The Problem With the Flat Fee Broker Concept

The flat fee broker represents a low cost option for sellers wishing to make their homes available to Realtors by utilizing the Multiple Listing Service. They can save on real estate commissions by taking on much of the work involved in marketing the home. The "flat fee broker" is often referred to as a "fee for service broker" that charges an up front fee to let a For Sale by Owner access the multiple listing service. It looks good on paper, but usually doesn't pan out in practice. The fee for service broker provides no services for the fee other than data entry on the MLS. The seller is responsible for all other aspects of the listing and sale process. Unless the seller is experienced, like an attorney or retired real estate agent, it is difficult for them to provide the quality of marketing that their competition will have.

The flat fee broker makes his money on the front end by entering data, not selling a house. Also, other services, such as enhancements to the listing, signs, lock boxes, flyers, photography, call forwarding, document preparation, buyer's agent's commission, etc. are typically sold individually, even those services that are required by law! Another disadvantage to the program is the amount of commission paid to the buyer's agent is often higher than average. Many times the buyer's agent has to act in both capacities, as a selling agent and a listing agent, because under the fee for service model the seller is normally representing themselves. The higher commission helps to entice agents to show the property.

Below is a comparison between the typical flat fee, also known as a fee for service, program and Berkshire Real Estate's Seller Assistance Program + MLS.