Flat Fees Explained

Whether you are selling or buying, a term you are likely to hear more and more often in the world of real estate today is "flat fee". It's actually quite an important term to understand, as no matter what side of the transaction you are on, using the flat fee service could end up saving you thousands (literally) of dollars.

Basically, no matter what sector of the economy you are talking about, flat fee means one thing. It means paying a set amount of dollars to a person in order to get one, specific task accomplished.

In real estate, that task in relation to flat fee is generally about getting a home listed in the Multiple Listing Service (MLS). The MLS is the lifeblood of the real estate system, the way in which sellers let buyers know that they have a house on the market. It can be a bit of a confusing entity, but we have explained it in detail in another article.

For now, the thing to keep in mind is that flat fee MLS listing means that a seller pays a broker a specified amount in order to have their property listed on the MLS. Without a broker's assistance, sellers can't list their homes on most MLS programs, because they tend to be exclusive (although this is changing in the Age of Information).

The Difference between Flat Fee and Traditional Real Estate

Traditionally, sellers would hire an agent from a brokerage to sell their house for them, using a variety of different techniques. The agent would be paid through a commission structure, usually receiving around 6% of the sale price of their home as their fees for the entire process.

With a flat fee agreement, sellers are only paying a certain amount of money for one part of the brokerage's service, that is, the privilege of listing their homes on the MLS. Homes are listed in detail (there are some open MLS programs on the Internet, but most contain only limited information for viewing, and they can be hard to find). And of course, for the seller one of the biggest draws is that they pay only a few hundred dollars, rather than the thousands involved in the commission.