Paying less to list your property is good for the seller because 96% of the time, the listing agent isn't the agent responsible for getting the property sold…it's the buyer's agent. So paying less commission to list is a good idea.
Drawback: The less commission being paid to the listing agent, the less commission possibly being shared with the agent representing the buyer (called the co-broke)
Several examples of a discount co-broke split
3% deal:
Structure:
2% = agent representing buyer
1% = listing agent
3% = total paid by seller
*4% deal:
Structure:
1% = agent representing buyer
3% = listing agent
4% = total paid by seller
5% deal:
Structure:
2.5% = agent representing buyer
2.5% = listing agent
5% = total paid by seller
* The best deal for the seller would be: 1% listing commission and 3% to the agent representing the buyer for a total of 4%
Factors that can help you get full service brokers and agents to lower their commission:
Help-u-Sell and Assist-to-Sell, are two national companies that offer programs that start at about $3,000, paid at closing. This is a full service/discount offer. Their agents hold open houses, represent the seller in contract negotiations and work the deal as full service agents.
Drawback: This Discount flat fee structure excludes the MLS unless the seller opts-in to the MLS and thus offers a “co-broke commission” to agents (outside of the discount/flat fee listing company agents). This means if the seller wants MLS exposure (to garner the help of the biggest real estate sales force in the world: Realtors), they would be paying the flat fee of $3,000 (or more) plus the MLS co-broke of 2%-3%. In a seller's market, this model is excellent because it is not necessary to have to be MLS listed to be successful. But, in a buyers market (the one we have been in since late 2005, in most areas) the MLS is an almost essential source for exposure.
Many companies have chosen this business model because it's easy to start and attracts customers quickly. But, this model is not necessarily good for the seller because of the easy nature of entry for brokers and non-broker based websites. As with any industry, when there appears to be easy money, all types of business models with different twists start to pop up. Some are good and some are just after quick money. It is therefore, important to do business with a reputable company.
The up-front flat fee programs range from $99-$999.
What services might you get from a flat fee listing company:
Drawback: The flat fee structure is good and bad. It literally all depends on the company that you deal with. There are a few drawbacks. (1) The broker that actually inputs the listing into the MLS might not be the flat fee company that took your money which means:
Word of Caution for doing business with any company-especially involving a major purchase or third party control over an important asset: Now that we have search engines such as “Google,” type in the company name with phrases such as “lawsuit”, “complaint,” “bait and switch,” “class action,” “dissatisfied customers” or “fraud.”