Why it Works?
With MLS Direct, home sellers are able to save at least 2.5% in traditional real estate commissions minus the flat fee paid upfront. For decades now the Multiple Listing Service, commonly known as the MLS, has been responsible for the larger portion of home sales in America. The MLS is essentially a member-only database of properties listed by individual real estate brokerage firms. They cooperatively work with other licensed brokers in the system to market properties.
A lot of money is made in real estate transactions typically by the receipt of a “commission,” customarily 6% from the final price of a home sale. This commission is typically divided between a selling and a buying broker. If the commission is negotiated at 6%, it is equally divided between the two co-operating brokers after closing. A $200,000 property will yield as much as $12,000 in real estate commissions!
This fee is usually justifiable as Realtors® provide not only access to a local MLS system but also advice and expertise in protecting both buyers and sellers best interests in a transaction. While legal counsel is also readily available when it comes to contract negotiations, most home sellers elect to use a real estate broker to handle their marketing and property selling affairs.
A few years ago, we implemented a “Flat-Fee” MLS selling model. Essentially, it does away with the listing agent and the customary 3% listing fee for representing and marketing a seller’s property. The seller now has access to the Multiple Listing Service by virtue of paying a flat-fee instead of a full 6% commission and is allowed to carry on the sale of his or her own home and the option to pay only 3% to an agent who produces a qualified buyer.
In spite of many opinions on this subject, flat-fee MLS services and brokers have proliferated across the United States and have developed growing popularity among die-hard for sale by owners and sellers who simply can’t afford to pay a full 6% commission off their equity. Since most homes are sold through the MLS, many “for sale by owners”, also known as FSBO's, seem to like this new selling method and are willing to pay flat-fees ranging from $299 to $799.
The system seems to benefit many agents working with buyers since they can often pick up additional transactions by helping the flat-fee seller purchase another home, thus creating an additional source of income. Many home sellers, however, continue to use the professional services of a real estate agent for convenience, expertise and advice.
Flat-fee programs not only offer access to local MLS systems but also to the high-traffic Realtor.com site. With 85% of homebuyers now using the Internet to look for homes, it makes sense to have as much online exposure as possible.
In conclusion, flat-fee services are not a replacement for the services of traditional real estate agents or legal counsel but the Internet and providing limited real estate services has made it possible to change the one-size-fits-all mentality when it comes to the typical real estate commission structure.
