Everything You Need to Know About the Pros and Cons of Using a Traditional vs. Online Real Estate Brokerage

Real estate brokerage has come a long way with the help of technology. The industry has truly evolved from driving around in a car with your agent and looking at properties to browsing online from the comfort of your own home. 

But with new options constantly popping up, it can take lots of work to know what route to take when buying or selling a property. Do you stick with the tried-and-true in-person method or hop on board with the newer online real estate brokerages? Both come with unique advantages and disadvantages; weighing them carefully before deciding is essential. So, let’s take a closer look and explore what each method offers.

Traditional Real Estate Brokerages

Traditional real estate brokerages are the most common brokerage type. These brokerages have physical offices and employ real estate brokers to work from these offices. The licensed broker meets with clients in person and provides advice and guidance on buying and selling property. Traditional brokerages have existed for many years and are well-established in the real estate industry.

Pros and Cons of Traditional Real Estate Brokerages

Pros

• Personalized Service: Traditional real estate brokerage agencies offer a personalized service where the broker meets with clients face-to-face and provides them with customized advice and guidance. This level of service is essential for some buyers and sellers who prefer a more personal touch.
• Networking: Traditional brokerages in the real estate sector have a network of professionals in the industry, such as home inspectors, appraisers, and title companies. They connect clients with these professionals, which helps streamline the buying or selling process.
• Established Reputation: Traditional brokerages in real estate have been around for many years and are well-established in the real estate industry. They have a reputation for providing quality service and are often recognized as trustworthy and reliable.
• Local Expertise: Real estate brokers in traditional brokerages deeply understand the local real estate market. They provide valuable insights on pricing, location, and other market trends that could affect the value of a property.
• Negotiation Skills: Traditional brokers in a real estate brokerage firm brokers are often skilled negotiators who help clients get the best deal on a property. They have experience negotiating with other brokers and assisting clients in navigating the often-complicated process of buying or selling a home.

Cons

• Limited Accessibility: Traditional brokerages in real estate have physical offices, which tends to be inconvenient for clients who live far away or have busy schedules. You may need to take time off work or rearrange your plans to meet with a real estate broker.
• Higher Costs: Traditional brokerages in real estate have higher overhead costs, such as rent and utilities for their physical offices. These costs are passed on to the clients through higher agent commission fees.
• Limited Technology: Traditional brokerages in the real estate sector may not have the latest technology to support real estate transactions, which leads to delays and errors.
• Limited Reach: Traditional real estate brokerage companies have a limited reach compared to online brokerages. They may only have a small presence in certain areas or markets.

Online Real Estate Brokerages

Online real estate brokerages are a newer brokerage type that operates exclusively online. These brokerages have virtual offices and employ real estate brokers who work remotely. Online real estate brokerages have gained popularity in recent years due to their convenience and lower costs.

Pros and Cons of Online Real Estate Brokerages

Pros

• Lower Costs: Online real estate brokerage firms have lower overhead costs since they don’t have physical offices, and these savings are passed on to the clients through lower agent commission fees.
• Convenience: Online real estate brokerage firms are accessible from anywhere with an internet connection. Hence, making it easy for clients to buy or sell a real property from the comfort of their homes with the help of a real estate broker.
• Advanced Technology: Online real estate brokerages have the latest technology to support transactions. That often leads to faster and more efficient real estate transactions.
• National Reach: Online brokerages in the real estate sector have a national reach, meaning they connect home buyers and sellers throughout the country. That’s particularly beneficial for clients relocating or looking to buy a second home.
• Transparency: Online licensed brokers in a real estate brokerage firm are often more transparent than traditional brokerages. They provide clients with detailed information about properties, including photos, videos, and virtual tours.

Cons

• Limited Personalization: Online real estate brokerage firms may not offer a different level of personalized service than traditional real estate brokerages since most communication is done online or over the phone.
• Limited Local Expertise: Online real estate brokers may not have extensive knowledge of the local real estate market, which can disadvantage clients who need advice and guidance.
• Limited Reputation: Online real estate brokerage firms are relatively new, and their track record may not be as established as traditional real estate brokerages.

What to Consider When Choosing Between Traditional and Online Real Estate Brokerages

Choosing between traditional and online real estate brokerages tends to be challenging. Here are some factors to consider when making your decision:

1. Commission Rates and Fees

One of the most significant differences between traditional and online real estate brokerages is their commission rates and flat fees. Traditional real estate brokerage firms typically charge a higher commission rate of 5% to 6% of the sale price, while online brokerages usually charge lower rates from 1% to 3%. 

However, it’s essential to note that the lower commission rate doesn’t necessarily mean lower fees. Some online real estate brokerages may charge an additional flat fee for services such as professional photography, staging, or virtual tours.

2. Services Offered

Another factor to consider is the services the brokerage offer. Traditional brokerages often offer a full range of services, including marketing, property inspections, negotiations, and closing support. 

On the other hand, online real estate brokerage companies may offer more limited services, such as listing commercial properties on multiple listing services (MLS) and providing a platform for home buyers and sellers to connect.

3. Agent Support

Consider agent support when choosing between traditional and online brokerages in the real estate industry. Traditional brokerages usually have a physical office, and sales agents work from this office, which lets you quickly contact your agent with any questions or concerns. 

On the other hand, online brokerages have a virtual presence, and most of the real estate brokers work remotely. While that provides more flexibility, it also means that you may get delayed responses to your queries.

