What’s The Deal with Flat Fee MLS Services?
Curious about flat rate MLS services? We hear about them all of the time these days, making many wonder if they are worth the hype or just another marketing scheme. Fear not. We’ll break it down for you, so you can decide for yourself.
What Is A Flat Fee MLS Service?
According to Wikipedia, a flat fee MLS service is “the practice in the real estate industry of a seller entering into an ‘a la carte service agreement’ with a real estate broker who accepts a flat fee rather than a percentage of the sale price for the listing side of the transaction…The primary objective of a flat-fee listing is to be exposed on the MLS and cut the listing side of the commission completely out by dealing directly with ‘buyer’s agents.’”
Many people are wanting to avoid paying real estate agent commissions that can top six percent. With the average cost of a home in the U.S. at $278,900, sellers can fork over nearly $17,000 at closing. Why so much? Sellers are responsible for paying not one, but two agents’ commissions at closing. Typically, three percent goes to their own agent and another three percent goes to the buyer’s agent as a fee for bringing the buyer to the sale.
What many sellers don’t know is that both commissions are negotiable, particularly in today’s competitive market. Still, even with a discounted commission, sellers want to keep more of their own money. This is the main reason why so many home sellers decide to sell their own homes through For Sale by Owner (FSBO).
With FSBO, the home seller takes on all of the responsibilities a licensed real estate agent has, such as listing their home on the MLS. Unfortunately, the MLS is proprietary to real estate agents and brokers. The only way for a non-licensed homeowner to get their property listing on the site is to pay an agent the commission or pay a broker a flat rate MLS fee to access it.
Do I Really Need My Property to Be on The MLS?
In the strongest terms, yes. The MLS is THE place to get your property found. Unless you have neighbors, family, friends or co-workers who are wanting to buy your home off market, you will likely have a difficult time selling your home without an MLS listing.
The MLS is a database of property listings and all of their many details. Agents fill out the fields for their clients and then make it “live,” where other agents and brokers can see it in a search. The listing is also available to real estate websites, such as REALTOR.comⓇ, Zillow, Trulia and real estate agency websites. All of these sites make the property database searchable for consumers.
Do I Still Work with A Real Estate Agent If I Use A Flat Rate MLS Service?
Typically with a flat fee MLS service, you pay only to gain access to the MLS. The agent will not be working for you to list your home, market your home, negotiate deals or walk you through all of the contracts. If you are a FSBO, you will do all of this yourself, unless you pay a separate fee for agent support.
Some agencies will allow you to pay for a la carte services, however, one of the best ways to get the best of both worlds (keep more of your own money while also getting FSBO help along the way) is to use a pay-per-day real estate brokerage firm. Firms like this allow customers to pay only for the days they have their home listed on the MLS and they throw in extra agent services, such as a yard sign, lockbox, professional photographer and marketing flyers. Some give you the option of paying a small additional fee for agent support any time you need it.
There are also discount brokers who offer their services at a discounted rate, such as one or two percent. Keep in mind that these discounted rates do not include the commission you will still have to negotiate and pay to the buyer’s agent.
What Are The Terms of a Flat Fee MLS Service?
Every flat rate MLS service will have their own terms, including their own rates and length of time you can use your MLS access. Typically, the lower-rate MLS services will specify a shorter period of time, such as six months. At the end of that period, you will have to pay up again for another block of time if your home has yet to sell.
Other firms will give you indefinite access to the MLS, but often at a higher rate. No matter which service you choose, you need to read the fine print. Most services require full upfront payment before you can access the MLS. Be certain there are no hidden fees, as well as surprise fees when you sell.
Can I Really Save Money Using a Flat Fee MLS Service?
Yes. Flat rate MLS services save consumers thousands. Of course, it will depend on which service you choose and if you add in any services on top of your MLS access. Yes, you will be doing more on your own and your time is worth money, but many who swear by FSBO will tell you it is still worth the savings in commissions.
A good point to remember is that you can always try the FSBO route with a flat fee MLS service and if it doesn’t work for you for whatever reason, you can upgrade to a full-service real estate agent. You always have the option to use a traditional brokerage who will do everything for you, just at a higher cost than if you did it yourself.
A flat rate MLS service is worth checking out if you are interested in FSBO. Be sure to consider the pay-per-day model as well and compare the two options. Either way, you will have more money in your pocket at closing to put towards your next home.
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