Austin Real Estate

Eric, I see the flat fee mls schemes as just that schemes. The MLS is a great tool but it does take a little more than just the MLS to get a home sold for a good price. another con that I see with the flat fee MLS system is that the home sellers who are most likely to want to use this are the same ones who will also try FSBO and almost always these sellers over price their homes and as such you will have quite a few of your signs sitting out there for a long time. Possibly a good thing, but then again what do all the neighbors think of your selling skills seeing your signs sitting in peoples yards for 6 months or more and the houses not selling?

Hey James. This is actually a post by Bob Lipply. I’m in the process of adding avatars to the diff’t author accounts so that it will be easier to see who writes what.

Thanks for your comments!

James your point is somewhat covered in Cons #3 and #4 for Real Estate Agent. Thanks for providing input. I will add to the list when I get more.

I can’t imagine why any seller would want to willingly put themselves against an experienced real estate negotiator? It’s not fair to them or their interests. Good post Bob!

Flat fee MLS works and is a good option for many (not all) sellers.

Now more than ever the value of great “full service” real estate agents are needed in the marketplace. Partial service/internet agencies simply do not have the data, time, budget, motivation or stamina in responding to a buyers market.

I’ve seen some decent marketing by sellers using partial service but overall, this isn’t the time cutting corners. Do it during a fat market when nobody can tell the difference.

I think the Flat Fee isnt a bad deal for the real estate agents doing them; collect a fee (even if a small one) for every listing whether it sells or not you have no ambition or additional incentive to do anything then what was already done. What were really talking about the seller is paying an additional 2.5% (already doing the 3) with essentially no money out of the sellers pocket until he/she accepts an offer that they are happy with AND that closes. In Tucson these are out there although not very popular at least after the first 90-120 days the seller sits on the property and then has to relist with a full service guy. All things considered from list to sell I must spend 40-60 hours (sometimes more) on all the paperwork, showings, feedback, research, etc. (I think most other agents would range about the same) Once you figure that in at a 3% fee and once you truely accept the fact that you as an agent will not sell every house you list due to market conditions changing seller’s changing their mind, all other reasons. SO figure in the 3% and the time that it takes an expert to complete all functions of the sale and for almost everyprice range/ seller situation (unless retired and have all day to do all these items) it doesn’t necessarily add up to take on the risk for the price savings. A seller who is selling a 200k property after advertising expenses and paying themselves for time to produce their own sale will end up at a small loss in most cases vs. time they could do other things. I’m figuring at least 2k in ads and it taking them 80-100 hours worth of work begining to end once you do the math it works out to $40-$50 an hour if they truely sell it and if they only spend $2,000 in ads and if they do all the disclosures and legal paperwork correctly and dont get sued (some companies that do the MLS means MLS only you as a seller are responsible for everything else) since they will not have insurance to cover that. Oh ya if they price it incorrectly and spend the $2000 in intial ads then have to drastically reprice and new advertising (since the original 2k would be essentially useless) that throws all the numbers out the window. The safe bet even if I wasn’t an agent is to let the real estate agent spend his money and time trying to find me an offer that I like. If this happens then im happy, if not I took no risk.

Hey Realtor Michael,
I am going to stick up for the consumer on my reply – since I am one. $100-150 an hour to sell a $200k house sounds pretty nice to me – do you have a law degree to go along with that hourly charge? I don’t know how you reached $2k in advertising, but that’s quite a bit of money for only a $200k house. I hope the homeowner is getting more than flyers, a preview tour or an open house for that much. MLS, flyers and availability of showings should easily sell a $200k house – if it is not over priced.

Realtors do provide some valuable service in information about areas (be careful of steering), the buying/selling process, communication with various party and most importantly, MLS access. If anyone could have MLS access, the necessity of Realtors would drop for DIY’ers – precisely the people that the flat/low fee Realtor is marketing too.

A DIY’er.

If anyone could have MLS access, the necessity of Realtors would drop for DIY’ers – precisely the people that the flat/low fee Realtor is marketing too.

A DIY’er.

This is a fantastic point. I am a full service broker, but I realize that not everyone wants full service. When I speak w/ someone who I can tell is into DIY, I definitely refer them over to a discounter or a flat fee service.

The only issue I have with your statement is “MLS access for everyone.” In Austin, each agent pays in ~$1000/year investment to have access to the MLS. IMO, the flat fee guys are doing a good job of giving the general public the ability to list their homes for a fixed price when they need to.

