Flat fee MLS: will I get lowballed?

Question

Hi BP members, would like your collective wisdom at this time... I need to sell a piece of property- a lakeside lot within a very desirable neighborhood in our part of town. I would like to go with a flat fee mls listing service but am afraid buyer's agents can make out that I went with a service like this and since I'm saving the commission on listing agent, make offers lowered by such amount. I have no other issues with the approach. I've done my research re: pricing, professional photography, etc. I live in the area and am well versed with it. It is a piece of vacant land so showings are not a problem either. Should I go this route or stick to the norm? As you can tell, I do not see the value in offering 2-3% to an agent when i can accomplish that with much less. Thanks in advance!

Mike Cumbie · Answer

@Mitra SamonPersonally if the house is right for my client and it's a flat fee I have no problem going to it. Generally speaking I can get away with more in the contract that favors my buyer, but a new listing agent is really not much different. My only real complaint about negotiating directly with the owner is they are usually too close to the property and think it is worth about 15% more than it is. With a regular listing agent they have already had those discussions and the owner has heard the actual market value at one point.so when I bring it up in an offer it's not a shock.During Listing presentation an agent says "Your house is worth about $170,000 in this market and we have the following plan....."Seller: "I think it's worth $200,000 lets list it at that"Agent: "OK, but so you know it comps out about 170, we need to have a reduction plan in place as well as you need to know the pitfalls of asking more than the value and a house sitting for too long.... (insert plea and beg to get it realistic)"When my clients offer comes in at $170,000 one seller has expected it and the flat fee seller is insulted.When we list properties we have other agents go in and give us their opinion of value. When I do my own properties I find I am high. I need the other agents to bring me into check. It keeps the market flowing. BTW every buyer thinks that same property is only worth $145,000 MAX!!....... So to me that's the only downfall I have with a flat fee listing.

Jonathan Minerick · Answer

Good question, @Mitra Samon. If you do the basics right, it will sell just fine and you will save a lot of money in commission costs. The basics are:Price it fairly,Offer buyer agents a reasonable commission, andGet pro photos.If you do #2 and #3 right and you are not getting any action, then you just need to adjust the price. Lots of showings/offers = priced too low, no showings/offers = priced too high. It’s pretty straightforward.The truth is that most agents just want to get a deal done, which is a good thing. Make a fair offer of commission and they’ll bring their buyers.

Mitra Samon · Answer

Thank you for your perspectives, I appreciate all the points of view. Now I need to make a decision!

Mike Flora · Answer

@Mitra Samon we flat fee list all of our SFR’s and have zero issues with getting low offers or any conflict whatsoever. We have to educate most agents on what it is we are doing. They look at it as any other listing out there. Just remember to give the buyers agent a commission.

Joel Owens · Answer

A few things.Land is not typically 6% like a house ( fees are negotiable ). Most land you can see a fee of 10% total split 5/5. 2 to 3 is low to a buyers broker/agent on a land deal unless this land is in the millions of dollars in price and up.Most MLS flat fee do not offer any other services or if they do it is an additional charge. So a buyers broker will likely mention seller is paying a flat fee to list so lets try and go in lower. Also most buyers brokers will shun away from flat fee type listings. The reason is they know flat fee they typically do nothing but place in MLS and have contact in for going direct to the seller. Most Buyer brokers/agents do not want to deal with the seller directly and would prefer a broker/agent on the other side of the transaction. Additionally it can create liability to the buyers broker/agent because by answering questions from the seller looking for help because the flat fee company is nowhere to be found it can create IMPLIED AGENCY instead of a customer performing just ministerial acts.I do commercial but I have friends that do residential and they typically stay away from these types of listings.

Mitra Samon · Answer

Thank you for responding, Aaron K. I guess my post was not very clear. It is the same flat-fee listing I'm talking about. However, in the mls listing, when it is apparent that I'm going through a flat fee agent (evident either by the name of the brokerage or the fact that my number is listed instead of an agent's)- I wonder if buyers are tempted to reduce their offer by a commensurate amount- thereby netting me no more by going this route. Thanks!!

Aaron K. · Answer

Most flat fee services are for the listing agent and give the buyer's agent the normal rate, unless this is something different.