I just (this weekend) negotiated a 4% commission with a realtor for a property I’m selling. The deal is that they’ll keep it in the brokerage and not have to split the fee with another brokerage (which is the usual arrangement; 6% split half and half between brokerages, with the realtors on both sides getting half of that split). Market is hot enough I’m satisfied I’ll get top dollar even with a smaller pool of potential buyers (cash deals over list market).
With that said, my realtor in this market has been doing RE for decades and has a proven record of delivering.
You'll miss the wealthy out of towner with a different brokerage, more likely to be the top bidder.
Most listing brokers will accept a 1% discount, and many buyers will use a discount (refund) broker on their side, so 4% "in house" isn't a substantial discount to miss the one buyer who might go higher.
This is a condo on the lower end of the price spectrum in a large complex, so not a property a wealthy out of towner would be shopping for. If fair market value was >$300k, I wouldn't consider such an arrangement as I might miss the whale.
How does that work? Doesn't that mean they're filling the role of both buyer's and seller's agents? Ignoring the moral complexities there (hint: don't), it means they're doing more work to get the money; presumably up to twice as much work. It doesn't see like they're getting a good deal.
Yes, your example is how it works. Arguably, they're seeing more of the profit under the assumption that there will be almost no work to sell my property (which is the case; it's been completely renovated, and inventory is extremely limited, I would be shocked if it took more than 72 hours to sell), so they're capturing a bit more rev than if there was another broker's office involved in the transaction.
With that said, my realtor in this market has been doing RE for decades and has a proven record of delivering.