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Flat Fee Listings. Why You SHOULD Consider Them.

By Bryant Tutas

Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

October 27, 2010 09:48 AM

Hi folks. I want to talk a little bit about Flat Fee MLS Listings. There is a featured post titled "To Flat Fee or Not to Flat Fee" I'd link to it but it's "Member's Only". Anyway, the writer is asking "Why are so many agents opposed to flat fee listings?" That's a very good question.

Based on the responses she received the issues agents have are:

Can't reach the seller to show the property.
Why should they have to do all the work for half the pay?
The properties are usually over priced.
The co-broke offered is usually less than "normal".
Stuck negotiating with a Seller that has no real estate knowledge.

Now folks, is it just me, or does this sound just like every other real estate transaction? Can't reach the agent. The listing agent is clueless so we have to do all the work. The property is over priced etc...

I recently took 12 Flat Fee MLS Listings. I had never done this before but was approached by an investment club. All showings, negotiations and communications are handled by the investor. All I did was place the properties on the market. Once the property is entered into the MLS my job is done. I make about $300 an hour on these listings.

This investor sold over 100 properties last year and has far more experience than most agents that I know. And they are paying a fair co-broke if an agent should happen to sell one of their properties. So far that has not happened as they usually sell their own. They want to sell their own properties. They have a huge list of potential buyers that they work with helping them to repair their credit. Once the buyers are ready they help them get either a FHA or a USDA loan and place them in one of their properties. It's a Win/Win.

They needed the properties on the MLS for appraisal purposes only. I'm looking forward to doing many more of these. It's a great income stream to supplement my full service brokerage activities.

I guess the point is to not lump all Flat Fee MLS Listings together. The beauty of our business is that there are many ways to conduct it. I'll take $300 an hour for entering listings any day of the week. Wouldn't you?

Tutas Towne Realty, Inc

Offering Flat Fee MLS Listings in Central Florida
(For Select Sellers)

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Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

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John White

Atlantic & Pacific Real Estate (US) LLC - Dracut, MA

Bryant...

I agree with your assessment that some of the same issues that we deal with on a "full service listing" are the cons that some are pointing out a "fee for service" listing. Ultimately, every agent has to do what he or she believes is the correct approach. I certainly understand why some agents are staunchly opposed to this model. They're simply trying to protect their "territory". The thing I've learned about real estate is that those to don't adapt with the changing market will soon find themselves back to doing what they were doing before they decided to pursue a career in real estate. This simply isn't the right profession for those who are resonant to change.

Oct 28, 2010 03:46 AM

John Marshall - FORE!

LoKation Real Estate - Cherry Hills Village, CO

Specializing in Golf Course Properties

Broker Braynt, your model makes sense in this situation and I would definitely entertain the same if it comes up in my area, when the flat fee clients expect full service for the initial flat fee is where I would draw the line. I have been there and if the conversation from a seller comes up that they want limited service I offer an a la caret menu of commissions.

Oct 28, 2010 03:56 AM

Denise Hamlin, Broker/Owner

Cardinal Realty ~ 319-400-0268 - Iowa City, IA

Helping Happy Clients Make Smart Choices

The comments are as educational as the post with this one. I think times are changing and we need to be creative to get ahead. Right now I don't know where I stand on flat fee listings, but appreciate the discussion - It definitely gives me food for thought. I'm in the process of taking pre-broker classes and obviously when the time comes to go it alone I need to have a plan. Erica's comment hit home. It seems being your own boss does give you a flexibility that otherwise isn't there. (Obviously I knew that already, it's just that working for a small company I'm not exactly tied to a lot of rules as it is. Fact is though, there are still rules!)

Oct 28, 2010 05:28 AM

Carla Freund

Keller Williams Preferred Realty - Raleigh, NC

NC Real Estate Transition & Relocation 919-602-848

Bryant,

First, let me say thank you for posting and giving your honest feedback.

I don't think I could ever be a flat fee agent. It's just in my nature to help folks and go the extra mile. I'm glad you've had success. I do have to say, I'm still not convinced this is the way to go for the average seller. Do you think it would have been the same if all those mls entries had been by different sellers?

It sounds like you've found a good niche with the investors. Good Luck!

Oct 28, 2010 05:56 AM

Sarah Rummage

Benchmark Realty LLC, Nashville TN 615.516.5233 - Nashville, TN

Love Being Realtor® in the Nashville TN Area!

You have make the flat fee work for you. That sounds like a good deal all the way around.

I will never understand, though, how in most cases the listing agent can just disappear and let the buyer's agent do all the work. My phone rings off the hook when I am the listing agent. Even the easy deals take a ton of hand holding. I can't escape it. Do most flat fee brokers just ignore it? I really don't get that business model.

Sarah

Oct 28, 2010 01:59 PM

Kim Boekholder Utah Real Estate/ PECO

Results Real Estate 801.580.5624 - Draper, UT

Broker Results Real Estate/Leasing Specialist PECO

love this and love all the opinions. Flat fee without having to pay half to my broker is why I'm seriously thinking about going on my own. more food for thought. loving this

Oct 28, 2010 03:17 PM

Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

If you systemize the flat fee listing business, it can be very lucrative. Between a website and an assistant, you can literally have the whole flat fee business run on autopilot. Then it doesn't even take an hour of your time. It takes an hour of someone else's time. Good job for thinking outside the box.

