Are Hybrids another Fad or the Future?

There’s been a lot of discussion this year on commission rates and compression and we’re seeing several alternatives being tested out in the market.  Now, “Hybrid Brokerages” seem to be the latest threat to the traditional way of selling real estate.

Discount brokerages have been popping up all over the country and as we reported earlier this year in our story “California Sees Surge of Discount Brokers and Listing Services” some California brokerages are offering rates as low as 1% commission.

Now, hybrid brokerages are positioning themselves as offering traditional RE agent services while offering some discounted services. Redfin is an example of a hybrid brokerage that still embraces some traditional practices like hands-on agent service.

Redfin is leveraging many technologies that consumers like including: Property and neighborhood search websites, transaction, task and contact management systems, instant-offer and showing-scheduling tools, 3-D home tours, property search websites, online lead generation, automated valuation and comparative market analysis (CMA) tools, digital lockboxes and interactive education resources.

Redfin charges sellers a listing fee of 1.5 percent and recommends clients offer a standard commission split to brokers for bringing a buyer to a sale. So sellers who work with Redfin usually pay 4 to 4.5 percent in commission, compared with the going rate of 5 to 6 percent.

Others like SOLOpro offer part of the buyer’s broker’s commission split back to the buyer in the form of a refund.

We’re also seeing, many traditional brokerages adopt technology and business practices from hybrids. Traditional brokerages are watching the hybrids closely to see what works and what doesn’t and they quickly jump on the features that resonate with buyers and sellers. Traditional agents have also experienced firsthand that these hybrids don’t always hire experienced agents which makes them work harder in managing a sale to closure.

In a seller’s market, discount commissions tend to pop up but if the market turns this could quickly change.

What do you think?  Are hybrids the future or just another fad!  We’d love to hear from you.

  • The discount Realtors have been out there more than you may realize. Now the Realtors are promoting themselves by posting on poles all over my neighborhood. But what do they really offer? What do you as a seller give up by using these agents? I am a predominately listing agent in my area of expertise, my clients do not have a problem hiring me to represent them at my commission rate and I am not a discount Realtor.
    One client did ask me to do a discount commission, due to our relationship, I did.
    I realized the same priced home, in the same area, with the same upgrades sold for more because the commission offered was more. My sellers was willing to take the lower offer and she bought her new home and is happy with the outcome,. My concern in todays creative marketing is the sellers that are now allowing the listing agents to do an auction on their home. I realized in researching the listing, the home is a distressed property. The property has been on the market for a while, The Realtor is not offering a commission on the Buyers side. What happens once the property goes into Foreclosure?
    Discount Realtors will only be around until the Sellers want more.
    Does your boss ask you to take less for your job?
    What kind of negotiator do you hire that can not negotiate their own commission, remember what you are hiring your Realtor to do for you. It’s not just sales.

  • RE_Insider

    One of our readers commented via email: Hybrids are here to stay. Now with the 100% commission from Brokers to Realtors, the Realtor can offer services at a discount all day long for full service. Brokers need to be more flexible with Realtors so that they can compete. 100% commissions are here to stay specially for Realtors with experience.

  • RE_Insider

    From another reader: If you remember they were all over the place in the late 90’s and then they were gone it sound good but it does not take people long to remember you only get what you pay for it just means full service agents will have to work a little harder