iBuyers, Discount Brokers, and the 1% Question: Three Disruption Models and What Each One Actually Costs You on Long Island

ByPawli Paola Meyer

The best financial questions a seller ever asks me are the ones framed slightly wrong. Someone will sit down at my kitchen table and say, “What’s the cheapest way to sell this house?” — and what they actually mean, underneath, is, “How do I keep the most money?” Those are not the same question. Confusing them is how sellers on Long Island have been quietly losing tens of thousands of dollars over the last decade to a set of business models that were engineered, almost perfectly, to feel like they were saving them money.

I want to walk through three of those models as honestly as I can — iBuyers, discount brokerages, and the tiered transparent-commission model that Maison Pawli runs on — because the truth about what each one costs, net of every fee and deduction and missed dollar, is not the truth the marketing promises. The cheapest listing fee almost never produces the highest net proceeds. Sometimes it does. But the only way to know which one fits your situation is to do the math honestly, with the real numbers, for your specific house.

Let me show you the real numbers.

What the 6 Percent World Actually Was

Before any of the disruptors showed up, the traditional brokerage arrangement on Long Island looked more or less like this. A seller signed a listing agreement at 5 or 6 percent. The listing broker split that commission with the buyer’s agent, typically 2.5 and 2.5, or 3 and 3. The full amount came off the seller’s proceeds at closing. On a $800,000 North Shore home, that meant $48,000 in commissions at 6 percent, or $40,000 at 5 percent.

The NAR settlement that took effect on August 17, 2024, changed the mechanics of this. Offers of compensation to buyer’s agents can no longer appear on the MLS. Buyers must now sign written agreements with their own agents specifying the compensation before the agent can show them a property. Commissions, always negotiable in principle, now have to be negotiated in writing with a specific disclosure of the rate. What did not change is the seller’s underlying interest: a lower total cost of sale, without sacrificing net price.

So three models have stepped into the gap the traditional structure left open. Let me take them one at a time.

Model One: The iBuyer

An iBuyer — Opendoor is the largest and essentially the only survivor at national scale — makes you a cash offer on your house, site unseen, based on an automated valuation model. You accept or decline. If you accept, they close in as little as 14 days. You do not stage, you do not show, you do not negotiate with a buyer, you do not wait on a mortgage contingency. The appeal is not complicated: certainty and speed.

The cost is where it gets interesting. Opendoor charges a service fee of approximately 5 percent of the purchase price. Its main competitor Offerpad charges around 8 percent as of recent disclosures. On top of the service fee, the iBuyer deducts the full estimated cost of any repairs its inspection identifies, and the seller does not get to negotiate those repair estimates the way they would with a retail buyer. The repair deductions can reset the final offer dramatically from the preliminary one.

More importantly — and this is the part almost nobody puts on the front page — iBuyers do not pay market value. A research team at Clever analyzed 409 Opendoor transactions between May 2023 and June 2025 and found that Opendoor sold properties for an average of 8.79 percent more than it originally paid. That is the iBuyer’s margin built into the offer price. Real estate analyst Mike DelPrete, who has followed this sector closely for years, tracked the industry through its peak and collapse.

Do the math on an $800,000 Long Island house:

  • 5 percent service fee: $40,000
  • Closing costs (1 percent): $8,000
  • Discount to market value (call it 8 percent, conservative): $64,000
  • Potential repair deductions (typical range): $10,000 to $25,000

Total hidden cost of convenience, before any repair haircut: roughly $112,000. After a moderate repair deduction: closer to $130,000. That is the true all-in cost of selling to an iBuyer on a reasonably-priced North Shore home, versus a comparable retail sale. The 5 percent service fee is a fraction of the real spread.

Why the iBuyers Are Mostly Gone

Zillow exited iBuying in November 2021 after losing over a billion dollars in three and a half years. Redfin shut down RedfinNow in November 2022, laying off 862 employees and taking a $22 million loss on the segment. Redfin’s CEO Glenn Kelman, in the all-hands email announcing the closure, was unusually direct: ”To prosper in a housing downturn that could last at least through 2023, we have to simplify our business. We’re closing our iBuying business, RedfinNow, because maintaining a profit with rising interest rates would make our offers on homes insultingly low.”

