotiated a $1,000 home buyer rebate for buyers in the 40 states where it's legal.
Why do these agents offer their services at a discount? It's simple: realtors spend a massive amount of time and money marketing themselves and trying to attract new clients. Clever supplements that side of their business and provides them with a steady stream of new clients, saving them money, and passing the savings on to you.
Want to learn more about how Clever can help you save thousands on your home sale? Get in touch with us, and we'll be happy to answer any questions you may have.
Top FAQs for People Considering a Limited Service Agent
1. What is a limited service listing?
A limited service listing means that the real estate agent or broker only provides limited real estate and brokerage services. While realtors perform several important tasks like marketing the home, pricing it competitively, and negotiating counteroffers, a limited service agent or broker will only help with a few of these.
2. What is a full service real estate agent?
A full service real estate agent performs all the services typically associated with a home sale or purchase. They will price your home, negotiate on your behalf, and serve as a guide throughout the buying or selling process.
3. Are realtors worth the money?
In most cases, realtors can help you get a better deal on a new home or sell your house for a higher price. While 6% commission may seem like a lot, there are ways to pay reduced commission and still get a full-service experience. Either way, you can often make up the difference in commission with a higher offer on your home.
4. What is a limited service broker?
Just like a limited service agent, a limited service real estate brokerage does not provide all the typical brokerage services. Instead, they charge a reduced rate and only give you a select few services.
5. What is prospect exempt?
When a seller starts their home sale unrepresented and then signs on with an agent at a later date, they may sign a listing agreement saying that they are prospect exempt. This means the realtor will not charge a real estate commission fee if the seller sells the home to a buyer they found before beginning their work with the new agent.