Competing Against Discount Brokerages and iBuyers

Crystal 

Walker

Content Writer

The call came on a Tuesday afternoon. A seller who'd worked with an agent three years ago was listing again, but this time she wanted to "talk about commission rates." She'd been contacted by a discount brokerage offering to list her home for 1%, and an iBuyer had already sent an instant cash offer. Could the agent match either one?

The agent didn't panic. This conversation happens to every agent eventually, and how you handle it determines whether you're running a sustainable business or constantly racing to the bottom on price.

The Reality of the Current Market

What many sellers have historically seen as a common commission structure is now facing pressure from multiple directions. Discount brokerages have stripped down their services and passed some of those savings to consumers. Tech companies promise instant offers with no showings, no repairs, and no hassle. Meanwhile, buyers increasingly question why they need an agent when listings are accessible from their phones.

These competitors aren't going anywhere. The question isn't whether you'll face this competition, but how you'll respond when you do.

Understanding What You're Really Up Against

The Discount Brokerage Model

Many discount brokerages operate on a higher-volume model. By charging a lower listing fee, they rely on efficiency, automation, and standardized processes to make the numbers work. To do this, services are often limited in scope compared to what some full-service agents provide.

A typical package may include an MLS listing, a lockbox, and basic photography. Services such as in-depth pricing strategy, staging guidance, customized marketing campaigns, or hands-on negotiation support may be offered at additional cost or not at all, depending on the brokerage and market.

The iBuyer Promise

Instant buyer companies focus on speed and certainty. They often provide quick offers based on automated valuation models, market data, and property condition assumptions. For some sellers, that convenience is extremely appealing.

However, sellers should carefully review the full financial picture. In many markets, agents and sellers report that iBuyer offers can be lower than what might be achieved through open-market exposure. In addition, service fees, repair deductions, and closing costs can significantly affect net proceeds. The exact impact varies widely by company, property, and timing.

Why Sellers Choose Alternatives (And What It Teaches Us)

An experienced agent lost a listing to a discount brokerage last spring. It stung. So the agent called the seller a month later to see how things were going. The house had been on the market for 47 days with minimal activity. In this particular case, the photos were subpar, the description was generic, and the price appeared to be too high.

The seller eventually fired that brokerage and called the agent back. But here's the lesson: the seller didn't initially choose them because she was cheap. She chose them because she didn't understand the difference in service. The agent hadn't made that difference clear enough.

People choose discount options when they:

• Don't understand what full-service representation includes
• Have had bad experiences with traditional agents who didn't deliver value
• Believe their home will "sell itself" in a hot market
• Focus on upfront costs rather than net proceeds
• Feel overwhelmed by the process and want simplicity

Building Your Value Proposition

Stop Defending Your Commission

The fastest way to lose a pricing conversation is to get defensive about your commission rate. When you justify your fees by listing all the work you do, you're still having a conversation about cost rather than value.

Instead, shift the conversation to outcomes. What's your average list-to-sale price ratio compared to the market? How much faster do your listings sell? What's your track record for getting deals to close without falling apart?

High-performing agents track their own metrics and compare them to local market averages. Some are able to demonstrate higher list-to-sale price ratios or shorter days on market based on their pricing strategy, marketing, and negotiation approach.

When agents can document those results, the commission conversation shifts from cost to outcome. Even small percentage differences in sale price or timing can materially affect a seller's bottom line.

Document Your Process

Most sellers have no idea what happens between signing a listing agreement and closing day. They see you take photos, put up a sign, and host an open house. They don't see the 40 hours of work that happens behind the scenes.

Create a detailed timeline document that shows every single task you'll complete, when you'll do it, and why it matters. Include everything from pre-listing inspections to negotiation strategies to coordinating repairs after inspection. Make the invisible visible.

Your Marketing Actually Has to Be Better

You can't charge full commission and then post some iPhone photos on Zillow. If you're going to compete on service quality, your marketing needs to prove it.

The Photography Question

Professional photography isn't optional anymore, it's table stakes. But here's what separates adequate from excellent: drone footage for properties with land or impressive exteriors, twilight shots that make homes look warm and inviting, virtual staging for vacant properties, and 3D walkthroughs that let buyers explore every corner before scheduling a showing.

One listing last year illustrates this perfectly. A home sat vacant for three months with the previous agent. Stark white walls, empty rooms, terrible natural light. The new agent brought in a virtual stager, hired a photographer who knew how to work with difficult lighting, and had a drone video showcasing the neighborhood. Six offers came in within ten days.

