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Flat Fee Broker in Cincinnati Ohio -- Ethics?

I had a call from a flat fee broker this weekend on a home that I showed. This Broker used to be a partner in another Brokerage and I had done some transactions with the old Brokerage before.

He asked me if I would be interested in coming to work with him at his brokerage. I told him no that I did not see a future in flat fee brokerages and thank you very much for the offer.

He proceeded to explain to me that the business plan is to collect the 500.00 listing fee and place a sign. At that point your work on the listing is done and you have made your money off it.

Now comes the second part of the plan. I will try to use his words as best as I can.

"You do not want to sell the house. The sign is advertising. Your real job is to scrape as many buyer leads off the sign as you can."

Is this how most flat fee Brokers work?

How do flat fee work with their sellers in your area?

Posted by James Gordon REALTOR® PBD SRS on 02/18/2008 05:25 AM

Comments (40)

sell a cincinnati home, cincinnati real estate, cincinnati real estate broker

Originally posted at: Southwest Ohio Real Estate : Flat Fee Broker in Cincinnati Ohio -- Ethics?

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40 Comments on Flat Fee Broker in Cincinnati Ohio -- Ethics?

FEB

2008

A friend of mine listed her home with one. She understood that the $500 fee meant she would get a sign and be listed in the MLS, but nothing else. She and her husband did additional advertising on their own, and managed to sell their townhome in several weeks. Fortunately they were in a hot area, and being on the MLS worked for them. They offered a buyer agent commission, which I'm sure also helped.

I guess it depends on what the seller expects for their $500 - because it won't include internet advertising, open houses, negotiation help, follow up with potential buyers, broker's opens, flyers, or anything else - just an inclusion in the MLS.

To start off, that Broker sounds like an unethical slime. Legally I think he has covered himself but he is certainly doing a disservice to the seller.

Penny for the 500.00 all you get is entry into the mls. Nothing more and with the limited service rules allowed in Ohio all showings are set through the owner and offers are presented to the owner.

Gary what he is doing is legal and he has covered himself but that is not the way that I would care to trant someone that thinks I am working for them.

In our area discount & flat fee brokers come and go. They quickly get a reputation and their small fees don't help pay their bills so they can't make it. Unfortunately their bad reputation spills over to the rest of us who actually earn the money we charge. A good realtor is worth every penny and more and if we keep educating the public some day they will get it.

Happy Selling

WOW and he is looking out for his clients best interests? hummm.....

Your Friend in Charlottesville!

Jeanette that is the problem, someone puts their property on the market with type of person and the client thinks that all REALTORS® are like that.

Charles the only person that he is looking out for is himself.

I've always thought there's a market for limited service. There are sellers that don't need 100% of what a full service company has to offer, and in reality, they shouldn't have to pay for it. As long as full disclosure is made at the time the listing is taken so that the seller knows, and is aware of exactly what they're getting and what they're not, I don't see a problem with it. Just as with anything having to do w/RE, the shady practices of one or two, make the entire industry look bad.

Most of the limited service co's in this area aren't just limited service, though. They pretty much all have a menu of options ranging from just the MLS thing all the way to full service. Some agents I know do pretty good working the limited service side at those companies(pay check), while others do better working the full serivce side (commish). It's all a matter of how one wants to run their RE business.

And this is coming from an agent who's always worked @ a full service company, lol.

This response may seem a little off topic, but I promise to make the connection. Here in Raleigh, Durham, Chapel Hill area of NC it is not uncommon, in higher turn over neighborhoods for some homeowners to attempt the sale themselves, either in MLS entry only or maybe not, knowing that potential buyers will be driving through their community, many with their buyer agent. Full service buyer brokers generally don't hesitate to show those FSBOs to buyer clients, knowing that we can perhaps get a better deal for them or better yet have a new listing to sell. In this circumstance many agents will charge a higher fee than what is commonly offered in our local MLS. Makes sense. There is more work. So, why would it be OK to sell a FSBO as a buyer agent and not OK to take the money to provide a service of listing in MLS. In both cases, the seller is hopefully aware that they are not being represented.