Now…if another system comes along that can challenge the MLS (Google maybe?) then I think we can see the price of listing a home (for brokers/agents & the public) go down drastically. The only real obstacle is going to be “real world” access – i.e. a lockbox system with limited access that the public can trust. IMO, local boards have done a REALLY good job on that aspect.

And btw – please don’t ever feel like you have to post anonymously if you’re going to take a contrary viewpoint. All opinions/views are welcome here!

Not only that (MLS fees) but in Tucson a very small 4-5 line ad in the newspaper runs $200+ a weekend! Now lets say your house is on the market for 10 weeks (70 days, which is less then the average in Tucson.) there’s over 2k right there with no guarentee your going to sell your home add in all the other marketing a DIY’er may have and the 2000 is probably on the small side. Think about this my website alone costs over 45k, my clients can take advantage of what I bring to the table. Nothing wrong with DIY’ers I just think when all “costs” are considered plus time a real estate agent isn’t as expensive as what the public percieves.

Another thing is the public assumes because you list your home with the agent they already got a check. I have many times taken listings only for the sellers to change their mind, all of a sudden get layed off and not want to sell anymore because the new house they wanted is just too expensive with the layoff. All kinds of stuff happens that I have to essentially be paid back for when I do close a house. Just like when you go to a store prices would be cheaper if their was no such thing as theft but since some people steal the merchandise then the Wal-Marts have to account for that as an expense just the same as any other and prices are slightly higher as a result. (Maybe that was a bad example it’s not the clients fault that lay-offs, and other events happen that void a home sale that an agent puts work into but if you dont account for those things then you will be doing something else other then selling RE in 6-12 months.)

Michael-

Let me preface my reply by saying I don’t mean my response as an attack – just trying to asking clarifying questions.

Do the newspaper ads work? Do you have a tracking system to ensure that? Just seems like they may be a waste of $’s in my mind (no pics, limited words, ect), but you are the Realtor. What clients do newspaper ads bring vs MLS search hits, website visitors or conventional realtor picks/escorts? Are they more serious?

I’ve never considered bandwidth costs, but if you are paying almost $3800 a month in hosting I’d be quite shocked – maybe some of it is the amortization of the site design, but still – ouch. Are you paying for search optimization too?

I can definitely appreciate the downside risks that all Realtors take – I am not sure why a retainer system has evolved yet. Have clients put down say $500 to start a listing and flyer creation and you’ll have costs and maybe a small profit if they bail early.

Note: most theft is internal (ie from employees) in retail – but large companies don’t disclose that do they?!

DIY’er

Anon –

You’ve signed off as DIY’er. This, IMHO, means that full service brokerages aren’t for you. Find a flat fee brokerage that will get you listed with a lockbox for a minimal fee. There are plenty to choose from, and I believe they cost ~$500 up front.

Flat fee real estate would be great if the services flat fee provided were truly all they needed. What happens is you get sellers who want to know why their house isn’t selling and what they should try doing and how they should start marketing it and they start pleading with buyer agents who show the place to tell them all of this. Then when you are negotiating on behalf of the buyer you need to walk the agency line as they ask you questions about how and if they can counter the buyer’s offer and how they should do it.

It’s the same reason why people still pay general contractors, plumbers, and electricians to do work on their houses; sometimes after the fact. Just because you *could* do it on your own doesn’t mean you *should* do it on your own.

The real estate industry is changing and along with it are the people who work in the industry that are changing as well. I have no worries about where my career will be because I’m one of those people who will be changing the industry. As for the other REALTORs… Everyone has control over their own future. Whether there will be 2.3 million agents 15 years from now… I’m not so sure.

People are finally realize that the days of paying an agent 15 grand to stick their home on the MLS, then wait for someone else to sell it are fading fast. Regardless of what the full service agents tell you, few do any more than that. Are two ads in the news paper worth $15,000 to you? As far as being professional negotiators, give me a break! The average Realtor took a 75 hour course to get his license, and not one of those hours were dedicated to negotiating skills. The bottom line is get your home on the MLS, and a “professional” will bring you a buyer.

Said with no self interest whatsoever….

Gary, that is SO untrue.

A qualified full service agent will share his or her online and offline marketing strategies including but not limited to; viral, peer to peer, whisper campaigning, bulk e mail, print, social netowrking (web 2.0), staging, open houses, CMA (analysis), and overall handholding.

If you do not understand what one or more of the above methods are, then consider an experienced real estate agent.

