Is flat fee listing illegal ?

Question

Phil G. · Answer

I'm about to begin offering  two flat-fee listing packages with different levels of services, focused on investors, starting in the New England states, and have spent a lot of time doing research on all of the east coast states.  Haven't found any states so far, where it's illegal to charge a flat fee.  There have been debates in numerous MLS systems as to whether to allow "Entry Only" listings, where the only service the agent provides is the MLS listing itself.  It seems like most MLS systems have relented on this and now allow it, though some systems require either verbiage or a flag indicating that it's an Entry-Only Listing.

There are some states that require "minimum service", this DOJ website shows which states they are.  Florida is not among them:

http://www.justice.gov/atr/public/real_estate/fee-details.html

Bryan L. · Answer

I don't think that flat fee listings are illegal, but I think that some states require brokers to provide certain minimum services.  In other words, some states may require brokers to do more than just put the property on the MLS.

Account Closed · Answer

Good point that "flat fee" is ambiguous but I'm pretty sure agents responding to this knew the difference. We were talking about limited service for a flat fee vs full service.

Bryan L. · Answer

@Bill S.  makes a good point.  A flat fee commission doesn't necessarily have to be associated with a limited service listing.  I have a full-service listing right now that I have a $10,000 flat commission on.  Seller offered that to me and I gladly took it.

Bill S. · Answer

Don't confuse flat fee for limited or listing only services. Some real estate companies prohibit flat fees by their agents but it's not illegal aside from being a civil matter by violating the agents contract with his real estate company. Don't know any state laws that restrict fee structures that can be charged. I do know some Board of Realtors (MLS) and some RE companies do require a minimum level of service by licenses agents which is above simply putting the property in the MLS but that's not illegal (not that you would know that when you talk to some agents). I know that Colorado was considering some legislation requiring agents (they have fiduciary responsibility to the public) provide minimum service but it didn't get far. Colorado allows for limited or non-agency relationships between agents and the public.

Angelique F. · Answer

I used one to sell a property last year, and so far, nobody involved went to jail, :)

Jerry W. · Answer

I can confidently say not illegal in Wyoming, but instate realtor boards will control whether or nor they allow brokers to do this.  I suspect they would have a hard time justifying forbidding it.  By the way @Phil Glantz , excellent and informative post.

Account Closed · Answer

I can't speak for other states but flat fee services are perfectly legal in VA. You just need the correct forms and the services that are provided are disclosed prominently.

Basically as an agent you can offer to do just listing in MLS, or listing + negotiating, or whatever.

I've been debating if I should create a flat fee listing package for FSBOs/investors. Not sure if it's worth the time and effort.

Kris Haskins · Answer

we use a broker that offers flat fee seevices.   Thats the only way we sell...

Wayne Brooks · Answer

Perfectly legal, free enterprise.

Is flat fee listing illegal ?

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