Real Estate Agents Guide To How Flat Fee MLS Listings Really Work
Table of Contents
- What Is A Flat Fee MLS Listing?
- What Type Of Sellers Use A Flat Fee MLS Service?
- Should Flat Fee MLS Be Allowed?
- Common Agent Questions About Working With Flat Fee MLS Listings
Please Note: this guide is for real estate agents to understand how to best work with flat fee MLS listings for their buyer clients. If you are interested in learning about flat fee MLS to sell your house, you can read this article. Or keep reading if you want to know what information we are giving Realtors.
Lately as the real estate market is changing and new agents are getting their licenses, I have been getting an increasing number of emails, phone calls, text messages and even social media messages via Facebook and LinkedIn from agents who are inquiring about how the service my company offers called flat fee MLS listings actually work.
While we are always happy to answer any questions about our service or our listings, I thought it would be a great idea to put some factual information out there directly from me so there is no confusion about this service and the most commonly asked questions by real estate agents.
First, a quick introduction about myself and my company. My name is Kris Lippi and I am a real estate broker that is currently licensed in 8 states including all of the northeast (New York, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire and Maine) as well as Georgia. My brokerage name is Get Listed Realty, LLC and I run this website ISoldMyHouse.com and we provide flat fee MLS listings in all 50 states.
My website has been running since 1997 and started out by providing online home selling advertising services directly to sellers who wanted to sell their house without a real estate agent. Back in 1997, the internet was very new and there were not all of the consumer portals such as Zillow, Trulia, Realtor.com etc like today.
The service was quite popular, especially in the northeast (check out an old commercial here) and attracted a lot of attention. Some of that attention made a lot of news back in 2004, after the New Hampshire Association of Realtors filed a complaint against the website arguing that it was operating as a brokerage without a license. This of course was because the service was very new to the market and at that time those agents didn’t understand the business model and perhaps viewed it as a threat to their business.
All of this was before my time with the website and that drama has all been resolved. Also, the online residential real estate services models have evolved and matured with lots of different variations of discount real estate brokers and limited real estate services models such as flat fee MLS.
With all that said, I won’t be covering all of those models, in this article I’ll only be focusing on flat fee MLS. So let’s get started.
What Is A Flat Fee MLS Listing?
This is a good question and a thorough explanation and level-set is in order to get everyone on the same page. A flat fee MLS listing is where a state licensed real estate broker or agent enters into a listing agreement with a home seller to provide them with a very basic and usually minimal set of services when selling their home. These services typically consist of online marketing by entering their home into the MLS and all the other online portals and IDX feeds that the MLS syndicates their data with.
This is why flat fee MLS listings are also commonly referred to as entry only listings because the broker is really only “entering” the listing into the MLS. The important thing to note is that the real estate professionals do not provide any other services to the seller, so the seller is basically handling the selling of the home, offers and counter offers, negotiations, escrow, closing and any other task.
At this point, you might be asking how is this even possible? If you don’t understand how an agent can only offer this limited service to their client, it is because you are probably what’s referred to as a full service agent. You provide a full set of white glove concierge services to your clients, or at least you should be. The trade off is you typically get paid with a commission based on a percentage of the sales price at closing. A broker who lists a home with flat fee MLS is not full service, they are a limited service broker and only gets paid a small flat fee ($300-$500) up front.
A limited service real estate agent breaks down all the typical services a full service agent does and offers only a subset of them to the client, a-la cart. In flat fee MLS, the only service is the entering of the home into the MLS but they could offer additional a-la cart service items for an additional fee.
What Type Of Sellers Use A Flat Fee MLS Listing Service?
We sell a lot of flat fee MLS listings through our website and as such we have a very good sampling of the types of people and personalities that use our service list on the MLS. I can break them down into the following categories of people.
