More and more home sellers are increasingly finding the 5-7% traditional real estate commission a bit steep and are looking for more affordable options. While becoming a For Sale by Owner (FSBO) to sell your home is one such option, navigating the process can be a major turn off for most people. To start with, the entire process is too labor-intensive and home selling has a lot of moving parts. This can get overwhelming, more so for first time home sellers. All is not lost, however. If you are looking to sell your house, there is possibly a better option that perfectly solves the above problems: flat-fee brokers! Under this arrangement, brokers offer some or all of their services on a flat-fee instead of charging you a percentage based commission based on the value of your home.
So if you are wondering if working with a Flat-Fee broker might be advantageous to you, please read on! Whether you are selling your home yourself or via a real estate agent, the most important thing you need to keep in mind is not how much you sell your home for, but how much of your home’s equity is put into your bank account once it has been sold. Below, we give you seven reasons why a flat-fee broker may be the best solution when it comes to increasing the amount of money that is given back to you when you sell your house.
It Will Cost You Less
The primary reason why a flat-fee broker is often seen to be a better option is listing commission savings. Depending on the sales price of your home, a flat-fee broker service can often be less expensive when compared to a traditional percentage based commission broker. When you are paying a percentage of your sales price as commission, obviously the higher the cost of your house, you more you end up paying in broker commission. That is not rocket science. However, when you agree to pay a flat-fee as commission, the price doesn’t go up if your home sells for more than you listed it for. But the reverse is true, right? If you sell your house for less, you pay a lower commission when you go with a percentage commission, while the flat rate fee remains static.
The reality is, if you choose your Flat Fee Brokerage wisely, you will still end up paying a fee that is significantly lower than the 2%-3% listing commission you would usually pay.
When you hire a brokerage that asks for percentage based commission, you’ll find that they offer a comprehensive list of services, and whether you use these services or not, you will still pay the full agreed commission once the home has been sold. But what if you want to do some of the work yourself? What if you feel comfortable enough to show your home yourself, or maybe you’re skilled in negotiating and want to handle this yourself? With many flat-fee brokerage services you’ll find that they offer the same list of services as a percentage based broker, but they are willing to breakdown the services so you only pay for what you use. If you only want to have your listing added to the MLS and nothing more, then there’s a good chance you’ll find a Flat-Fee broker that can do this for you and charge you a lower fee.
Below is a list of services that a real estate agent might offer and, you may wish to do yourself, or hire various professional services to carry out some of the tasks…
- Determining the initial sale price of your home
- negotiating offers
- home staging advice
- professional photography services
- designing and printing marketing materials
- erecting an agency sign on the property
- holding open houses
- scheduling home inspection services
- helping you navigate the sales contract and home repairs
Choosing a real estate agent is synonymous with walking a tight rope. If you don’t have personal experience with one, or have personal recommendations, then it’s down to you to interview potential clients and then hopefully choose the right one to meet your needs. Even when you meet with an agent, it’s highly likely that the majority will say the same things and will promise the world, so that will make it even harder to make a choice.
So how can you make the right choice? The only real way is to test one and to give them a short-period of time (1-2 months) to measure their performance. That is not to say they need to sell your home in this period of time (although that would be great), but you need to see that they’re making progress, that they’re doing the things that they promised during your initial meeting and that they present your home in the most professional way possible. If you’re asked to sign an irreversible 6 or 12 month contract, then if you find your agent isn’t doing all of the above in a way that pleases you, then it’s likely you’ll have to see the contract out and won’t be able to switch agents. Always check to make sure that you can cancel the contract without penalty before putting pen to paper.
With a Flat-Fee Listing, it’s likely that you’ll be able to cancel the contract, especially when you’ve already purchased the lower priced services. Yes you will have paid some out of pocket fees, but at least you won’t be precluded from working with another agent that you think is impressive.
Level the MLS Playing Field
One of the reasons why brokers charge high commissions is because they’ve made significant investments in the technology that is required to sell homes. A big part of the technology utilized by brokers is the software that they use. A major piece of software is the MLS (which technically is a searchable database). A big advantage in the past was that FSBO could not list their homes inside the MLS. But now, with Flat Fee Brokers an FSBO can get their homes into the MLS at an affordable price.
You Have More Control
Different agents have different processes that oversee pricing, staging, inspections, open house and buyer negotiations. Once you choose one of our flat-fee plans, you can control how to carry out the preceding processes. You get to determine and fashion the sale of your home how you want the sale process. While a realtor can bring their expertise and help some processes during a home sale, there are other options. If you are looking to keep most of the proceeds of your house sale and only need limited assistance, a flat-fee package is worth considering. With access to MLS and some time on your hands, you can quickly sell your house with minimal overheads.
Signing with a full-service agency locks you into an agreement with set terms and conditions until your house sells. A flat fee arrangement allows for unparalleled flexibility. With the pay-per-day plan, you only commit yourself to make payments in the short term. It is true that you or your agent can also choose to terminate your agreement if either party deems it necessary. However, getting out of a contract can be a lengthy, expensive and tedious process. The best way to go about this is to consent to part ways mutually. When this fails, you might find yourself in litigation, which can get even more expensive. Limited commitment avoids all these unforeseeable issues between yourself and your agent and ensures your interests are protected. It is good to know that you can walk away from existing agreements at any time without it hurting your pocket.
Granted, FSBO is the cheapest option of the three, as you are not required to pay anyone for any services. This, with a word of caution, though. Attempting to sell your home without access to a Multiple Listing Service is strongly discouraged. This is more so when you do not have an interested buyer in mind by the time you decide to sell. The Multiple Listing Service (MLS) is a platform used by realtors to see information on listings. Essentially, this is how realtors match a home to a buyer and vice versa. If you do opt for a flat-fee plan, you will mostly be getting access to the MLS, which significantly increases your chances of finding the right buyer quickly. This is primarily what the fee you pay caters for. You can often flat-fee MLS listing services that cover a state period of time, indefinitely or even daily fees.