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Flat Fee Real Estate

Feb 21, 2008
Flat implies a constant figure. Certain industries such as traffic attorneys or amusement parks have for many years utilized some sort of flat fee price to increase sales volume and customer satisfaction, to calm people's fears about the potential for a large bill after the service has been provided, and to give assurance that all customers will be treated fairly since they are all generating similar revenue for the business. In flat fee real estate, sellers are truly able to achieve a listing fee that stays constant regardless of the sales price of their home. If that figure were $995, for instance, a true flat fee listing would cost the seller no more and no less, regardless of whether their home's price were $1,000,000 or $100,000. For many sellers, flat fee real estate is a refreshing relief. Traditionally, most commissions were based on a percentage. So a seller might pay ten times more to sell a million dollar home as they would a one hundred thousand dollar home.

A number of listed brokers have instilled some type of flat fee pricing. The range is all over the map. One broker might charge three hundred dollars, another might charge three thousand dollars. The services one receives may be the same or different. In some cases there may be different levels of fees, such as a bronze, silver or gold package that would include increasing prices that were nonetheless not based on a percentage of the eventual sales price of the home. Others charge a flat fee plus a smaller commission based on a percentage of sales price that includes additional components such as negotiation or advisory services. A few others actually have two flat fees with a break point coming at a particular sales price. So regardless of the fee structure selected, it is important for the homeowner to examine exactly what is being offered for a particular price and whether the flat fee price includes everything they need or if they need to pay extra for additional services.

It is important to note that while many listing brokers have taken on a flat fee structure, most buyer's agents are still compensated on a percentage amount that varies with the sales price of the home. It is not uncommon to see three percent of the sales price being offered to a buyer's agent. Sellers often are not as concerned that the buyer's agent commission is not a flat fee but instead percentage-based, because of the fact that they want their property to offer competitive compensation compared to other homes and because they generally perceive that buyer's agents provide an extremely valuable service in delivering qualified buyers to a home seller. Flat fees to buyers' agents may gain traction in the future, however, today they are somewhat uncommon. During certain periods of an extremely hot seller's market, some homeowners and builders have moved to the flat fee structure for buyers' agents, however, the trend generally has not lasted long. As the Internet and other dis-intermediation continues, however, it would not be a surprise for even more flat fee real estate to take place with all sorts of brokers.
About the Author
Donald Plunkett is the President of Congress Realty, a $299 flat fee real estate company offering its MLS listing services in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Texas and Washington.
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