You've no doubt heard the expression... You've probably even said it a time or two... We are gullible though and almost without hesitation we tend to grab at things that are FREE or at least what appears to be.

That is the driving force behind the success (meaning prevalence) of "flat fee" listings offering sellers access to the MLS (Multiple Listing Service) for a flat fee. Just do a Google search for "flat fee MLS" and look at all the people doing it: Owners.com, Listbyowneronmls.com, ezmlslisting.com and the list goes on and on... It was an idea that I admit even popped into my head way back when I first got my real estate license and was given the "keys to the truck" when I realized the power of the MLS and my unique access to it.

So, why not do a "flat fee"?  It seems like a good deal.. a seller pays me a little money to just upload their home information and pictures to the MLS (putting them literally in front of millions of buyers and buyer's agents) and I have them sign a "limited service listing" which states that they aren't expecting me to do much more than that.  I can put the seller's contact information in the Realtor Remarks section and have potential buyers just bypass me all together.  I've made my money and the seller got a great deal... saving that typical 3% that he would normally have to pay.

Well... Here's why.  The MLS is a post where REAL ESTATE AGENTS agree to share listing information about their clients homes with other REAL ESTATE AGENTS.  They must be contractually permitted to offer the home for sale and there must be a contract between the seller and the listing agent defining the commissions that the seller agrees to pay.

The problem is that, with a "limited service" listing, there is no contract between the seller and the buyer's agent... AND... there is no contract between the sellers "agent" and the buyer's agent... AND the MLS listing (posted on the website) is NOT a contract and does not guarantee a buyer's agent commission.  Did you follow that? There is NOTHING that guarantees that the buyer's agent gets paid.  AND... the buyer's agent will have to communicate direclty with the seller? Does that sound like there might be a conflict there?

Oh sure.  If you are the buyer's agent...You can call your MLS service and complain and you can call your board and even the State if you want... but you will hear the same thing...  They have met all our requirments and paid their membership...  You should have covered it with your "Buyer's Representation" agreement... You DID get a "Buyer's Representation Agreement" didn't you?

Well IF you did get a "Buyer's Rep", it would need to state in it something like, "should the seller (for some reason unknown to anyone at the time) refuse to pay the commission that is offered on the MLS at the sale of the home, the buyer would have to pay it."  Now, isn't that fun... You may get the unique opportunity of potentially having to sue your clients for your commission... Who's going to do that?

Seasoned real estate agents know this and AVOID these "limited service" listings like the plague.  Of course they are not supposed to do it... and could potentially be fined for not treating them just like a regular listing but... Put yourself in the position of a seasoned agent.  If you had clients that were looking for a home to buy and you happen to find one that fits their needs and desires but it states "contact owner direct" or "limited service listing" in the Remarks section... FLAGS are going off in your head!... Wait a minute... that seller might monkey with my money.  I have had the seller even put in a counter offer that I agree to take 1% commission even though the MLS listing clearly stated 3%... WHAT? I have to do all the work... for both sides... and take 1/3 of what you said you'd pay me to do it? UNBELIEVABLE!

You can bet that many real estate agents see these "flat fee" listings and often "filter" them out of the homes they send to their buyers.  So, the seller saves a little money... but their home is "FLAGGED" by the "limited service" listing and probably won't show like "real" listing... the buyers probably don't get a fair look at a potential home... the buyer's agent is put in a position of self protection instead of representing their buyer... and the "listing" agent has made a few dollars "pimping out" the MLS.