Over the past few weeks I have been noticing an up-tick in flat-fee listings on our local MLS. An argument could always be made during a boom that a one-armed blind monkey with a sign in the ground could sell a house. So going FSBO (for sale by owner) in that type of market has some merit provided the seller has a full understanding of the responsibilities, liabilities and TIME involved. However, I have always wondered how well such systems really work for sellers in a challenging market. After all, it’s very tempting for a seller to want to pocket that commission money rather than hand over a fat check to a brokerage.

Being a person who likes numbers – I decided to take a look at one of the more popular flat fee brokerages and compare it to one of the typical full-service brokerages in the area and compare their relative performance by several criteria.

1. Average Selling Price.
2. DOM (Days on Market.)
3. % of listings that expire.
4. % of listings that are in contract/pending/sold.


Granted, I didn’t have the time to compare all flat fee services to all full-service brokerages, but I think this opens a window into the process even though it is far from complete. These figures apply to listings for both brokerages that were in effect over the same six month period.


Average Selling Price:

The average full-service listing sold for 7% more or about $30,000 more than the average flat fee listing. In this case I was being generous to the flat fee side because they were primarily selling single family homes whereas the full-service brokerage had more than a few cooperatives listed which sell for significantly less money.

Some might think this is a wash with respect to commission costs, but it isn’t. The flat-fee seller put money up-front – from about $200 to just under $1000 in some cases – to list the property in the MLS. In addition, when you list in the MLS, you are marketing to real estate agents and must offer a commission to the selling side or there is probably little point in an MLS listing. So, the seller has had to pay the listing fee up front, any marketing costs apart from the MLS listing they choose to do and offer a partial commission. These costs add up quickly and create risk. The seller takes on the cost of marketing the home and risks failure. If the home doesn’t sell, that money is lost and they have the added cost of full commissions should they need to go that route.

Days on Market:

For single family homes the average DOM were 56 days more than the full service counterpart. That’s mortgage and carrying charges such as electricity/heat for an extra two months on the market. If the seller is occupying the home they are selling and the clock is not ticking on an escrow, this is fine. Each situation is unique.

Percent of Listings that Expire:

19% of the flat-fee listings expired while 23% of the full-service listings expired. Of that group, about half of the full service listings re-listed with the same brokerage while only 7% o the flat-fee listings re-listed.

Percent of Listings that are in Contract or Sold:

Those figures were perhaps the most striking: 19% of the flat fee and 54% of the full service listings were under contract/sold in that six month window.

These numbers are interesting and seem to put to rest the notion that real estate agents don’t really “do anything except stick a sign in the ground.” Obviously, in this example and in this market, the full-service brokerage was able to best the flat –fee service in almost all the criteria – including leaving the seller with more money in his/her pocket. This begs the question as to why.

Selling a home isn’t rocket science. Well, neither is changing your own oil or fixing your own car. You might even install your own new kitchen and bath. But is doing so WISE? Don’t get me wrong. Flat-fee listings may work for a certain segment of the population. For those who know the housing market well, understand marketing and local pricing and can price their own homes objectively and with no emotion, a flat-fee service offers tremendous value. Sellers also have to recognize that selling their own home is very time-consuming and they also need to know how to qualify buyers and assess which ones are the real deal and which are time consuming tire kickers. Sellers who go this route deserve a lot of credit, but they need to know what they are getting into and be honest with themselves. Do they really have the time and patience to sell by themselves? Do they know enough about the market to really have this effort work for their bottom line?