FEB

2008

Katie there is a place for limited service brokers but it was just the attitude of taking 500.00 for an overpriced listing and not wanting it to sell because your sign would be gone and with it the buyer leads.

Vicky I believe that some people that go with a flat fee brokerage believe that they are being given good advise when in fact the broker wants that sign to stay there as long as possible.

FEB

2008

Just like anything else, I think there is a place for them. I think in a down market, these guys will struggle.

FEB

2008

Bob they may have their place but my problem was that he was so blatant in saying he did not want the listing to sell. In fact part of his business plan calls for it not selling.

If signs really brought in sooooo many Buyers, he wouldn't be using a flat fee business model. It doesn't make economic sense.

Rick I agree with you. I could not figure out how the plan. I did check one flat rate brokers cancelled listings in my area and they collected 87,000.00 on just cancelled.

This has nothing to do with him being a flat fee broker...this has everything to do with his lack of ethics. Even if he worked for a traditional brokerage, his attitude would not be any less professional.

FEB

2008

No agent or broker would turn down a selling commission!!!This comment was obviously made by an old school agent!

Denial, some people think that certain things last forever.however those people eventually learn the plain and simple truth.many many years ago the dinosaurs roamed the earth alongside real estate brokers and agents who held the “holy grail”..”the mls book” but then came along came the world wide web.dinosaurs extinct and brokers and agents wondering when people would notice that they in fact did not hold the “mls” anymore.
THE FUTURE OF REAL ESTATE IS HERE AND COMING TO A TOWN NEAR YOU!

Craig Davidenko
912.398.7245
flatraterealestate.com

FEB

2008

Craig that was exactly his point. He already had made his money on the listing. Now he was after a commission on another home. The whole way that he was working was to post the property and let it sell if it will. The real money for the flat fee broker that I talked to was in selling other peoples listings.

He was after a selling commission but to get it he had to move them off the house that they called on.

MAR

2008

I don't know what to say to that! I don't have a problem with this business model as long as they are honest with sellers and they understand that is all they are doing. If they are telling the sellers they are going to sell their home this way, then they are lying. If they are saying for this $500 all they do is this and they get the buyers that call, then I think it is fine! You just have to be honest and with the way they said it to you, I really doubt they are.

APR

2008

I've used Flat Fee Service in the past but it is a LOW priority and NEVER advertised...only Word of Mouth. I only use it for a ice-breaker and an initial selling discussion. But I always provide 10 X's the service I'm paid for in these situations. Best example is a man that called about my flat fee for being a FSBO advisor. After talking he decided I could do a better job taking pictures than him. One thing leads to another and spent a lot of time "invited" into him home to discuss the other alternatives. He finally decided to do the full listing. So it was a door opener. If I have to follow though I do, but it cost me.

APR

2008

James:

You gotta appreciate this guy's candor.

APR

2008

If the seller's agent tells the seller that for the $500 all you get is.... and that's it than there's nothing wrong with that! Seller knows up front what he's paying for.

If the agent generates buyer calls and works them, so what? He may have been bragging and certainly spoke incorrectly about what he's doing. He should want the seller to sell the home. But he's charging for a service, and providing it.

There are all sorts of arrangements nowadays. Even Craig will be crying when Walmart steps in and does listings for $49.95.

APR

2008

David--I do a similar thing. Gets your foot in the door and you'll be the one they call when they're frustrated. I'm taking my 12 year old over this morning to a FSBO (elderly woman) to help weed her garden. She needs help on the exterior. She'll pay my son to help with yardwork. I'm the only agent who offered her help after she told them she was going FSBO. Yesterday she told me if she finds a buyer, she'll pay me a commission to handle the paperwork and get it to close. If in 2-3 weeks she doesn't have a buyer... listing is mine.

Yes that is the real gimmick! We have one here in Atlanta that has an entire buyers division! Isn't that against the code of Ethics? Using people?

Yes, Jim. The goal should be always to get your client what he needs: to sell the house! Some agents don't care how they get it done, or even if it happens, as long as they profit.

