Flat fee listings are an interesting concept. The official industry term is actually “limited service listings.” Personally I think that term better describes them anyway. The basics behind it are that your house gets listed in the local Multiple Listing Service (MLS), gets loaded onto all the hundreds of websites that the MLS feeds onto, and maybe a few other services. But instead of the listing agent handling all the phone calls, showings, negotiations, paperwork, and getting it closed, that job instead falls onto the seller. In return for less service, the seller pays a lower fee.
In a typical real estate listing there are often 2 brokerages involved in the transaction: (1) The firm that lists the property for sale, and (2) the firm that actually sells the property and represents the buyer. As an example, the seller might pay around 5-6% of the purchase price as a commission. The listing brokerage would share that commission with the buyer brokerage. So in this example a full service commission listing brokerage would get 2.5-3% and the buyer brokerage would get 2.5-3%.
What the flat fee listing does is remove the listing brokerage somewhat out of the equation. Instead of the listing brokerage collecting 2.5-3%, they would instead get either a flat rate of a few hundred dollars or they would get a much smaller percentage. The buyer brokerage would still get their 2.5-3% commission. In return for doing the extra work involved, the seller gets to save potentially thousands of dollars in commissions.
Here is an example based on a $200,000 house sale and a 6% commission with 3% being offered to buyer brokerages.
Full Service Listing: Flat Fee Listing:
$200,000 price $200,000 price
- $6,000 listing side commission (3%) - $300 listing fee
- $6,000 buyer side commission (3%) - $6,000 buyer side commission
$188,000 net $193,700 net ($5,700 in savings)
With the huge growth of the internet, the latest statistics that I have seen show about 80% of all buyers start searching for real estate themselves online before they start dealing with a real estate agent to help them. The internet has truly changed the way consumers buy and sell everything. But it is important to know what you are getting into.
The key with flat fee listings is that the seller needs to be comfortable with all the additional tasks involved that they will now be taking on. If sellers are not comfortable with the phone calls, the negotiating, the paperwork, etc., then a flat fee listing may not be appropriate.
If you are thinking of going the flat fee listing route, the next step is finding the right brokerage to list it for you. There are plenty of firms all over the internet that will list your property and their prices can range from under $100 up to $1000+ depending on the level of service provided. Besides prices, the most important thing that you want to look at when deciding which firm to use is their level of customer service. Do they return calls and emails promptly? Are they willing to help out if you need assistance beyond just loading your property into the MLS? Can they help you determine a good listing price? If a problem arises with the transaction, can they help steer you out of treacherous waters? Sometimes you can go online and find reviews about real estate brokerages but not always, so make sure to do a little homework before you just sign up with the cheapest priced firm.
It is important to weigh the pros and cons of doing a flat fee listing. We have a detailed “Frequently Asked Questions” page on our website to help you make the right decision before listing your property for sale. We also do regular full service listings so give us a call if we can help.