The Pitfalls Of Engaging Cut-Price Real Estate Agents

The Pitfalls Of Engaging Cut-Price Real Estate Agents

12 March 2018

Imagine this scenario: After experiencing some chest pain, you visit your doctor for a checkup.

He advises you that after conducting some tests that you have a serious heart condition which will require surgery to correct and, in the process, potentially save your life. Without it, you may not see out another six months. Serious stuff.

Your doctor then refers you to two potential surgeons. The first is a renowned heart surgeon who has an esteemed reputation for never having lost a patient. He has published books and journals on the subject and is regarded as one of the foremost experts on the topic of heart surgery. He is the best there is in his field – But he is also expensive. The bill will have five figures, and it’s quite possible that the first of those figures will not be a 1.

The second potential surgeon your doctor refers you to as a potential candidate is much cheaper. Less than half the cost, in fact. He seems quite nice. But he is fresh out of medical school. Perhaps you will be his first patient. The cost is low – But the risk is enormous.

The question is this: With the stakes being so high, with something as important as your very health and well-being – Would you be prepared to put it all in the hands of someone who was anything less than the best? Would you be willing to risk your life in order to save a few bucks? My guess is that you certainly would not. If you’re anything like me, you would find the extra money somehow and make sure you gave yourself every chance of surviving this potentially life-threatening ordeal. You wouldn’t settle for less – You would certainly want the best.

Now juxtapose this with the admittedly less serious but nevertheless hugely important process of selling the family home. For most, it is their biggest asset and the source of most of their wealth. At any rate, we are talking about massive sums of money. It would make sense to ensure it was being entrusted to a serious professional who knew how to leverage its value, would it not? Wouldn’t you want the best salesperson and marketer you could find working on it?

Sadly, there are some who have not considered this. Far too often, property owners are basing their choice of real estate agent on cheap fees, making the dubious assumption that this will net them more money at the close of the transaction. This is becoming more prevalent in a market climate that has been inundated with low cost & DIY providers. But this theory has more holes than a piece of swiss cheese.


Sounds cliched, I know. But it’s the truth. And it is true across all industries, all professions. You may not want to admit it, but you know it’s true. There is not one service, product or profession anywhere in the world where you pay a lower price to obtain a better quality outcome. It just doesn’t work that way. The best invariably charge more, because they know they are worth it.


Ask yourself this: What is really going to put more money in my pocket, a cut-price commission deal or an agent committed to getting the highest price for my home? The commission you agree to pay is the agent’s incentive to sell the property. By reducing their incentive, do you really believe you are setting yourself up to get the best price? I don’t think so.

Let’s get focused on what’s really important: Getting the highest price for your property.


I can tell you one thing without a shadow of a doubt – If you want to spot a weak negotiator, ask them to reduce their fee. If you are interviewing an agent and they agree to reduce their fee without any sign of a fight, how do you think they’ll fare when a buyer asks them about the lowest price you will accept?


This is a bone of contention among some property owners – Often they are happy to pay the commission but feel as though the upfront marketing costs are just a greedy “double-dip”. This is understandable but once again, there’s a simple explanation as to why your agent is asking you for an upfront marketing investment: If you want to get the best price for your property, it needs to be marketed well. If you force your agent to pay all the advertising expenses, you are not only diverting their attention from the main goal of getting the best price (Something tells me that a quick sale to recoup their outlays might be at the forefront of their mind instead), but you’re also increasing the likelihood that they will cut corners and compromise on some of the marketing components to minimize their risk.

None of this helps you.


Good agents charge higher fees. It’s just the way of things. I have watched the rise of the discount and flat-fee agents over the years, and one thing I’ve always noticed is that the really good agents wouldn’t be caught dead working there. True story.

Cut-price real estate services are nothing new, but neither is the notion of value and that better products and services tend to cost a bit more. The beauty of real estate is that you only pay when you get a result you are happy with. When viewed through this lens, are the fees really that high?

Til next time, ciao ?

Lee Knutsen

Article by Lee Knutsen

Co-founder & Managing Director of House, Lee Knutsen first entered the real estate industry in 2006 as a residential sales specialist. After more than a decade as a sales agent…

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