Flat Fee MLS Companies. Are they all the same?

Question

I have a few single family homes I'm planning to sell as they become vacant. These properties were rentals that have been fully renovated to meet/exceed the quality of the neighborhood. They are definitely nicer than 95% of the homes you see on the average MLS listing at these price points. I posted one of these properties on FB and Zillow welcoming Buyer's with agents. What I've found is that most Realtors don't like to work with FSBO sellers due to negative experiences dealing directly with sellers. I can understand how working with the public can at times be frustrating. Since I know most Realtors prefer MLS listings, I've considered adding my property to the MLS. I've done some research online and found that there are numerous Flat Fee listing companies that will list a FSBO MLS listing.

Few questions I have are.

1.) Are all Flat fee MLS listing companies created equal? I see that some allow just a flat fee between $99-$299 while others charge a flat fee plus a small % of the sales price. (Any company that charges anything other than a flat fee is automatically crossed off the list).  I was looking at brokerdirectmls.com because they only charge $149 for 10 pictures plus the listing, then I noticed in the small print that they also charge a small % of commission on the sale. Then I found getonmlsnow.com that lists for $179 and it appears that they charge no other commission.

2.) I've considered throwing 2.5% commission on the buyer's side. I feel like 2.5% is fair but don't want to ruffle any feathers over a few hundred dollars. Is 2.5% fair on the MLS or would 2.75%-3% be more along market norms?

3.) Anything else I should know about flat fee listing services?

Account Closed · Answer

Most people look online for properties before they contact a realtor. If you list on the MLS you have a wider audience and a possibility of getting the buyers to call you. Listings are running about 60 DOM right now with 42% having to reduce their asking price before selling, in AZ. I'm not sure of the stats in your area.

You have to know how to write up a purchase & sale agreement and open escrow, that kind of thing. The hardest parts are to price the property correctly, finding a buyer and negotiating the close. Since I am not paying a realtor, I have wiggle room in setting the price. I consider the comps, capital gains, DOM, my time, opportunity costs, etc. In my case, if an agent brings me a buyer and the sale closes, I pay them a fee, usually 2% to 3%. They have done their job by bringing a buyer. I always represent my side. If someone finds my property on the MLS and then contacts an agent, I don't pay a fee.

That gets a little tricky since some people won't buy a property without representation. So, when someone brings an agent they met after seeing my property on the MLS, I raise the price of the property enough to cover that expense. I haven't had a buyer turn down a price increase to cover their agent's fees. I do explain why and how agent's get paid and what their job is to the buyer so that they understand the price difference. Or the agent and buyer can have a buyer's agent agreement.

That being said, the market is cooling and buyers are harder to come by. When interest rates go up next week, it will be harder still. So, I don't think listing in the MLS is enough. You will have to market.

The company I've used charges $700 or something like that with no extra fees and are always responsive to questions. It's pretty routine for them and most FAQs are in a PDF anyway. They are strict to follow local MLS rules so be prepared to get detailed and accurate in your listing.

Earl W. · Answer

This is an old post that has been revised. I have purchased and sold multiple properties since this post. I've sold 10 properties in the last year and in that 12 months I have used FSBO, a Realtor and multiple different flat fee listings to sell. I'll share my experiences:

1.) IMO, FSBO websites are a waste of money. You could just list on Zillow, Marketplace, ETC or flat fee it and save yourself the $3,000+ that most companies want. Kind of hard to believe you spend that money and still don't get the MLS listing. Some FSBO companies will sell their $3,000+ package and then upsell you a MLS listing for $999 plus .5%. This can become more expensive than flat fee or using a Realtor.

2.) Realtors definitely serve a purpose. They are great if you need help navigating the selling process or if you just don't want the headache of dealing with showings, etc.

3.) Flat Fee listing services are great considering you can pay a small fee and have your property added to the MLS but be warned not all Flat Fee agents are created equal. All flat fee agents will add your listing to the MLS, but some of them will not give out your contact information unless you pay extra. Buyer's agents then call the companies phone number to schedule a showing which can be a huge problem because some of these companies can be slow to get ahold of you. This makes it hard to sell a house when the buyer's agent can't get an answer from you. Avoid listwithfreedom.com at all cost. I could make a 3 page report on the reasons why, but that is a totally different listing. Some Flat Fee companies want to charge extra for the showing time app which makes it easy to schedule showings.

