Odd question? Not really. Within the real estate industry it is shaping up to be the heavyweight battle of the century. If you think the NAR hates Discount Brokers (and they do) – Flat Fee MLS Brokers are downright blasphemous. When a property owner that has made a decision to sell their property “by owner” and engages a licensed real estate agent that provides Flat Fee MLS Services they essentially take on (or more accurately eliminate) the role of “Listing Agent” (AKA Selling Agent). More importantly they also expose their FSBO property to the valuable Multiple Listing Service (MLS) and the considerable marketing horsepower that is associated with it. Consider the fact that the FSBO property is now listed within the same database that the 2 million strong professional NAR sales team use to find properties for their buying clients.
Granted you are agreeing to pay a pre-negotiated “Buyer Agent” commission fee (usually in the 2% – 3% range) but you ultimately save the “Listing Agent” fee which is usually in the 3% range. Based on the average value of “existing home re-sales” of $268,000 we are talking about $8,000 – that’s a significant chunk of your home equity going into someone else’s pocket. In addition, your FSBO property is listed on Realtor.com which enjoys over 7 million monthly “non-realtor” visitors. If a Buyer comes directly to you via Realtor.com (which is likely because your contact information is in the “Listing Agent” area) you pay no real estate commission – that fact alone makes a Flat Fee MLS worth it’s weight in gold. Just consider that a (as in one) classified ad in your local paper is likely going to cost in the $75 range – $399 for the exposure that a Flat Fee MLS listings provides is the preverbal “deal of the century”.
How does Flat Fee MLS work?
You agree to pay a licensed real estate agent an “upfront fee” (usually $399 – $699) as opposed to a commission fee based on the successful sale of your property. A typical Flat Fee MLS lasts 6 months and can be extended another 6 months for a nominal fee ($50). In exchange a licensed real estate agent agrees to list your home on the valuable MLS. While this licensed real estate agent is the “Listing Agent” of record and their name and number shows up in the real estate agents version of the MLS that generally is the end of the service. Most Flat Fee MLS Brokers have a phone system that forwards Realtor incoming calls directly to the property owner to schedule appointments or answer questions. The MLS is, without a doubt, the real estate agents most valuable sales/marketing tool; this is particularly true for the Listing Agent. As a potential buyer you can go and browse through Realtor.com so you really don’t have to engage a real estate agent to “look” at properties. The challenge is to get your property listed within that database and website – which you cannot do without the assistance of a licensed real estate agent – but with a Flat Fee MLS – now you can.
How valuable is a “Listing Agent”?
I know I’m going to come across as a “Real Estate” basher and as the President of a Free For Sale by Owner business I am an easy and logical target. That said, is a Listing Agent’s service really worth 2.5% or 3% of the total value of your home? In my opinion it’s a no-brainer – NOT A CHANCE! Beyond providing a professional lawn sign, listing your home on MLS and having the occasional Open House they really don’t do much. Sure you get the odd agent that spends a tremendous amount of money marketing themselves and their listings – but they are the exception, not the rule. According to NAR’s own statistics the average real estate Arizona Flat Fee MLS agent spends less the $500/year on internet marketing while 77% of prospective buyers see the home they purchase on the internet first. Another 18% see your real estate lawn sign and call the number on the sign.
Will Buyer Agents still bring their “Buyers”
A Flat Fee MLS, for all intent and purpose, is the same as all the other listings on MLS. As long as you offer a reasonable commission to a Buyers Agent (2.5% – 3%) your FSBO property will receive the same status as conventional, full fee (5% – 6%) real estate listing. The fact is a Flat Fee MLS listing pays out the same as any other MLS listing. Buyers Agents don’t care who listed the property their buyer wants. The days of agents pushing their own properties in hope of “double ending” (listing and selling the same property) ended with the advent and popularity of the internet. I don’t know what percentage of agents manage to “double end” a property nowadays although I do know for a fact that it has become less common with “conflict of interest” laws and regulations.
Bottom-line, all things considered – with all that a Flat Fee MLS listing offers I really have to question the value of engaging a real estate listing agent. While I don’t claim to be a mathematician the last time I checked a $25 real estate lawn sign, a $399 Flat Fee MLS listing and $150 worth of print advertisements don’t come anywhere near $8000! I’ve said it before and I’ll say it again (and I take a lot of heat from Realtors) most “Listing Agents” are nothing more then professional price reducers. They excel at getting you, the homeowner, to lower your price so that your home sells and they collect their commission. Remember every $10,000 price reduction costs you $10,000 – it only costs $300 in lost commissions to the real estate “Listing Agent.”