Listing Agents

[James Lee]

I am working on getting my CA sales person license. I heard that there are listing agents that would offer homeowners to list their property on the MLS for a flat fee ($500). Can a licensed salesperson ask for a flat fee only to list their property on the MLS for the owner and not do any work after it's been listed? Does this mean that the homeowner will sell the property on their own? If the property sells, is there a commission owned to the brokerage firm?

[Account Closed]

I see companies on the intertube offering basically a flat fee FSBO on the MLS, but here are a few thoughts:

I don't know about California law, but here your broker would need to ok it. So you will probably need to be a self-employed broker. Legally you can charge whatever you want. 

For $500 are you not going to offer selling agents a commission? If not, you wont get much activity. If so, who will pay it? Part of the MLS is an agreement between brokers to share the commission. I'm not sure how you would handle having the seller pay the broker directly, because there is no listing agreement with them. So if a seller tells the selling broker to go pound sand after that broker produced a buyer, there is going to be a very angry broker. Maybe they could do an agreement with the seller, except you (sort of?) represent them already. I think you would at least have to charge the seller the commission that you offer through the MLS, and handle that work.

The problem with putting FSBO's in the MLS is that by the time the seller pays 500 bucks, a selling broker commission, legal assistance, doc prep, signs, a lockbox, ect... They may be doing a lot of work to save a little money. Especially with lower valued homes, which make up a large part of the FSBO market.

So it looks like the selling agent may be doing most of the work. Since you wont be assisting in the transaction, I can see the selling agent getting sucked into helping the sellers with the documents, inspections, ect... So does he represent them now? Or do you? Is it dual agency?

Also, I believe that even if you have disclosures stating otherwise, your department of real estate may still say that you have an agent/client relationship, and fiduciary duty, and if your customer (client?) screws up everything, you may be held responsible.

But like I said, there are companies advertising that they list FSBO's on the MLS for a flat fee. I suspect that there is some agent participation during the selling process, and maybe for an additional fee. This may be a bit weasely, but you could ask for a listing package from one of these companies and see what documents/process they use. You also may want to speak with your MLS about the legalities and requirements. And definitely talk with a good real estate attorney before perusing this.

I looked into something similar years ago, but I couldn't figure out how to make it legally work. I think the reason Zillow hasn't taken over the residential brokerage market with this type of discount FSBO listing, is because they can't get around the agent/client problem.

Let me know what you find out, and good luck with your new license.