Flat Fee MLS vs Low Commission Realtor: Pros & Cons
You don't need to pay a 6% commission to sell. We’ve compared two low-cost options: Flat Fee MLS vs 1.5% Commission Brokerage so you can decide which option is best for you.
What Is The Multiple Listing Service or MLS?
The MLS, or Multiple Listing Service, is essentially the main resource where realtors post their available listings for other agents to view. Each specific area of the country maintains its own database as part of the overall network of properties for sale. In Nashville, Tennessee, for instance, the local MLS is called Realtracs. This extensive database of homes is exclusive to those with real estate credentials, and it's a real estate agent's primary tool for viewing properties actively listed for sale. Basically, if you want to sell your home it's the absolute best place to list.
Is Flat Fee MLS Similar To For Sale By Owner?
A flat fee MLS service acts as a companion to those taking on the For Sale By Owner challenge. If you’re going the for sale by owner route, you might enlist the assistance of a flat fee MLS service to get your listing on the master database. For a flat fee, they'll provide FSBOs with something called an “entry-only listing” that gets your home posted on property indexes like the MLS and Realtor.com. As an FSBO with an MLS listing, however, you’ll still have to:
- Identify necessary maintenance and repairs
- Competitively price your home (through a comparative market analysis)
- Stage your home
- Create an MLS listing
- Photograph your home
- Advertise your home on alternate sources such as Facebook and Instagram
- Show your home to interested buyers
- Hold open houses
- Screen potential buyers
- Decide the pros and cons of each offer
- Negotiate the price of your home
- Navigate the due diligence period
- Negotiate the repairs requested by the buyer
- Become familiar with the real estate contracts and paperwork
- Handle all closing documents and procedures
This undertaking has been causing headaches for years, to the point that by 2018 only 7% of sellers listed their home FSBO—an all-time low. If you’re still committed to taking this road-less-traveled, however, a flat fee MLS service might make your path slightly easier.
What Does A Flat Fee MLS Service Do?
This is a real estate broker that—for a one-time fee—uses their credentials to post your property listing on the Multiple Listing Service along with real estate websites like Realtor.com, Trulia, and Zillow. Usually, you'll submit your property to their website and they'll contact you within 24 hours with the listing agreement and property disclosures that you will need to complete in order to list your home. After that, your home is on the MLS! How much you pay for this exposure, however, depends on the level of service you request, because there are a range of marketing options associated with your MLS listing (we'll talk more about those later).
If you want more than a listing, many flat fee MLS brokers provide a limited assortment of real estate services—and the more you pick the more you pay. For an additional fee, they’ll photograph, market, and even create a virtual tour of your home. The more they act like a traditional full-service real estate agent, however, the more you’ll have to compensate them like one. Ultimately this a la carte style of real estate services can end up costing thousands of dollars. Also, remember that going the FSBO route with the help of a flat fee MLS listing doesn’t save you from paying 3% of the final sale price to the buyer’s real estate agent.
How Much Do Flat Fee MLS Companies Typically Charge?
Many companies offer a $100-$300 basic package that will land your property on the MLS for around 2-6 months. We aren’t kidding when we say basic. This foot-in-the-door listing often allows only a few photos of your home, which doesn’t exactly move the needle for most buyers. A full-service, six-month listing with a max photo allotment usually costs at least $1,000. Even at this price, however, the flat fee listing is still pretty basic. In Nashville, if you want elevated marketing strategies, like walk-through videos and floor-plan maps, then you can end up paying over $2,000 to a flat fee listing service. This initial commitment, however, might just be the beginning of your relationship with a flat fee real estate company. If your property takes a while to sell, which is likely if you're trying to sell your home on your own, you'll have to keep paying more just to keep the listing posted. Unlike a full-service real estate agent that only gets paid when your home sells, a flat-fee MLS brokerage almost always charges upfront.
Once You’re On The MLS, How Will Buyers Contact You?
Even though you've listed through a flat fee MLS service, it's not their job to act as a liaison between you and potential buyers. Expect your contact information to be clear and available on all real estate platforms, and expect plenty of buyer's agents to contact you directly. When you take the flat-fee MLS route, you should also expect a myriad of listing agents to call you as well, sometimes to the point of harassment in an attempt to persuade you to list your home with them. Without a full service real estate agent to facilitate this process, the vetting responsibility falls on you. Prepare a few basic questions to ask each buyer before you allow them to schedule a showing. That way you won't waste your time presenting your property to people who aren't pre-approved or who have an inconvenient relocation timeline.