4. Technology 

Online brokerages typically offer advanced technology and tools that traditional brokerages may not have. These tools may include 3D virtual tours, online home valuation tools, and online scheduling. 

On the other hand, traditional brokerages rely more heavily on human interaction, with real estate brokers providing personalized advice and guidance to clients.

5. Local Market Knowledge

When choosing a real estate brokerage, it’s crucial to consider their knowledge of the local market. Traditional brokerages usually have more extensive local real estate market knowledge since they’ve been operating in the area for extended periods. 

On the other hand, online brokerages may lack the knowledge and experience of the local market, especially if they are new to the area.

6. Marketing and Advertising

Traditional and online brokerages offer marketing and advertising services, but their approach differs. Traditional brokerages usually rely on offline marketing, such as newspaper ads, flyers, and billboards. 

In contrast, online brokerages use digital marketing techniques such as social media, search engine optimization, and email marketing. Choosing a brokerage with a marketing strategy that aligns with your goals is essential.

7. Reputation and Experience

When choosing between traditional and online brokerages, consider their reputation and experience. Traditional brokerages usually have an established reputation and track record in the local community. In contrast, online brokerages may have less experience, but they tend to offer nationwide coverage.

8. Personal Interaction

For some buyers and sellers, personal interaction is essential, and they may prefer working with a traditional brokerage that provides face-to-face meetings and personalized service. Online brokerages often rely on digital communication, which may not be less personal compared to traditional brokerages.

9. Accessibility and Flexibility

Online brokerages are often more accessible than traditional brokerages, as they can be accessed from anywhere with an internet connection. This is particularly convenient for home buyers and sellers in different parts of the country or the world.

Likewise, online brokerages offer more flexibility in a real estate business than traditional brokerages. They usually accommodate buyers and sellers outside business hours and offer more flexible commission structures.

10. Personal Preferences

Lastly, the choice between a traditional or online real estate broker comes down to personal preferences. Some buyers and sellers may prefer the personal touch and local expertise of a traditional brokerage, while others may prefer the convenience and cost-effectiveness of an online brokerage. 

Bottom Line

Choosing between a traditional and online real estate brokerage depends on your personal preferences and needs. Traditional brokerages offer personalized service and an established reputation, while online brokerages offer convenience and lower costs. 

Before deciding, consider your location, budget, and experience level. Choose the brokerage that meets your needs and provides the best service!

At Ardor Homes Massachusetts, we offer a faster, more efficient way to buy and sell your home online. With our dedicated team of estate agents, you’ll get the best possible price for your home without the hassle of traditional house hunting. Plus, with our partnership with a top leading brokerage, we offer you the best results. So, let us be your trusted partner in the real estate journey!

FAQs

What Is Brokerage in Real Estate?

In real estate, a brokerage is a company or agency that acts as an intermediary between buyers and sellers of real estate properties. They usually make use of an escrow account while acting as the intermediary. A brokerage typically employs licensed real estate agents or brokers representing clients in buying, selling, or renting real estate properties. 

The brokerage may provide services such as marketing properties, negotiating deals, facilitating real estate transactions, and advising clients. In addition, real estate brokers and real estate agents in a brokerage earn a commission on the same transaction they facilitate.

What Is a Real Estate Broker?

A licensed real estate broker is a professional who acts as an intermediary between buyers and sellers of real estate. A licensed broker facilitates real estate transactions, such as negotiating prices, preparing contracts, and ensuring all agents comply with legal and ethical standards. They’re also responsible for maintaining records of all real estate transactions and ensuring that all parties receive proper documentation.

What Is a Real Estate Brokerage Firm?

A real estate brokerage firm is a company that employs licensed real estate brokers, providing support and resources to transaction brokers, such as marketing tools, office space, and administrative assistance. The brokerage firm is responsible for ensuring that all real estate brokers comply with legal and ethical standards and that all real estate transactions are conducted lawfully and ethically.

How Does a Real Estate Brokerage Work?

Real estate brokers work on a commission basis, meaning they earn a percentage of the sale price of the property they helped sell. The commission is usually split between the buyer’s and seller’s agents. The commission percentage varies depending on the location and the type of property being sold. The brokerage firm also takes a portion of the designated broker’s commission.

Are Online Real Estate Agencies Trustworthy?

Yes, many online real estate agencies are reputable and trustworthy. However, it is essential to research and read reviews before selecting an online brokerage to ensure they have a good track record and are licensed and regulated by the appropriate authorities.

Can I Negotiate  Commission Rates With an Online Real Estate Brokerage?

Yes, commission rates are typically negotiable with both traditional and online real estate agencies. However, read the contract carefully and understand what services are included in the commission rate before agreeing to any terms.

How Do I Choose Between a Traditional and Online Real Estate Brokerage?

Consider your preferences, budget, and the level of service you require when deciding between a traditional and online real estate brokerage. It may also be helpful to research and compare different brokerages and read reviews from other clients before deciding.

Steph Wilkinson

In her 25-year career, Steph Wilkinson has been involved in the acquisition, marketing and sales of over $3 Billion dollars of residential real estate. A number of years ago, Steph transitioned into Brokerage Leadership for National real estate brands and tech start-ups. She has served as a Business Strategist for real estate agents and brokerages alike and is also a real estate coach and trainer. In her new role with the Iconic Team, Steph will be responsible for the growth of the team and will be working with all of our agents to increase their productivity and bottom line.