Listing fees for "flat fee MLS" services cover a wide range, but generally include two components: the flat fee paid to the listing broker, and the commission the property owner agrees to pay a Buyer's Broker (if there is one).
Typically, with flat fee MLS the fee is paid at the time of listing the property rather than at closing or settlement, the opposite from traditional brokerage services. However, if a Buyer's Broker sells a Flat Fee MLS listing, the commission payable to the Buyer's Broker is typically paid at closing.
Flat Fee Service Advantages Many flat fee service providers allow the seller to advertise as a For Sale By Owner (FSBO) by using their sign and contact information in the yard. In fact, there is some degree of confusion in the market regarding FSBO signs being used on properties that are also listed in the MLS. Therefore, please use the 18in x 24in REAL ESTATE SIGN that you will receive within 5 to 7 business days. Please PRINT your phone number on it. This sign will help alleviate the confusion to REALTORS® who may not know that you are represented by a Real Estate Brokerage AND that you would like REALTORS® to bring you a Buyer (Realtors Code of Ethics stipulates that Realtors are not allowed to solicit listings already posted in the MLS. Please contact info@MLS4public.com should this happen to you.)
Another significant advantage to Flat Fee is most service providers stipulate that if the seller finds his own buyer without the use of a buyer's broker, then the buyer's broker commission is eliminated, and the seller owes no broker a commission.
Other advantages for the seller may include the option to cancel the listing at anytime without penalty and relist with another service provider or full service broker, effectively eliminating any "minimum length of service" (the listing period) typically required by full service brokers. Because MLS rules typically have strict requirements of its member brokers, a Flat Fee subscriber may not be able to terminate a listing after a contract with a buyer represented by a Realtor member of that MLS system has been ratified. The reason for disallowing termination or withdrawal from MLS under this scenario is because the entire MLS system is based on its members agreeing to cooperate with each other and ensure payment from their listing clients to each other upon closing. To allow Flat Fee listings any privileges in this regard would undermine the very foundation of the MLS system.
Flat Fee Service Disadvantages A potential downside of using a flat fee listing service is that, in most cases, the seller must represent himself in the transaction, or arrange for other professionals such as an attorney or title company to handle closing. Because most Flat Fee service providers offer "limited representation" by the real estate broker, which typically excludes services such as offering advice during contract negotiations and making sure all offers, counter-offers, counter-counter offers, etc. are properly executed by the parties, flat fee listings are not advised for the first time home buyer, or for the property owner who simply does not have the time or perhaps personality to manage the selling process. In Texas the Broker is required to negotiate all deals, whether or not they are receiving a smaller commission. In any case, both flat fee (limited service) and traditional full service brokers should always advise clients to seek qualified legal and tax advice regarding their real estate transactions.
Flat Fee may not be the best choice for sellers who have moved away from the area where their home is located, either. While it happens successfully from time to time, it can be difficult and frustrating for a home owner to negotiate a long-distance contract and smoothly navigate to a closing.