If Jeff Hagel with BEX Realty is licensed in your state, I would go with him. (You can google his name) He charges like $199 or $299 up front and absolutely no other fees at closing. No add-ons. Showing time is free, your number is added to the listing, etc. By law he has to provide a minimum service which means he is the one writing up the docusign documents, signing as your agent, etc. In reality you are in charge of the listing. Once you and the buyer's agent agree on terms, the buyer's agent will write a contract and send it to Jeff's email, which he then signs and forwards to you. You are responsible for making sure your attorney, the seller's agent, abstractor and anyone else is doing what they are supposed to be doing. You might also need to shoot a quick text or e-mail once in a great while just to make sure things are being done as they are supposed too.

In closing, if you know the sales process then flat fee listings are great. If you are new to selling properties, then maybe use a Realtor for your first couple. If you do use flat fee, follow this one rule:  If you don't have a direct line to a live person, then steer clear of that company at all costs. You can pay any commission to the buyer's agent that you want, but anything under 2.4% can be considered insulting to some.

Jason V. · Answer

I just signed up with the cheapest Flat Fee MLS site that was essentially just a "referrer" to ListWithFreedom.com ... but the referrer's site actually saved me around $50 over going directly with the main host site. In fact, I paid for 25 photos but was actually able to upload 48 without issue, which is a feature that costs $300 when purchase straight thru said broker... meaning I saved $150 in some ways, as the extra photos was the only feature I would've paid more for.

It's a PITA to fill out all the info & disclosures required for the MLS... however, I'd assume that I'd be filling out most of that info with a realtor anyway. Need to know county, city property tax breakdown, dimensions of a few rooms, parcel ID #, etc.... but again, this is information that a listing agent will frequently leave up to the seller anyway. I find it much more intelligible to just do the work directly myself.

One thing I'm really not sure of (but would like to know).... is how far is the Flat Fee MLS broker's "reach" over my ability to sell thru alternative avenues outside the MLS listing service that I'm paying them to list on??? If I list with them, they are for sure the "exclusive broker" for anything sold thru the MLS, and it's pre-negotiated that the buyer agent's cut will come directly out of the agreed upon price. They also made me sign TWO of the very same contracts that I cannot place a FSBO sign in my yard, it can only be the Listwithfreedom sign, which I can buy from them for $50. Understood, because I have a contract with them to exclusively use their sign and not a FSBO sign. However.... if I list my house for sale on Craigslist, FB Marketplace, Zillow/Trulia, etc.... am I still obligated to follow their rules of ME paying the buyer's agent commission?? I'm not sure if this is a grey area or not but would be sweet if someone could clarify.

BTW, it's apparently common knowledge that the buyer's agent commission sells more homes at the 2.5% to 3% mark. Anything less doesn't motivate those realtors, and anything more doesn't really help you out anymore. Once your commission rate is set, there's a site that says the buyer agent's commission is non-negotiable, however, I think it technically is if you go back and change it. It could take 12 to 48 hours for them to update it, tho? I dunno...

John Warren · Answer

@Earl W. this was a really interesting and thoughtful post.

I am interested, as an active agent, to see what happens to the flat fee model. Once the co-operative compensation is removed from all MLS in July, I am curious how these folks will stay in business. It will be interesting for sure.

Bojan Pavleto · Answer

Hi, I use a Illinois licensed Realtor called ListHomeFlatFee.com to list my flips in Skokie, Evanston, Morton Grove and Chicago for the past two years and I love it. Service is great and it has saved us so much money in fees. Check them out!

Bubba McCants · Answer

Thanks for the response. I appreciate the help.

Lucia Rushton · Answer

@Earl W. Flat fee cos do not provide full service nor negotiation for you. They simply manage the bare minimum requirements of the transaction.

