Traditionally, real estate agents and realtors/brokers have difficulty in locating serious principals (buyers and sellers), and often significant amount of time is spent by real estate agents on such principals only to realize that they were either not ready to buy or sell, or in the case of a buyer, were looking for a very different specification than they initially started with. This is one of the reasons that lead to high commission rates in real estate transactions that actually do happen and yet the realtors do not make a very high pay rate. Similarly, principals (buyers and sellers) experience difficulty when trying to locate a discounted realtor for their market needs.
Typically, the principal meets individual agents (via phone, e-mail, personal visits, etc.) one at a time in order to obtain commission estimates for listing the property to be sold (or commission refunds to buyer from commission obtained by agent from seller, to find appropriate properties to buy) and then the principal must individually negotiate the terms for services to be provided by the agent if they are looking for discounted real estate agents. Often principals who are first or second time do not even have the knowledge or the expertise to be able to even recognize the services needed behind the task of buying or selling a home from an agent.
It becomes practically impossible for a principal, unless very savvy, to negotiate and compare fine details of services in a transaction if that same service level negotiation has to be done with a large number of agents (>10) to arrive at a “true market rate” for such services. A principal would need to contact a very large number of agents (sometimes exceeding even 50 to determine a “true market rate”) to identify agents with similar level of experience or similar levels of “user reviews” or similar levels of services offered, whose commission refund/discount can then be compared, which is not practical.
All of the above are some of the reasons that high commission rates have persisted for decades, as principal’s time limitation causes them to select particular word of mouth referrals from other people they know or have heard of, without auctioning or bidding such commission amongst the available pool in an attempt to bringing such commission to a market rate. The fear of “you get what you pay for” has persisted and is reinforced upon by various people in industry in the absence of technology that can solve the problem.
An online engine that takes in a specification from the principal and uses software to solicit a large number of discount real estate agents to bid their services provided with commission discounts helps solving the above problems. Most advantageously, a principal can get much larger number of bids, than what a principal can get by contacting on their own, of discount realtors for their business and compare each bid in a tabular format, “apples to apples”, with level of experience and levels of services provided by such discounted realtors in such a bid. At same time a discount real estate agent can save significantly on farming time and get a more “ready” principal additionally saving them significant time on finalizing a specification, and thus reduced commissions may not result in a lower pay rate for them.
Therefore an online engine to select an agent, as opposed to manual selection through traditional methods, can optimize the last 5-7% of the “cost” of the transaction that lies in the commission of the agents, by an optimal discount realtor selection with optimal services and experience level that suits the principal, and yet not compromise service quality or hurt agent pay rates.