That quote is the entire story of why this model is structurally hard to make work. An iBuyer can only hit its margin by buying below market and reselling near market, which requires stable or rising prices during the holding period. When prices wobble, the iBuyer either buys less or buys lower — and buying lower means offers to sellers that, as Kelman put it, are insultingly low. Opendoor purchased 8,241 homes in 2025, down from roughly 35,000 in 2022. iBuyers still represent less than 0.5 percent of all home purchases in the United States.

None of the major iBuyers operate meaningfully on Long Island. The algorithmic model does not handle the specificity of North Shore inventory — waterfront parcels, pre-war construction, shifting flood maps, school-district variance by hamlet, historic district overlays. An Opendoor AVM looking at Mount Sinai cannot distinguish between a Miller Place Road colonial and a hamlet-adjacent ranch on Echo Avenue. It prices conservatively and moves on. You, the seller, eat the conservatism.

If speed and certainty are genuinely what you need — a job transfer with a hard deadline, an estate situation — the iBuyer discount may be worth it. For almost every other seller on Long Island, it is not.

Model Two: The Discount Brokerage / Agent-Matching Service

This is a different kind of disruptor. Clever Real Estate, Ideal Agent, UpNest, Redfin’s brokerage arm, Houwzer, and a handful of others all play in this space. The premise: connect sellers to full-service agents at a reduced commission — typically 1.5 percent listing fee (with a $3,000 minimum on lower-priced homes) instead of the traditional 2.5 or 3 percent.

The mechanics are worth understanding because they are not what the marketing implies. Clever is not a brokerage that employs agents. It is a referral network. When you sign up, Clever matches you with agents at existing brokerages — Keller Williams, RE/MAX, Coldwell Banker affiliates — who have agreed in advance to accept a 1.5 percent listing fee in exchange for Clever-generated leads. The agent pays Clever a referral fee, typically 25 to 40 percent of their commission, out of that 1.5 percent. What the agent actually keeps on your transaction is meaningfully less than 1.5 percent. That gap matters because it shapes how that agent allocates attention across their book.

The structural challenge with the discount brokerage model is what the industry calls incentive compression. An agent working your listing for a net 0.9 to 1.1 percent after referral fees and brokerage split has a mathematical reason to move volume rather than maximize outcome on any single property. Spending an extra two weeks fine-tuning the marketing, or negotiating hard for another $15,000, costs them hundreds of dollars while costing you thousands. The economics pull the wrong direction.

This is not a character critique of the agents. Many agents in these networks are competent and diligent. It is a statement about what the compensation structure makes rational. When the upside per transaction is compressed, the rational response is to compress the time and attention per transaction.

The other issue, on Long Island specifically, is that these platforms match you with whoever is in their network in your zip code. You do not choose your agent based on North Shore experience, on whether they have sold on your block, on whether they know the quirks of the school district or the historic district overlay on your property. You get matched.

Long Island total cost, on that $800,000 example, through a 1.5 percent discount network listing:

  • Listing commission: $12,000
  • Buyer’s agent commission (now negotiated separately post-NAR settlement, but commonly 2 to 2.5 percent): $16,000 to $20,000
  • Net proceeds deduction: $28,000 to $32,000 in commissions

The actual number on a well-run sale is competitive with traditional brokerage and significantly better than an iBuyer. The risk is not the fee — it is whether the compressed incentives produce a marketing and negotiation effort that actually captures your home’s full price. If the discount agent leaves $20,000 on the table because they did not push hard on a counter, your 1.5 percent savings becomes a negative trade.

Model Three: The Tiered Boutique Model

This is the model I built Maison Pawli around, and I want to be explicit about what makes it structurally different from either of the above.

Rather than offering one listing price with hidden service tradeoffs, Maison Pawli runs three transparent tiers. Sellers pick the tier that fits the work they actually need:

  • Smart Seller at $500 setup plus 0.5 percent — for the seller who wants to run the sale but wants a licensed broker protecting the paperwork, running the MLS, and negotiating the offers
  • Professional at 1 percent — full-service marketing and transaction management, with physical presence at showings, inspections, and open houses delegated to the seller; photography is seller-provided (or hire a local photographer for a few hundred dollars) or upgrade to Premier
  • Premier at 2 percent — the white-glove tier, available in Mt. Sinai and surrounding markets. Everything in Professional plus Pawli-taken professional photography and drone, hosted private showings, two hosted open houses, presence at inspections and appraisals and final walkthrough, Heritage Diner Lobby Showcase for select homes, AI virtual staging, and full marketing suite

The difference from the discount network model is structural. When a Clever-matched agent lists your home at 1.5 percent, they are doing the work of a 2.5 percent traditional listing at compressed economics, because the brokerage ate the fee without changing the service expectations. That is where incentive compression bites. At Maison Pawli, the Professional 1 percent tier is priced honestly against what it actually includes. Photography and physical showings are not secretly removed from the service menu — they are explicitly listed as either seller-handled at Professional or Pawli-handled at Premier. You pay for what you get.