When it comes to other marketing strategies, like hosting an open house or putting out a "For Sale" sign in your yard, the responsibility falls to the seller. We suggest you use tools like social media and even a custom website for your home to complement the publicity-offered listing provided by a flat fee MLS service.
Flat Fee MLS Pros And Cons: Should You Use A Flat Fee MLS Service To Sell FSBO?
Pros of a flat fee MLS listing:
- A la carte style allows flexibility in choosing real estate services
- Allows access to Multiple Listing Service without enlisting a full service realtor
- Can save you money over the traditional real estate agent commission
Cons of using a flat fee MLS brokerage:
- Savings dwindle as you select extra services on top of your MLS listing
- Will likely take longer to sell your home due to over pricing your listing or taking unprofessional listing photos
- Sales price is often significantly lower than what a traditional real estate agent attracts for a comparable property
- You are still responsible for the vast majority of For Sale By Owner responsibilities, like completing a comparative market analysis, negotiating contracts, showing your home, navigating the closing process, and vetting potential buyers.
Some Tips For Your Flat Fee MLS Listing
- There are almost 1,000 individual local MLS databases that cater to their surrounding market. Many flat fee mls brokerages will not cover all locations. It’s pretty deflating to list with an out-of-state broker, only to find that buyers in your area can’t even see your home. It's best to go with a local MLS to ensure that your property gets the most relevant exposure. Here in Nashville, you should make sure the flat fee MLS company has access to Realtracs.
- Double-check your listing on each marketing platform to make sure that all of your information is input correctly.
- If you plan to use your broker for more than just listing your home on the MLS, make sure you can add services as you go. You might encounter unexpected obstacles that you need help navigating partway into the selling process.
- Make sure you are able to make changes to your MLS listing. You might be responsible for updating your property's features and information as the housing market evolves. Some flat fee MLS companies charge a fee if you choose to update or make changes to your listing details or price.
What Is A 1.5% Realtor?
If you’re not sure about FSBO, and shelling out the traditional 6% commission for a real estate agent makes you feel nauseous, this might be the option for you. It’s a seller-friendly approach that allows agents to charge low fees while still providing the full service experience of a traditional 6% real estate broker. These agents help determine the price of your home, help you stage it, photograph it, market it, show it, and then handle the final price negotiations and closing process—all for a fraction of the conventional cost. It's truly the full service real estate experience without the inflated price tag. Felix Homes, for instance, will handle everything from list to close for this discounted 1.5% listing agent commission. Keep in mind that similar to flat fee MLS companies, you are still expected to offer the buyer's agent a competitive commission, typically 3%. Either way, the result is that real estate brokers like Felix Homes save sellers some serious money, over $12,375 on average.
How Are 1.5% Realtors Different From Flat Fee MLS Companies?
First, 1.5 percent real estate agents or discount realtors as they are commonly known find ways to work smarter. 1.5% real estate agents tend to favor a tech-savvy approach to home-selling. For example, Felix Homes combines conventional MLS and online listings with targeted social media marketing. At Felix, we've also developed our own proprietary search platform where clients can easily view local properties. This allows our agents to leverage their time, which is one reason why Felix charges just a 3% total commission when we facilitate the entire transaction on behalf of both the buyer and the seller. Essentially, using a local MLS is just a small aspect of a 1.5% realtor's services.
The second factor that allows discount real estate brokers to offer such low fees is volume: they simply sell a lot of properties per agent. Listings can sit on the MLS for months, especially for FSBO sellers who aren't constantly available to communicate with buyer's agents. Whereas a low-commission real estate broker uses dedicated agents, along with that technology edge, to successfully complete as many as 5-7 transactions per agent per month. Better efficiency and experienced agents lead to more sales, which means more money in the pockets of the seller and the low-commission real estate agent.
This home-selling model often yields astonishing profits. The average home represented by a real estate agent already sell for an average of $80,000 more than an FSBO. When you only have to cover a third of the traditional agent commission on the seller's side, you make more money with no extra hassle. In fact, Felix saves their sellers an average of $12,375 on every transaction. Faster sales and lower fees without sacrificing service? It’s no wonder why sellers are steering clear of the FSBO route, and maximizing profit with low-commission realtors.
Who Is Felix Homes?
At Felix Homes, we strive for more sales and more savings, which is why we believe that our low-commission model is the most financially responsible way to sell a house. If you live in the Nashville area and want more information on how you can sell and save, give us a call at 615-422-4277, or send us an email at email@example.com.
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