Erica....YOU'RE MY KIND OF PERSON!!! You deserve to be one of the Realtor's of the Year!!!! That's what this business is all about and how to set a foundation for a long term successful career! KUDOS!!!!

Jim....I'm not sure if you comment was directed to Erica or not, but if it was you're WAY OFF BASE and might have missed the point. People like Erica don't do this (nor do I) as a "Gimmick". Sorry if this is not the comment you were referring to though. Please correct me, thanks.

Erica thats the problem he does not want the house to sell. If it does his leads go away

Denise there are some agents that will list your home for free if you buy with them. Those darn balloon heads.

Thanks David. You're right. I don't use any gimmicks! I really hope Jim knows me better (from reading posts I've written) than to think that.

APR

2008

I have used a flat-rate MLS listing service in the past and they were very professional and up-front about what I was getting for my $325. The broker in your scenario seems to have done everything that my broker did, with the big difference being the motivation behind why you'd want to be a flat-fee brokerage.

AUG

2008

PLease don't trash talk flat rate brokers. They are providing a service that all other brokers offer. No broker is paying for advertising in those glossy real estate magazines. There are too many listings on the market! Buyers search all platforms and research their own info. Real estate agents are benefing from being hanfed listing sheets from the buyer.

WOW Craig...I'm not sure if I even understand what the heck you're even talking about.

First of all NOT all brokers do "flat rate". In my area, there are only maybe 6 or 8 out of 150 brokers. As for "no broker is paying for advertising in those glossy real estate magazines"????? you mean their free? And the "hanfed listing sheets..."?...I'm clueless on that one. I've never had a buyer hand me listing sheets.

AUG

2008

Craig, Sibcy Cline the largest broker in Cincinnati still provides a 96 page full color glossy book published monthly of Sibcy listings in the area. Maybe that is one reason that we went from the 34th largest broker in the country to the 32nd. Professional photographers take the pictures of every home that I list. In this market you just can not throw a house on the MLS and expect it to sell.

I re-read this whole post again to make sure I'm on topic...I started a Flat Fee program about 10 years ago...long before I ever heard of it anywhere in the country. It was intended to capture the seller to become their buyer agent when the house sold. I offered a Option 2 which stepped them up to include the MLS which then was the regular % buyer agent commission. IF I sold the house...I got the buyer agent fee...otherwise all I got was the flat fee and then sell my client another home. After doing this 10 years I finally hit on a happy medium...I charge $595 for the FSBO service providing a phone number, sign, brochure design and printing, full-representation listing in my FSBO section of my website with a www.LittleRockMetroFSBO.com website. About 90% of the time we step up to Option 2 which puts them in the MLS for 3% of which I get .6%. Doing this on $200K+ homes makes it well worth the time and effort.

One of my transactions about 2 years ago... (1) Got the $595 (2) went in the MLS in 15 days (3) drive by called on the sign (4) I sell it and get the full 3% (5) I sell my seller client another home and get the full buyer agent commission (6) He refers me to "2" friends and both sell quick (7) the buyer of the original sell calls to sell (8) I get another $595 and sell her a $350K house at full buyer agent commission. Now I have 4 good friends I stay in contact with.

AUG

2008

David the way this started was a rant on the ethics of a local entry only limited service broker who admited that the only reason he was in that possiition was to "scrape buyers" off sign calls and he did not want a listed to sell as that would remove one of his "gettin paid for it sign in the yard ads"

James...I'm with ya. My point is the concept "can" be used as a true benefit to the seller and an agent from an "honest" perspective and these type brokers you're referring to is what gives those of us that are true-to-our-word a bad name.

I think a broker that does what he told you should have his licensed revoked.

What that broker said was just wrong. His motivation is unethical. But don't we all love the sign calls that come in where the buyer is WRONG for the house, or even AFTER it's u/a, and we still pick up and work with the buyer to find him another house?

AUG

David, I amazes me that more brokers/agents don't understand the economics of this like you do.

Can a broker offer flat fee and full service?

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