Flat Fee Real Estate Brokerages, a good deal or not?
A new trend offered to sellers to list a home is the Flat Fee Brokerage. Sellers pay a fixed amount, sometimes as low as $99, and have the home listed for sale in the MLS. Just like working with a full-service brokerage.
You would think, WOW!!!! that is a wonderful deal. It can be, but most of the time is not. The MLS works because of listing agents sharing part of their commission with agents who bring a buyer. This is what we call a commission split. It is my experience that most homes are sold with the help of a cooperating broker. Other agents sell my listings, and I sell their homes listed in the MLS.
The $99 is, of course, not enough to compensate an agent who spends at least a day to show homes to prospective buyers. That is why these agents receive a separate compensation form the seller. This can be 2-3%, depending on what the seller is willing to offer. The advertised final cost to the seller is therefore still a percentage of the sale price, and the cost of the seller is therefore much more than the advertised flat fee.
On the buyer's agent side (split) there are no savings for the seller because the compensation is the same as with a full-service broker. So what do you get for your 99 to 300 dollars? NO REPRESENTATION.
- You will have to show the home yourself. This may take a lot of time waiting for agents to show up. Sometimes the flat fee brokerage adds a lock box for a fee.
- You will not get any professional pictures, videos or drone areal photography. Your web presence may suffer because of this.
- There is no buffer between you and the buyer's agent. This may cost you more dollars than the potential savings because an experienced agent can read you like a book. He needs to deal with you honestly and fairly, but he will be committed to his buyer.
- You have to evaluate the offer from a real estate professional yourself and familiarize yourself with the usual terms of a transaction and the legal lingo.
- Once you have an executed contract you need to contact a title company and follow up with the timeline of the transaction.
- You are exposed to expensive lawsuits if your inexperience results in a legal conflict.
- These companies list your name and email in their listings, exposing you to a tidal wave of phone calls and emails from agents should the listing expire.
Most agents do not like to work with a seller who is not professionally represented. Often they have to do the work for the seller because of seller's inexperience. Your home will be on the bottom of the list to show if there are better alternatives. Selling Real Estate is a peoples business. Agents often prefer to work with certain other agents based on past experience.
It is amazing that sellers are still willing to sell one of their most expensive assets this way.
Time will tell if this trend is here to stay.
In the meantime, we are here to help you sell and buy homes in a dedicated professional way and at a fair price.
Call us at 407-701-6814 if you are ready to talk Real Estate.