Sincerely,

Gene Dexter
RE/MAX Integrity
Seattle

Gene –

Check out the link on Gary’s name. There are a lot of unbundled/flat fee guys out there that realize they have a specific niche, that full service agents also fill a need, and are great to interact with. Then there are guys like Gary.

I went to Gary’s site and I find it interesting that he charges much more than most flat fee services for his low end service AND he only allows one photo in the MLS. Most MLS’s allow multiple photos and with the sea of inventory out there today, I know in my market one photo would not generate any interest. Gary what’s up with that? Why only one photo? And, what do you do if the home doesn’t sell?

Thanks Gary for showing us exactly why flat fee is flat fee.

Here’s an update. It’s been almost 2 months since we have offered this service and not ONE request. We have received requests for our full service listing service however.

Thanks for the update, Bob. We actually offered this a couple of years ago, but discontinued it after a couple of attempts. We found that the clients usually wanted more service than a “flat fee” and it tended to cause a weird situation between the agent & client. It just wasn’t for us.

I have found a lot of people do not understand what a the flat fee listing actually is. Education would be key if your company is going to market this as a product. Let it be known they will pretty much have to act like a fsbo with the exception that their home will be listed in the MLS.

I wonder if buyers out there see the flat fee listings sort of like FSBOs. Do these buyers assume that since the sellers are going with a discounter that they can lowball like they do the FSBO folks? The same can be said about people not using a buyer’s agent. They assume that they can knock 3% off the price going it on their own.

Some more tips would help in a lot of ways. Any more information and experiences is appreciated.

I have considered offering flat fee services for many reasons and providing substandard services isn’t one of them.

Homes should be listed and fees established on a case by case basis. No home or seller situation is alike. Quite often the $100k listing is a longer and more difficult process than a $500k listing. The work is almost identical in many instances. However, I disagree with the idea that you pay more to list because you paid more to buy. Who are we to demand %3 to 6% of a sellers equity. Full Services Agents don’t always provided the level of service or expertise that they should. Many full service agents provide the same service as a flat fee agent and make 5 times the commission. We are all independent business owners and we should be able to run our businesses based on our own personal and business goals and objectives. Most full service agents charge 6% because they are on a 50/50 split with their broker not because they provide superior service. Consumers need to understand how the break down of commission works.

So let’s do the math… You list a $100k home. It sells for $100k. The full commission to the listing agent/firm is (3%) $3000. Let’s say you’re on a 50/50 split. Your earnings is $1500. How much money did you spend listing the home. For example purposes let’s say you spend $300. This brings the listing agents net earning to $1200. Selling a property should be a partnership between the listing agent and the seller. You each must do your part to ensure the home sells. Sellers are required to keep their home in showing condition at all times. That is a lot of work for most working people.

If a flat fee service provider is serious about their business and are in it for the long haul, it does not make sense to build a bad reputation for their business by slapping a home in MLS, collecting a fee and it never sell. Therefore, why are we assuming that is all a flat fee service provider does. They should still provide a CMA as well as other marketing services. The real problem is the issue with price fixing. Because the large brokerage firms fight against this form of business in addition to MLS Boards they try to make it difficult to effectively run a Flat Fee business. You are not allowed to provide “full service” and charge the same fee to every seller or you will be accused of price fixing. Therefore, the solution is to base your fees on several factors which include the unique aspects of the home as well as the unique aspects of the sellers financial situation, equity, etc. Lastly, the commission says there is no standard fee. 6% is not a set fee and if your files are audited, every listing should not have the same listing fee.

Main point… there is no guarantee that you will get “full service” by paying 6%. Let’s consider another factor, DOM (days on market). If your home is in highly desirable community and the comps indicate an average days on market as 42 days, why should you pay 6% to sell your home? The “full service” agent does minimal work and pockets your equity. This doesn’t sit well with me. Therefore, I would like to reiterate the position that the fees should be based on many factors not the standard 6% that most listing firms charge. Again, one major factor in the fees charged is the agent/broker firm split. Because an agent chooses to work independently and charge a lower fee does not mean they provide a lower level of service. The difference is there financial goals are different than yours. So for the sellers reading this, keep in mind that all agents are not created equal, all compensation/commission splits are not created equal. Before you say no to the agent that offers discounted fees, understand their business model may be very different that the next agent. Don’t assume it’s because they are incompetent or offer substandard service. The real fear here is COMPETITION. With today’s technology, large firms are shaking in their boots that agents won’t need them anymore to have a successful business. The fee is 6% because it’s split four ways! Not because the service is better!