The Digital Strategy Gap

Most discount brokerages put your listing on MLS and let the portals do the rest. That's not a marketing strategy, that's a distribution baseline.

A real marketing strategy includes targeted social media advertising to reach likely buyers, email campaigns to agent databases and other agents' databases, printed materials for high-end properties, video content that tells the property's story, and SEO/LLM optimized listing descriptions that drive organic traffic.

Full-service agents often invest significantly more per listing in professional marketing than limited-service models. That investment may include photography, video, digital advertising, print materials, and targeted outreach. The level of spend varies by agent, brokerage, and price point, but the difference is often visible in presentation, exposure, and buyer engagement.

The Consultation That Changes Everything

When a potential seller makes contact, smart agents don't rush over with a listing presentation and comparable sales. They schedule a consultation where they walk through the property and ask questions about goals, timeline, and concerns.

Then they provide three options:

Option 1: Full-Service Premium - Everything described above, with white-glove service throughout. Standard commission.

Option 2: Modified Service - The seller handles some tasks themselves (cleaning, minor repairs, open houses). Reduced commission.

Option 3: For-Sale-By-Owner Support - Where permitted by state law and brokerage policy, the agent provides pricing guidance, contract review, and limited advice for a flat fee. The seller does everything else.

When sellers are presented with clear choices, many appreciate the ability to select a service level that fits their needs and budget. Agents who use this approach often report that most sellers choose full-service representation, while others opt for modified or limited-support options. Offering choices reframes the conversation from defending commission to aligning services with expectations.

Handling the Instant Offer Conversation

When a seller mentions they've received an iBuyer offer, effective agents never trash-talk the company. Instead, they pull out a calculator.

"That's great that you have an offer in hand. Let's compare it to what you'd likely net if we listed the property traditionally."

Breaking down the instant offer:

• Purchase price
• Minus iBuyer service fees
• Minus repair deductions
• Minus closing costs the seller will cover

Then showing the traditional listing scenario:

• Expected sale price based on comps
• Minus agent commission
• Minus typical seller closing costs
• Minus any repairs agreed upon

When agents walk through both scenarios line by line; price, fees, repairs, and closing costs, sellers can see how different approaches affect net proceeds. In many cases, the difference can be substantial, even after accounting for commission. That said, speed and certainty still matter, and for some sellers an instant offer may be the right solution.

When You Should Walk Away

Not every client is your client. Some people will always choose the lowest price regardless of service quality. Some have unrealistic expectations that may not align with the realities of the market. Some are so difficult to work with that the emotional toll isn't worth any commission.

One agent walked away from a potential listing last month. The seller wanted full-service representation but was only willing to pay a minimal commission. She'd interviewed six agents before and would probably interview six more after. That may not be someone you can help, and trying would just leave everyone frustrated.

Recognizing those situations early allows agents to protect their time, energy, and ability to serve the right clients well. Chase every low-ball opportunity and you'll end up working twice as hard for half the money.

Building a Referral Engine That Insulates You

The best defense against discount competition is a strong referral base. When 60-70% of business comes from past clients and referrals, agents aren't competing on price anymore. They're competing on relationships and track record.

Staying in touch with past clients monthly matters. Not with generic market updates that go straight to spam, but with genuinely useful information: neighborhood developments, home maintenance tips, local business recommendations, invitation-only client events.

Some agents host casual happy hours every quarter for past clients. Nothing fancy, just drinks and appetizers at a local spot. The goodwill and referrals generated from those events are worth exponentially more than the cost.

The Long Game

Consider an agent who sold a home for 2% when everyone else charged 3%. The seller chose that agent based on price, but the service was mediocre, communication was spotty, and there was no way to know whether it was a good deal. When that seller listed again five years later, they hired someone else.

The agents who build lasting businesses don't do it by being the cheapest. They do it by being so good that their clients never consider working with anyone else. They do it by making the process less stressful, by advocating fiercely during negotiations, by solving problems before they become crises, and by treating their clients' money like their own.

Can you compete with discount brokerages and iBuyers? Absolutely. But not by matching their prices. You compete by being so clearly better that price becomes secondary. You compete by demonstrating value that can't be automated or outsourced. You compete by being the agent someone recommends without hesitation when their best friend needs help buying or selling a home.

That's not the easiest path. But it's the sustainable one.

Disclaimer: Examples, figures, and scenarios discussed in this article are illustrative and based on industry experience. Actual results, fees, timelines, and net proceeds vary by market conditions, property characteristics, timing, and service provider. This content is for informational purposes only and is not legal, financial, or real estate advice. Sellers should evaluate all options based on their individual circumstances and consult appropriate professionals as needed.