Oct 29, 2010 03:36 AM

Nick Vandekar, 610-203-4543

Realty ONE Group Advocates 484-237-2055 - Downingtown, PA

Selling the Main Line & Chester County

As has been mentioned above, our industry is changing and being willing to change and not stick your head in the sand saying we only accept x% for our listings is going to mean being in business or not. There are going to be a lot more business opportunities in the future and we will need to be flexible and look at each opportunity and choose when to say No and when to say Yes. Good post thanks.

Oct 29, 2010 03:40 AM

Becky Johnston, GRI, CNE, ePro

Golden, CO

BB I agree 100% with you.

I had to go on my own to handle these type of transactions. I went to legal, and had my model set up so it wasn't cheap either. It is something I am glad I did, and love the different options available.

Oct 29, 2010 04:09 AM

Mike Weber

Keller Williams Realty Northern Colorado - Fort Collins, CO

40+ years in Northern Colorado

Interesting spin on the idea. I have always been against doing this, but your argument is good.

Selectively choosing the property that gets listed this way would be very important. My concern would be if a deal goes south, my E&O deductible is $1500. If I only made $300 on that transaction, I am now upside down $1200. If I don't have control of the transaction, but my name is on a part of it, I would worry.

Oct 29, 2010 04:45 AM

Marcy Moyer

eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA

Probate, Trust, and Investment Specialist

It sounds like you are involved with a good system, but some of these flat fee listings become a nightmare.

Oct 29, 2010 06:35 AM

Marcy Moyer

eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA

Probate, Trust, and Investment Specialist

It sounds like you are involved with a good system, but some of these flat fee listings become a nightmare.

Oct 29, 2010 06:36 AM

Patricia Beck

RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO

Colorado Springs Realty

When making a decision of whether or not to take a flat fee listing, I think it depends on the seller and situation. Some brokerage companies here do not allow their agents to do it though.

Oct 29, 2010 09:40 AM

Ty Lacroix

Envelope Real Estate Brokerage Inc - London, ON

Bryant, the flat fee worked in your case because the sellers were professional like, it was a business for them and they offered a fair co-broke.

Oct 29, 2010 11:11 PM

Larry Estabrooks

Independent Real Estate Agent - Moncton, NB

100% representation means NEVER DUAL AGENCY !

Good points Bryant and as your title says - worth considering.

Oct 30, 2010 03:02 AM

Tammy Fullriede

Bale Realty - Wilmington, IL

Thank you for the refreshing post!

I risk having many professional agents come against me for what I am about to say, but like so many industries, I do believe that the real estate industry will be changing within the next 10 years. With the power of the internet and the information that the average person can get online, most people do not need to call an agent to get many of their questions answered. Print advertising for the most part does not bring buyers in these days. If you want to sell your home today you absolutely must have an excellent online presence.

With so many sellers underwater or having little equity in their homes, The Flat Fee Service option is going to become more and more attractive to them. I was thinking of offering them an upscale flat fee service, where for a little more money, I would meet with them, advice on what they need to do to get their home in selling condition, take all photos, give them a property website, provide them with a centralized showing service, lockbox and maybe a sign. After that I am done, until we finally get an offer. Here in Illinois, it is the law that all listing brokers must represent the seller in the getting the contract negotiated and signed so I would have to do that regardless

The hardest part for me currently in Real Estate is the wait between listing and offer. I always like to keep my clients updated on where we are at, setting showings, getting feedback etc...And then there is the dreaded I am sorry but there is no activity going on with your home right now. Then you have to explain to them the current market conditions AGAIN and share with them what has just been listed or sold etc. On it on it goes. Since it takes a while to sell most homes in my current market area, I dread making those phone calls and the months in between is very hard on me as a professional.

I think a Flat Fee Service makes a lot of sense in today's market. It's a lot to think about and it has it‘s pros and cons, so any advice you could give me and others Broker Bryant would be very much appreciated.

Oct 30, 2010 05:41 AM

Cheryl S . Glover

Keller Williams Classic III Realty - Clermont, FL

CIPS, CRS, Green, GRI, SFR, TRC,

I have to say that I just do not agree with doing clerical work under the heading "Realtor". I think that you are short changing yourself. This is your career, not a summer job. In the long run it is not a positive move for MLS or you. I have done flat fee listings depending on circumstances but disagree with you taking a fee to get them past using a professional. Sorry that I disagree but . . . . .

Oct 30, 2010 06:53 AM

Andrea Branch

Miami, FL

Bryant & Erica; Both great posts; thanks for validating there are others like minded.

Oct 30, 2010 02:01 PM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Thanks guys. I appreciate all of the different opinions. That's how I learn.

The point of this post was to get you to keep an open mind. Things are rarely black and white. Analize opportunities as they arise and then make an informed decision about whether or not it's something you want to do. That's what I did and I was glad I did.

Working with this investor on the flat fee listings has already opened up some new opportunities. I expect it to lead to numerous closed transactions on the buying side plus it's given me another cash investor to have in my stable for when I need to stop a foreclosure on a short sale. It's all good.

Don't box yourself in.

Nov 01, 2010 12:38 AM

Anonymous

Sue Aitken

Flat fee service has just started coming into our market, and is creating problems for co operating brokers.

The listing office takes the listing for $395.00 and posts on our mls system, and the selling commission is $1.00. The selling broker does the negotiating directly with the seller with the listing broker having no involvement.

This is just a way for a listing broker to make a quick $395.00 and no remuneration to selling broker.

Nov 02, 2010 11:53 AM

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