Today, I’m going to discuss a topic that not a lot of people know about, and that is “What is a Flat Fee Listing”.

So what is a flat fee listing? I think about a flat fee listing as any property that’s advertised for sale using the MLS or the Multiple Listing Service, where that seller has hired their own broker to represent them to get that MLS access, and the flat fee aspect comes when that listing Broker is going to be charging the seller a reduced commission or a discounted fee compared to the status quo 6% brand name brokers that are so common out there.

Components of a Flat Fee Listing

Now, what are the components of a flat free listing? In addition to the discounts that a broker will charge, you really need two things: Number one is, the property must be advertised for sale in the MLS, and then number two, in order to get the property, even in the MLS, you have to be working with a licensed real estate broker. So, the seller has to hire a broker, and then the broker has to put in the listing into the MLS.

Now, remember, don’t forget about MLS rules about Buyer Broker Commissions. The buyer agents are paid by the sellers. So MLS rules require a listing broker to advertise and to pay the commission to a buyer’s agent. The listing broker is only able to pay that commission from the seller’s proceeds.

So, the MLS dictates advertising rules, which are governed by the National Association of Realtors Code of Ethics. Per their Standard of Practices 3-1, realtors acting as exclusive agents for the sellers, establish the terms and conditions of offers to cooperate. And cooperate is just another word for commission sharing and commission paying. 

Now, there are different types of Flat Fee Agents. I think of it as a sliding scale. So, a flat fee agent is essentially any agent that’s willing to charge less, but some brokers charge a very low cost, which typically means very little or less services, and the others will charge a higher costs. Now, this is still a discount compared to the status quo agents, but the seller would get more services. So it’s a sliding scale.

For Sale By Owner and Limited Service Brokers

At the low end is a Limited Service Broker. This is ideal for For Sale By Owner types of sellers, or do-it-yourselfers. There’s typically a seller will have to pay an upfront fee for that broker to put it into the MLS,  very low cost and it’s A La Carte Services. So, for a couple of hundred dollars here, or a couple of hundred dollars there, it all starts to add up, but it would based on what services that you need.

On the higher services side would be a Full Service Flat Fee Broker. They’re more similar to a brand name 6% agent. Typically, there’s no upfront fees to work with them. Very low cost compared to a brand name broker, but more expensive than a do-it-yourself limited service broker. The sellers will typically save between about 1% and 2% from a traditional 6% agent.

You Pay For What You Get

So, my recommendation is that you pay for what you get. A seller must carefully consider what types of listings they want and what they need, and who provides the most value for what it is that you’re paying. So again, limited service, great for do-it-yourselfers and For Sale By Owners. These are sellers that know what they’re doing, can negotiate their own contracts, and do their own paperwork.

Whereas on the flip side, if a seller is looking for that white glove service, five-star experience, there’s going to be much more broker involvement with negotiating contracts, making sure all the paperwork is done the right way, creating a more beautiful listing, that would be the full service flat fee listings.

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