Incredibly savvy sellers
These sellers are smart people with a DIY or entrepreneurial mindset or have a solid business background. They are usually prior sellers who paid attention to the process, investors who buy and sell multiple homes or have a close friend or relative who is coaching them along behind the scenes.
They usually will offer a commission that is typical for the market they are selling in, will have the home staged or in an appropriate condition and are priced correctly. These sellers also understand the power of working with buyers agents but don’t feel they need a listing agent. These sellers are highly successful with flat fee MLS.
The FSBO newbies
These sellers are typically first time home sellers that are usually just trying to save a buck. You can’t blame them, commissions are expensive and selling on their own is 100% possible. They may or may not get exactly how the home selling process works. But they usually take the time to educate themselves by consuming online content such as blog posts, YouTube videos, books or other media.
I find a lot of these sellers take the good advice they learn through that education process and have a successful home sale. The others will try to cut a few corners such as taking less than perfect photos or pricing too high, etc. They also might underestimate how involved the selling process is but most are able to figure it out. These sellers that cut corners are around 50/50 with success with flat fee MLS. If they don’t sell in a month or two after taking corrective actions, they might cancel and list with a full service agent.
The know-it-all cheapskate
First, let me say this type of person is definitely the small minority but they are out there and our service can attract them from time to time. This is the type of seller that thinks they know everything about selling a house but make every mistake possible. They definitely don’t see the value in paying any professional for anything, especially real estate agents. They are the ones that get mad that they can’t list on the MLS without offering a commission and their next question is can I offer one dollar! These types of sellers are usually unsuccessful with flat fee MLS and trust me you don’t want them as a client anyway.
Should Flat Fee MLS Be Allowed?
This might seem like an odd question, if you understand that residential real estate is not a one size fits all business or you understand the basics of competition in business. But we do get some real estate agents who firmly believe that our type of service should be “banned” or even “illegal”. That is not going to happen, and it’s actually in the real estate agent professions best interest that this service is available, hear me out.
First, in the previous section, I talked about the three types of personalities that use flat fee MLS. If you remember those personalities all three of them DO NOT want to use and pay for a full service listing agent.
- The savvy seller will not use a listing agent because they know how to successfully sell a house without using an agent, they don’t need you but value you as a buying agent.
- The know-it-all cheapskate will also never use you and if they do, they will make your life miserable because you will always be doing your job wrong and you are overpaid.
- The FSBO newbie might use you but they need to try on their own first, if they sell then you should be happy for them and their success. If they don’t sell, they will be a much better client for you and appreciate what you offer.
So, all three of these types of people don’t want to use a real estate agent at this time to list their house and if a flat fee MLS service wasn’t available to them, they would seek alternative options and most likely try to cut you out of the deal altogether.
For example, we all know Zillow offers FSBO a way to list on their site right alongside all the other listings. Your clients will most likely see the house on Zillow and if it meets their criteria they will want to see the home. At this time FSBO listings on Zillow don’t have to offer or pay a buyers agent commission.
Another popular avenue is Facebook. Buyers and sellers are getting smart and using local Facebook groups to advertise that they are either looking to buy a house in town or they are selling one soon to get some feelers out there. There is no guarantee that you will get a commission, if your client buys that house. Unless you have a buyers agreement stating the buyer will pay a commission or you are able to negotiate a commission from the seller directly.
But a flat fee MLS listing has a cooperating commission that is pre negotiated with the sellers and bound by a listing agreement, which is a requirement of the MLS. So a flat fee MLS service markets to the types of sellers that don’t want to use a listing agent, and gets them to work within the system that buyers agents use to conduct business in the way that is familiar to them. The best part is a commission is contractually guaranteed if their clients buy the house. This is a much more efficient way for buyers agents to work with FSBO home sellers.
On top of all of that, there are also antitrust laws that are in place to prevent any groups from limiting competition in business. There are some lawsuits going on now that are challenging the MLS to make it even less restrictive and the Department of Justice has already made opinions NOT in the National Association of Realtors favor.