On an $800,000 house at Maison Pawli Professional (1 percent):

  • Listing commission: $8,000
  • Buyer’s agent commission (post-NAR, negotiated separately, commonly 2 to 2.5 percent): $16,000 to $20,000
  • Net proceeds deduction: $24,000 to $28,000 in total commissions
  • Out-of-pocket: roughly $400 to $750 for a local real estate photographer, if you do not have professional-grade photos of your own

On an $800,000 house at Maison Pawli Premier (2 percent):

  • Listing commission: $16,000
  • Buyer’s agent commission: $16,000 to $20,000
  • Net proceeds deduction: $32,000 to $36,000 in total commissions
  • No out-of-pocket — Pawli-taken photography, drone, hosted showings and opens, and full presence at every appointment are included

For reference, traditional 5 to 6 percent on the same sale is $40,000 to $48,000 in total commissions. Even at Premier, Maison Pawli’s total exposure is roughly $4,000 to $16,000 less than traditional full-service. At Professional, the gap widens to $12,000 to $24,000.

Here is the part that matters for both tiers: none of the savings come from compressed agent incentives. The broker-owner’s incentive is fewer listings, each of which represents meaningful business. If I am carrying seven listings and yours is one of them, a bad outcome on your sale is 14 percent of my year. That alignment does not exist at a large franchise office, and it does not exist in a discount network where your listing is one of hundreds flowing through a referral engine.

I realize it is awkward for me to make the case for my own model. But the honest version is the only one I find useful to write, because most sellers reading this will not hire me anyway. They will hire someone local, and what they actually need is the framework for evaluating the choice. The framework is: ask exactly what is and is not included at the fee being quoted, and ask what the fee structure does to the service incentives over the life of your listing. An honest broker should be able to tell you exactly what you are buying at whatever price they quote.

How to Evaluate Which Model Is Right for Your Sale

Every one of these models has sellers for whom it is the correct answer. What I tell people over coffee, before they have signed anything with anyone, is to ask themselves three honest questions.

How important is time, really? If you have a hard deadline — military orders, a closing on a new house that you cannot move, an estate situation — the iBuyer discount may be worth paying. For everyone else, the 30 to 60 extra days of a retail sale are generally worth tens of thousands of dollars.

How unique is my property? If you are selling a three-bedroom split in a development of identical three-bedroom splits, the automated valuation and the discount-network match will both perform adequately. The more your property deviates from the algorithmic median — waterfront, pre-war, architecturally distinctive, oversized lot, historic district, North Fork vineyard parcel, anything that requires human judgment to price — the more the value of a broker who actually walks it outweighs the fee savings.

What is my realistic price range? On a property under $400,000, the minimum fees and referral structures of discount networks bite hard, and the gap between models narrows. On a property over $1 million, the fee model matters much more — a 1 percent delta on a $1.5 million house is $15,000, real money, which makes the choice between a 1.5 percent network agent and a transparent-tier boutique a meaningful dollar question as well as a service question.

The Thing the Marketing Will Not Tell You

The disruption models did not fail because they were stupid ideas. iBuyers identified a real friction in the selling process. Discount brokerages identified real fee compression that the 6 percent norm deserved. Both pushed the industry toward more seller-favorable economics, and on the whole that has been good for consumers.

What the marketing will not tell you is that each of these models makes its money somewhere. iBuyers make it on the spread between purchase and resale. Discount networks make it on referral fees and volume. The seller’s job is to figure out where the model is earning, and whether the trade is worth it for the specific house, the specific timeline, and the specific price point.

The tiered transparent-commission model, when done honestly, earns through lower overhead, higher attention per listing, and pricing each tier against what it actually includes rather than bundling everything and compressing the economics. It is not magic. It is a structural arrangement that aligns the broker’s incentive with the seller’s result, because the broker’s entire business depends on every listing performing — at whichever tier the seller chose.

That alignment is the thing worth buying. The fee is just the wrapper.

Real estate markets change. For current listings and market data, contact Pawli at Maison Pawli.

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