Al Bunch · Answer

I'm out searching for questions sellers have about "flat fee" or "discount real estate listings" and saw your questions.  Hopefully your sale concluded with no hiccups a long time ago.Still, I didn't see anyone really address the questions and since I'm here, I'm the broker for a "flat fee" brokerage, and I have a few minutes so I thought I'd clear the air (responding to your post will shake some cobwebs loose and help me generate some new content for our website too, so there's that). I see you're in Mississippi - I'm in Texas and we currently only handle listings in the Houston area so take all of this with a grain of salt.Photo count on an MLS listing is an oversold feature - the MLS in your area sets specifics on listings (for example. HAR - Houston Association of Realtors) has a mandatory minimum photo count for single family homes unless the buyer specifically refuses and that requires signed paperwork to do. Some MLSs allow identical photos to make up their required count - I still haven't figured that one out.  Either way - it takes a few minutes to drag and drop a whole folder onto a listing photo upload page and then order them in a meaningful fashion (front of house or major feature first, etc) - adding individual photo descriptions is a PITA though.You're exactly on point about the paperwork - sellers should be filling this out, not agents.  Many Realtors will fill out the paperwork (like the MLS data input / property information form) for their clients but never read the fine print. That can be hot water territory - so while it's a lot of paperwork to complete it's a necessary evil."Seller has examined the information contained on this Data Input Form, which is attached to and made a part of the Listing Agreement and warrants that it is true and correct according to the Seller's best knowledge."I don't know how things work in other states, in Texas the TAR (Texas Association of Realtors) listing agreement form is an "Exclusive Right To Sell" listing agreement - stated right there in big print on the top of the form.  As a flat fee listing service we always add the "Exclusive Agency Addendum" to the listing agreement that allows a seller to skip paying all or a large part of the buyer's agent commission.  That addendum also has provisions that allow the seller to do additional marketing on their own including their own yard sign, so I'm not sure what the fuss was about there - though I can tell you if you put a FSBO sign in your front yard agents driving by will blow your phone up trying to get a listing appointment with you and that's a whole other conversation.  As for internet marketing on Zillow - when your listing goes live and if your listing broker ...and... their MLS has a data sharing agreement ..and.. if the brokerage hasn't opted out then the MLS listing data will overwrite your Zillow listing. Zillow can be fun to deal with.Anyway, the fun part of the Exclusive Agency Addendum" in Texas is this:"If Owner sells or leases the Property to an Excluded Prospect, Owner will not be obligatedto pay the fees due to Broker under Paragraph 5A of the Listing, but Owner will pay Broker, at the time the sale closes or the lease begins, a fee equal to"and an excluded prospect is defined in the very next paragraph:"In order for a person to qualify to be an Excluded Prospect under this Addendum, Owner must send Broker written notice identifying the Excluded Prospect by name, address, and phone."You just don't see that addendum most of the time because sellers aren't usually aware of it and it's not part of the listing agreement.Buyer Agent Commission (BAC) in the Houston MLS - the commission in the listing can be changed at any time. https://content.harstatic.com/mls/pdf/MLSRules.pdf Division of commissions rule 5, NOTE 2.  We've had clients change their offered commission numerous times during the course of a listing thinking it would make a difference - our experience is that above 3% or with a BTSA (Bonus to Selling Agent) it doesn't have a measurable difference - the Buyer is generally in control and pushing a client towards one home or another based on your payday may land that agent in hot water later. In HAR there's no way to search based on commission but I've heard in other states you can. If you're focused on your clients instead of your back pocket this all works out how it's supposed to.What we cannot do in Houston at least is put a listing in MLS with no BAC - I've called HAR before and I believe they said minimum commission amount allowable in MLS was $1. Check with your broker or your local MLS - I'd talk with your broker/agent first, but if you're a seller and you're calling BS on what you're hearing - go straight to the MLS and ask.  Tell them you're a seller and that you're hearing something you don't believe and that you just want to verify.As far as how fast MLS updates - as far as I know, updates in MLS are instant (or as "instant" as they can be).  Updates on the real estate portals are what take time - HAR has their own MLS portal (har.com) and that can take a few minutes to a few hours to update.  The secondary major real estate portals typically fall into the few minutes to a day or two to update - they're normally faster to pick up a new listing but can be slower to get updates to an existing listing.So - flat fee listings are typically limited service listings where the broker is just your onramp to get your listing into MLS and doesn't provide much beyond the required minimum after that - everything else is an upcharge/upsell - the one big ticket item I think every listing should have is a Supra lockbox just for security. Combinations can be handed out and it happens - with a Supra every access is logged so you at least have a better shot of knowing who was there and when.We stopped flat fee listings awhile back simply because people would show up, order the least expensive listing possible, and then not really know what they were doing.  I just couldn't sit idly by and watch someone try to manage getting a contract negotiated, signed, and moved through to closing when it was obvious they weren't sure what they were doing most of the time.Instead we offer a 1% full service listing (it's flat fee in that we don't tack on anything else - no technology fees, no transaction coordination fees, no marketing fees, etc) - we're just 100% virtual.  Listings scale super easily so we're able to service 4 or 5 one percent listings in less time than it takes to service one 3% face-to-face listing.  I expect the crowd here on BiggerPockets is different and flat fee listings probably do make sense.

Earl W. · Answer

Thanks for all the information. I am familiar with buying/selling FSBO and have contracts, Seller's disclosures forms, etc. I've decided that the flat fee MLS listing with no additional services is what I need.

When you say 2% to 3%, how do you decide what number to list on the MLS? I've heard that 2.5% is the industry standard, but I don't want any Realtor to steer their clients elsewhere due to the commission being too low. If I'm going to get more activity at 2.75% then I would be willing to pay an extra few hundred in commissions.

Flat Fee MLS Companies. Are they all the same?

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