When you run your own real estate investment business, it’s important to keep both your personal compensation and your profit margins in mind. These measures ensure you can grow your business and that all of your efforts are being fairly rewarded. While several non-negotiable costs, such as taxes, maintenance, and property management fees, are inflexible. But other fees, such as marketing costs and the line items on your closing costs, are far more dynamic.
One of the biggest costs you’ll encounter in acquiring new properties and selling old ones is the real estate agents’ commission fees In Texas, these are typically 6% of the property’s sales price. Remember, real estate agents also often work for themselves, and they need to maintain their own margins—including a recommended 5% profit margin and 50% allocation for personal compensation.
While real estate agents can provide value for some conventional buyers and sellers, real estate investors can drastically improve their own balance sheets by opting for a flat-fee listing service and doing without a real estate agent entirely. With the right platform, you can get your properties listed on MLS—which is often only directly available to licensed agents—and also maintain more fine-tuned control over your marketing, negotiations, and closing process. Keep reading to learn more about the advantages of a flat fee listing service and when real estate investors should use this service.
What Is a Flat-Fee Listing Service?
Flat fee listing services offer one essential service: listing your property on the multiple listing service (MLS). The MLS platform is a dynamic database of properties that are coming soon, available and active, pending, and closed. Real estate agents on both sides of transactions use this platform to share and gain information.
Selling agents, for example, will research properties on behalf of their buyers, either by looking into specific addresses or setting up searches for properties that fit specific criteria. Listing agents will describe their clients’ for-sale properties by providing images, details of the property, and other notes.
The MLS is generally only available to licensed real estate agents, so you need someone with eligible access to input and publish your property’s details. With a flat-fee listing service, however, you don’t need an agent to do that. Instead, you can pay a flat fee that is substantially less than a Realtor’s commission. You get the same benefits of having an active listing on MLS, which is then available for agents to find. MLS also pushes the information out to consumer-facing real estate platforms, like Realtor.com, Redfin, or Trulia, so people can make offers and buy the property.
Many modern flat-fee real estate listing services offer a full menu of optional services beyond simply listing a property. For example, a service that provides data-backed real estate tools may help you price your home by providing financial models. They may provide photography services to enhance your listing with professional-grade photos, provide a Supra digital lockbox, or even help you organize and manage showings.
Key Differences Between a Flat-Fee Listing Service and a Traditional Listing Agent
There are two critical differences between conventional real estate agents and a flat-fee service: the pricing model and the services offered. While both may offer similar services and facilitate a sale at every stage of the process, these differences will have a substantial impact on your bottom line. Some of the factors to consider include:
- The total cost: As the seller, you provide the commission for both the selling agent (the buyer’s agent) and the listing agent. They each traditionally receive 3% of the sales price. For example, on a $400,000 home, each agent would take $12,000, and you’d be out $24,000. With a flat fee service, you may still have to pay that full selling agent commission, but you can cut out one commission and buy a la carte services as you need them.
- Control over the process: Many real estate agents have a set process—they will offer pricing suggestions, have a set workflow for open houses and marketing, and provide a network of vetted lenders, title companies, and other professionals. This can be convenient for individuals selling their personal home and who don’t want to learn the ins and outs of real estate. But you pay that 3%, no matter what level of service you receive or the strategy your agent employs. And though realtors have a fiduciary responsibility to act in your best interest, they might not carry out your preferred workflow.
- A la carte vs. comprehensive: With a real estate agent, you are buying a full guide to the entire process, whether you need that or not. But a flat-fee listing service lets you buy that single critical service you need: listing the property on MLS. From there, you can decide which add-on services make sense for your property, budget, and existing capablities.
5 Reasons Why You Should Switch to a Flat Fee Listing Service
You may already see how a flat fee option is a better fit for your business model. Here are some of the reasons many investors opt out of having a full real estate agent, choosing a listing service instead:
1. Simplify the process.
Once you lift the veil and see the mechanics of the MLS and real estate negotiations, they become much simpler and less overwhelming. You can more seamlessly provide the field details for your MLS profile (such as the basic description of the property, images, price details and offer requirements, etc.), provide the seller’s disclosure, and move on to marketing. You don’t have to schedule a meeting with a realtor, walk through their ideas for your pricing strategy, or constantly work through an intermediary you don’t need.
2. Eliminate the biggest line item in your closing costs.
For a seller, closing costs come out to approximately 8-10% of the property. 3% of that is for the commission of a listing agent. When you switch to a flat-fee service model, you can immediately trim down that cost.
Even if you purchase a comprehensive array of individual marketing and listing services that total up to 1% of the home’s purchase price, you’ve still knocked down your closing costs to 6-8%. Some properties, such as high-end luxury properties in a niche market, may require that near-1% investment in marketing, images, and services, while more standard homes in high-demand areas—like a $350,000 home in Collin County—virtually sell themselves.
3. Have more control over pricing strategy, marketing, and negotiations.
When you’re in business for yourself, it’s often because you want to do things your own way. That means controlling your own pricing strategy based on your perspective of the market, marketing on your preferred channels, and negotiating so every detail of the accepted deal—from the closing timeline to who’s paying each fee—to your satisfaction. While Realtors must act on your behalf, miscommunications, disagreements, and delays can get in your way. With flat-fee listing services, you’re in charge.
4. Systematically increase your profit margins.
If you want to scale your real estate business, it’s important to build systems instead of one-off solutions. While hiring an agent can seem like a one-step solution on the surface, it covers dozens or hundreds of individual decisions and the mechanics of every real estate transaction. You can build a more efficient system by operating with more modular processes. You can streamline the workflow of providing the details, determine which criteria warrant more or fewer services, and keep the wheels of your business turning with efficiency and transparency.
5. Manage multiple properties.
Every time can be the right time to use a flat fee listing service, but the best time to make the switch is when you hold multiple properties. Managing a portfolio of multiple properties on the market is complex and unwieldy when you rely solely on others to provide timely updates and insights. Constantly calling your agent for updates, or even getting regular calls and updates from a diligent agent, simply isn’t efficient. With the right flat-fee option, you can maintain clear profiles and tasks for each property and know exactly where everything stands.
5 Signs You’re Ready to Take the Helm With a Flat Fee Listing Service
Despite all the benefits of using a flat fee listing service, many investors may hesitate to depart from the industry-standard practice of using an agent. If you are considering using a listing service or are on the fence, you can approach the decision systematically. If any of these signs apply to you or your business, make the switch:
- You are familiar with the buying and selling processes.
- You don’t need the comprehensive services a conventional real estate agent offers.
- Your real estate investments are a business, not an experiment.
- You like being in control of your money, properties, and processes.
- You’re in a good market.
Now Is the Time to Use a Flat Fee Listing Service
Flat fee listing services allow you to approach your real estate investment business more systematically so you can increase your profit margins and maintain control over the dynamics of every transaction. At ListingSpark, our listing services—and all our optional services—are designed to make it even easier. Streamline the entire real estate listing process and start whittling away line items on your closing costs with our flat-fee listing service, photography services, and more. If you want to see where we can fit into your business’s workflow, schedule a chat with our team or start exploring the platform.
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