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Introduction

Most sellers pay 5-6 percent commissions to sell their home. On a $400,000 property, that cost is $20,000-$24,000. Further, this expense is usually the same regardless of the experience, competence, and efforts of the agent. These two factors have persuadedsome sellers to consider non-traditional options. One such option is low-commission and flat fee brokers that offer their services at a cost lower than a 5-6 percent commission, sometimes much lower.

These alternative service providers have faced substantial challenges. In the past, traditional agents, in an effort to preserve 5-6 percent commissions, have often been reluctant, or even refused, to work with lower-fee agents. State minimum service and anti-rebate laws, advocated by traditional realtors, further limited opportunities for alternative service providers. Perhaps just as important, consumers feared that low-priced brokers would provide inadequate services. A national survey of 588 representative homeowners found that, when asked the question – “How concerned would you be that [a} discount broker would not provide all the services that you need to successfully sell your home?” – 82 percent of respondents expressed concern, with 36 percent indicating they would be “extremely” or “very” concerned.

Early in this century, tech experts saw opportunities to reduce selling costs and fees through the application of digital technologies. They founded companies supported by investors who envisioned these brokerages as revolutionizing the residential real estate marketplace just as tech entrepreneurs had transformed other consumer marketplaces. 

In 2005, former Microsoft executives created Zillow, which assisted consumers by pricing their homes and making available information about homes for sale. Shortly before that, investors supported the creation of Redfin, which used salaried agents and initially charged total commission rates of about three percent. In the next decade, tech-oriented brokerages including Trelora (2011), 1% Lists (2015), Houwzer (2015), Clever (2016), Ideal Agent (2016), Prevu (2017), Houzeo (2017), Simple Showing (2018), and Beycome (2020) also began offering lower-priced services to consumers either regionally or nationally. 

The 2024 settlement of class action litigation and new industry rules created fresh opportunities for non-traditional brokerage services. These changes weakened state minimum service and anti-rebate statutes. More importantly, by focusing public attention on 5-6 percent commissions through news coverage, the changes persuaded some consumers to question traditional real estate brokerage services. Also, the recent decision by Zillow to make no distinction in their listings between FSBOS (for-sale-by-owners) and brokered properties increased opportunities for consumers wishing to sell their own homes. 

The survey of homeowners cited above also found that a significant percentage of homeowners would consider employing a low-fee broker if they sold their home. In response to the question – “If you sold your home, would you consider hiring a discount broker who charged one or one-and-a-half percent instead of the typical two-and-a-half or three percent”? — 42 percent of the entire sample and 54 percent of 18-34 year olds responded “definitely” or “probably.”10 Another recent survey, which researched the actual selling preferences of those who had sold a home in the past five years, had a not inconsistent finding. In response to the question – “What is the best overall way to sell a home?” – only 67 percent selected traditional real estate agent, and 24 percent chose either FSBO, discount broker [low-commission broker], or flat fee broker.

It appears likely that there are at least 2,000 agents that exclusively offer sellers low-commission or flat fee brokerage services.12 There are also many thousands of agents who sometimes offer these lower-cost services to sellers but rarely advertise this fact.

Nevertheless, a large majority of residential real estate services continue to be provided by traditional brokers.14 The purpose of this report is to describe and assess alternative real estate services to home sellers focused on the question – are low commission and flat fee brokers a viable alternative for home sellers? Specifically: What are the different types of low-fee brokers? What is their current role in the real estate marketplace? Do they provide valuable options for home sellers? Which firms appear to offer consumers the best value? 

This report is organized into the following sections: 

• Ways for Sellers to Reduce Commissions 
• An Overview of Low-Fee Brokers 
• Information About Specific Low-Fee Brokerages 
• Flat Fee Brokers 
• Low-Commission Brokers 
• Summary and Conclusions 

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