Common Agent Questions About Working With Flat Fee MLS Listings
We want agents to sell flat fee MLS listings with as little friction as possible. Hopefully the answers below to the common questions about flat fee MLS, will help make the transactions simpler and less mysterious for you.
How will I get paid as a buyer agent?
You will get paid the exact same way that you get paid for every other house you sell when you represent the buyers agent. The commission is paid from the proceeds of the sale and is paid at the time of closing either by the attorney or title company. Most of the time a commission statement is not needed from the listing office but the flat fee MLS broker should be more than happy to provide one or a copy of the listing agreement if the closing agents need either of those documents.
How do I set up a showing or get access to the property?
This one is dependent on the property, just like every other listing in the MLS. In order to find out how to show the property you need to look in the showing instructions in the MLS. The flat fee MLS broker will put the sellers preferred contact information and any special instructions for the agent to see. Some offices may use the showing services such as ShowingTime but don’t forget to look in the MLS, and that’s good advice for all listings!
Will a real estate agent be present at the open house?
Most likely no, remember a flat fee MLS broker is typically only providing the “entry only” service to these sellers. However, there could be some that offer to do open houses as part of their service but we have not heard or worked with any of them.
Where do I send offers to purchase the property?
Directly to the seller in most cases. However, some states have minimum service laws that require the listing broker to accept and present offers to the sellers. If that is the case then you should send them to the listing broker. Or if the broker is providing this service to the seller as an additional service. I would read the instructions in the MLS that are typically called the agent remarks/instructions or any document attachments to the listing that might have special instructions.
Who do I negotiate with?
Directly with the seller in most cases. However, some states have minimum service laws that require the listing broker to negotiate contracts with the buyers agents on the sellers behalf. If that is the case then you should send them to the listing broker. Or if the broker is providing this service to the seller as an additional service. I would read the instructions in the MLS that are typically called the agent remarks/instructions or any document attachments to the listing that might have special instructions.
Who holds the escrow deposit?
This depends on local norms but whatever you do, DO NOT have the seller hold the escrow funds directly. A professional escrow agent account is typically used. For example, the brokerage escrow account or attorney’s escrow account can be used.
How will we get access to the property for the home inspections, appraisals and final walk throughs?
The seller will provide access to the home. Contact the the same way you contacted them to set up a showing or whatever other communication methods you established through the negotiation process.
Do I have to do twice the amount of work?
In most cases no. As you know, all real estate transactions can be very different and challenge even the most experienced agents and brokers. Believe it or not, a lot of sellers can be more experienced in the home selling process than a lot of agents, maybe even you! In some rare cases, a home seller might be in over their head. In this situation, it could be more difficult to work with the seller but this is no different than working with bad agents that you come across from time to time.
How can I become a flat fee MLS agent?
If you are interested in offering this type of real estate service, here is how you can do it. First, don’t think it is easy money, it’s not and believe it or not, it is very competitive. Second, I would recommend that if you do want to offer this service, you need to be all in on the decision and build your business around this service. Also you either have to be a broker or an agent that works for a broker that is ok with you offering this type of service. Lastly, I would recommend that you be tech savvy and good at internet marketing. You need to attract sellers to you through creative online methods as well as being able to use technology to make the process streamlined and automated as much as possible.
If you want more information on either becoming a flat fee MLS broker or have any questions for me than feel free to reach out or drop a comment here, I’m happy to help in any way I can. Or if you are already a flat fee MLS broker or started offering the service and want to work with the customers of ISoldMyHouse.com you can fill out this form to start the process of becoming one of our partner brokers. Although, we only work with the best brokers in our network so make sure you are committed to providing excellent customer service.
About the Author: Kris Lippi is the owner of ISoldMyHouse.com, the broker of Get LISTED Realty and an official member of the Forbes Real Estate Council. He actively writes about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, Fox News, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as other major websites. Read more about us here.