Drawbacks of Flat Fee MLS
What to Know About Flat Fee MLS
When something in life seems too good to be true, it probably is. In real estate, the perfect example of this definitely has to be flat fee MLS. Selling your home is already a costly expense once you factor everything in, so any way you can save money should be always welcomed, right?
The pitch with flat fee MLS is that your going to save thousands of dollars when selling your home by not having a real estate agent. But is that really the case? Most people obviously want to list in MLS but is that really all it takes to sell your home for top dollar? The answer is a rounding NO!
In the vast majortity of the circumstances you will net less money when you just go with a flat fee MLS listing and nothing more. If selling a home were that easy there would be tons of people doing it. The fact of the matter is they aren't! In fact, it is much like selling for sale by owner which has a ton of drawbacks. Here is what you need to know about flat fee MLS so you can make the best decision possible.
Understanding The Difference Between a Traditional Broker and a Flat-Fee Broker
With a traditional real estate agent, you’re going to be paying them a percentage of the house sale which is usually anywhere from 4-6% of the sale price, depending on who you choose. In exchange, you’re going to be getting a service that provides you with helping to price your home, marketing it both online and offline, and most importantly being your guide and fiduciary throught the process.
One of the most significant aspects a top producing agent can do for you is set up a full-proof marketing plan designed to get your home sold for the maximum amount.
If possible, the agent should strive to set your home up to achieve a bidding war. When that happens you are bound to be in the driver seat and get the terms and conditions you're looking for. But if you choose to list in MLS only, where you pay a flat fee, you’re going to get none of the perks we just listed; instead, you’re going to only get an MLS listing, and that’s about it.
These are some of the things you'll need to do as a seller when going flat fee MLS. Everything else will need to be sorted and paid for by yourself. So if you think you can handle it, then getting a flat fee MLS is going to be the one for you, but the reality is you probably won’t have this sort of time (or knowledge) at your disposal where you can focus completely on the selling of your home; alongside your other life commitments.
Ultimately, this can be a terrible idea, especially if you want to sell your property fast so you can move to another home you’ve already got lined up.
The Downsides of Flat Fee MLS
As discussed, using a flat fee broker means that you’re getting listed on an MLS but you’re also not getting many of the services that are absolutely vital to the success of home selling. Below, we’re going to discuss what the overall drawbacks are of using a flat-fee broker so that you can understand whether or not it’s worth the hassle siding with one just to save a bit of extra cash.
- Losing money if you underprice: you’re probably not an expert, since it’s not your full-time job to be involved in real estate, so won’t know how much you should list your home for to ensure you get a good deal. There is nothing more important in real estate sales than pricing your home correctly from day one. Start making reductions and you've lost momentum.
- Lose more money if you don’t fix the small problems: Again, you might not have the eye for this sort of thing, but your brightly colored walls, dirty carpets, and mold spots in your home could be scaring potential buyers away from your property.
- Lack of experience: Due to your lack of experience with selling a home, you may let a buyer re-negotiate the price after the inspections; which could lose you out on some serious money if you allow them to knock them down due to desperation.
- Unnecessary expenses: You may lose additional money if you let the buyer put certain expensive closing costs on your side; allowing them to do this just so you can go through with the sale.
- Less time doing your actual job: as mentioned, real estate isn’t probably your job, meaning that if you’re handling the selling of your own property you’re going to have to take time away from work to do all the things a real estate agent would be doing for you.
Are You Really Saving That Much With Flat Fee MLS?
Remember the way commission in real estate sales work is like this - a seller pays X percentage in commission. For arguments sake let's call it 5 percent. That 5 percent is most often split 50/50 between the real estate company listing your home and the company who procures the buyer.
So while you will not be paying a listing agent by using a flat fee MLS agency, you will still be paying the buyer's agent a commission. In essence, you will be paying 2.5 percent plus the fee for the flat fee MLS agency. So it might seem like you are saving 2.5 percent less the flat fee but what you need to remember is what you will net from the sale NOT what you are saving in the fee.
A traditional real estate agent could easily make up the difference in commission savings by doing the things that have been mentioned here. This is what sellers really need to understand.
Final Thoughts on Flat Fee MLS
Could you get lucky and sell your home for top dollar with flat fee MLS? Sure you could, it's possible. Is it likely? No, unfortunately it is not. There are certainly downsides to flat fee MLS worth considering before going down this road, especially having the time to do all of the things a real estate agent in your corner normally would.
Sometimes it’s worth paying a little extra to be free of stress, leaving the job to the experts will also give you peace of mind knowing that you’re in good hands and that everything is being handled correctly. Hopefully, you now have a better understanding of the pros and cons to going the flat fee or entry only sales route.
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