You've decided you want to save money by using a flat fee or limited service MLS listing when you sell your home? You know you can handle some of the work of showing your home to private buyers and negotiating your own deal. So how do you decide which company to use? What are the differences? Does it really matter?
First, let's make sure we're clear on what a flat fee listing is. Flat fee MLS, in concept, has been around since at least the early 1990s. Generally, a licensed real estate broker contracts with a seller to provide a package of services or selected "a la carte" services for a flat fee rather than a "commission" or percentage of the sale price. Typically, the flat fee applies only to the listing side of the transaction, and the seller must agree to offer a buyer's broker a percentage commission. The buyer's broker commission is usually advertised to brokers so that they will show and sell the home. In the majority of cases, the house will be sold to a buyer represented by a broker.
A flat fee listing broker unbundles the services that a traditional full service broker would or should provide, and provides a limited number of services. The key service is listing the property on the local or regional multiple listing service (MLS). The MLS is a private database accessible to only member brokers, and is almost the singular source used by buyer agents to locate properties for their buyer clients. Having your home listed on the MLS means fishing in the "big lake" versus the small pond of For Sale By Owner (FSBO) buyers looking on FSBO listing sites, Craigslist, and other public portals. In addition, MLS listing data is automatically syndicated to hundreds of public portals where home buyers shop directly; Zillow, Trulia, REALTOR.com, homefinder.com, homes. com and usually all of the local firm websites.
How to choose? Beyond whether they can simply input listing information on the MLS, there is much more to consider in choosing about a Flat Fee MLS listing service.
1. Is the company local?
2. Is the company a brokerage, or simply an online service that subcontracts with a broker?
3.. Does the broker visit your home and meet with you personally?
4. Is the company respected by other local brokers?
5. What is included in your package? Forms? guidance? lock box? yard sign? showing services?
6. Does the company represent buyers too? Or will they only represent you?
7. Will there be a licensed broker available if you need additional help?
Real estate is LOCAL, and your flat fee broker should be too. There are national websites offering flat fee MLS listings, but the actual MLS systems are local member only sites. National firms have to subcontract with local brokers to input their listings. Because the local broker is only getting a cut of the low fee paid to the national site, they will do the bare minimum necessary to get the listing data into the system. In real estate, the minimum can be dangerous, and potentially expensive in the long run. If the advertised information on the MLS is not correct, both broker and seller are liable for the misrepresentation or omission of facts. And, the lawsuits can be expensive! So, choose local only. Trying to save pennies here can cost tens or hundreds of thousands!
Hire a Broker Directly. Make sure that you are hiring the broker directly, and not a subcontractor.
Make sure the broker will visit on site at your property. A good broker would never list a home "from a distance". License laws in every state require a broker to represent facts about each property they put on the MLS. They must verify the square footage, legal bedrooms, sewage & water systems, HOA information, street maintenance, legal access, liens & ownership, and much more to assure that the advertised information is accurate. Any broker who does not do all of this risks license revocation AND places themselves and you at risk of litigation.
Talk to experienced brokers in your area about the local flat fee MLS providers. While traditional full service brokers may not love flat fee brokers, they must work with them to bring buyers and sellers together. Tell them you are not going to list full service and ARE going to list flat fee. Then ask the experienced full service broker which flat fee firm they would choose if they were in your position. Reputation is everything. If local buyer's agents don't respect your flat fee broker and won't show and sell their listings, you will shoot yourself in the foot by choosing that company.
State "agency" laws vary, but you want an exclusive seller's agent where available. In many states, it is legal and common practice for one firm or even one broker to handle both sides of a transaction. This sounds crazy to most people outside the real estate industry. Some firms also use flat fee listings as "loss leaders" to lure buyers into their firm. Ask your local flat fee MLS provider if their firm also works with buyers... and if they will potentially also work with the buyer of your house. In that scenario, the broker cannot "advise" either of you.
No two flat fee services are alike! It's critical to ask what is included in your package and if additional help is available if you need it. It will be hard to compare services "apples to apples" as every service is different. It's not always about the price, it's about the quality of service. If you are going to pay $200-$400 for someone to throw your listing up on the MLS and then disown it, you are not getting a bargain. You are being left out to dry.
Ask these 10 questions:
1. Will you answer broker's questions about my home?
2. Will you answer questions from buyers?
3. Will you provide current state disclosure and contract forms?
4. Will you provide guidance about preparing my home for sale & staging?
5. Will you provide guidance on pricing our home or property?
6. Will you present and explain any offers to me?
7. Do you provide the same kind of lockbox that full service brokers are used to?
8. Do you provide a sturdy yard sign?
9. How will brokers schedule showings for our home?
10. Are you available if we need more help along the way and want to add on services?
Sometimes you get what you pay for. Flat fee listings are a great way to save thousands of dollars in commissions. But with flat fee MLS providers, you don't want the cheapest, you want your area's best!