Preparing to sell your home can be an intimidating prospect. As you get ready for your next move, your primary concern will probably be on how much you will you make from the sale.
Even if this is your first time selling a house, you are probably aware that brokers typically charge a percentage on the money you get from the sale of a home as compensation for their services. This is referred to as a commission payment.
The broker will then split the commission between itself and the agent who facilitated the sale along with the procuring brokerage that brought the buyer. In most cases, it can seem that they both get paid rather handsomely. However, you do have to remember that a traditional brokerage is paying for their MLS Dues, Association Dues, marketing costs, taxes, and so on.
A flat fee is a type of arrangement that allows you to cut back on some of the costs that a tradional real estate listing incurs, and has to be passed on to the seller. Somtimes, a flat fee listing makes it so that you can have a lot more in the bank once you sell the house, while other times a tradiontal listing may be worth the additional costs due to other factors. Here is what you need to know about flat fee listings versus a traditional brokerages.
What is a Flat Fee Listing?
In order to notify potential buyers that your home is available for sale, traditional brokers will put your home on an MLS (Multiple Listing Service) – which is a website where brokers sell and buy houses for their clients. An MLS is the primary method that brokers use to make house transactions. This is because once the home goes live on the MLS, it will appear in many other house selling/buying sites as well, thus making it easy to find potential buyers. As such, when you hire a broker, they will list your home on the MLS, get leads, show your home, and make the sale.
Flat fee listing companies, however, give you access to the broker-exclusive MLS to allow you to list the house for yourself. You will pay a set fee, and that’s that; you will not pay any commission when you sell the house.
As you can tell, you will not have a dedicated broker doing all the work for you; rather, you will have to do the work yourself such as talking to the buyers’ agents and showing the house. Nevertheless, the flat fee company will provide you with a team of dedicated listing agents to help you throughout the entire process at no extra cost.
Depending on the fee you agree upon, the company might also include provisions such as creating ‘For Sale’ signs for you, professional photography, contracts assistance, or even a full-service agent to help you make the sale.
Some companies might get you this access for as low as $299. The additional services and features could bring this price up to between $1,500 and $3,000 depending on your location. Nonetheless, this does not compare to the traditional broker commission which could be as much as $12,000 for a $400,000 house.
As such, flat fee companies allow you to make significant savings by eliminating the need for an agent to do most of the work for you. This drives down the costs while giving you more control.
Benefits of a Flat Fee Listings over Traditional Brokers
1. Flat Fee Companies Want to Find Buyers Quickly
A flat fee company makes money by turning properties at a fast rate. Traditional brokers work on a commission, and thus, might talk you out of a fast sale with the promise of a better price. Nonetheless, this is not guaranteed and could make you wait for long, only for them to sell at the same price range they had previously refused.
A flat fee company will help you sell the house at fair market value within the shortest time possible. And since they are not brokering, they will offer you a more consultative approach. They ensure that you know what’s happening at every stage of the process to help you make a confident decision.
2. Budgeting With More Accuracy
Flat fee listings let you know exactly how much you will spend. This allows you to make a decision that is based on your budget rather than relying on what the agent might sell the house for. For instance, if the traditional broker sells your home for less than what you were anticipating, their percentage-based commission will still be high thus affecting your budget.
Knowledge of how much you can reasonably expect from the sale is important as it helps you calculate your potential profits to allow for more informed decisions.
3. Flat Fee Services Are Fair
The status quo in traditional brokerages is that the agent receives a commission off the sale of the house. So, if an agent is selling two houses; one worth $400,000 and the other $200,000, it is only fair to assume that they will invest the bulk of their efforts into marketing the higher-priced house as it will make them more money.
This is not fair as all home sellers need to be accorded the same level of service, regardless of the value of their houses.
Flat fee listing services, however, will accord their customers the same level of service and attention because their profits come from turning properties at a fast rate.
4. Much Less Expensive
Traditional brokers’ commission is usually at around 3% or more. Thus, assuming your home is worth $200,000, you will pay them at least $6,000, and if it is worth $400,000, you will part with $12,000 or more depending on the terms.
Now compare that with the $299 charged by the flat fee company. Or even the $1,500 – $3,000 package that comes with exclusive features that mirror the efforts that a traditional agent would use to sell your house. They are incomparable.
For years, traditional brokers have been making tidy profits off selling people’s houses. Their exorbitant rates ensure that house sellers give away a significant portion of their proceeds to the selling company, thus affecting their budgets. Flat fee companies solve this problem by allowing you to do most of the work yourself while providing you with guidance along the way.