Agent2Agent in Encinitas>Question Details

Bill Hays, Real Estate Pro in Cardiff, AL

Is flat fee a better way to go?

Asked by Bill Hays, Cardiff, AL Wed Oct 27, 2010

I mostly represent buyers. am looking for ways to generate some listings. As I show homes, I see varying levels of service on the part of the listing agents. I am amazed that a seller would pay 2.5-3% for the low level of service these sellers are getting. Don't get me wrong, there are also some impressive listing agents who really do a great job as well. But the reality is that selling a home is a team effort between the seller and the brokerage and eventually (hopefully) a buyer.

With the internet's presence in our industry, the varying level of seller needs, and economic times in which we find our selves, most people are looking for ways to cut expenses. Does offering a fee for service approach for listing a home start making some sense in the long run? It seems to be how most other professional services are rendered these days other than movie star agents and professional athlete agents. Thoughts?

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I hate to agree, but I agree. I see a lot of very substandard service, and wonder if sellers are aware. The biggest name brokerages have agents who reply to emails with a few syallables if you even get a response at all, poor quality DIY black & white flyers, deplorable listing photos and information - even on good properties, etc. Professional athlete agents get their clients to sign, then pass them off to an assistant, so they can get even more clients. My buyers and sellers really appreciate the service I give; I wonder how they'd feel if suddenly they were working with an unlicensed assistant? As for Zip, most agents have no listings, as they cater to buyers, but they are trying to get their agents to get more listings by offering a lower commission, which you can do too.

Just do what you do, offer a little less commission to list; you don't have to offer a flat fee. Yes the buyer's agent will make a little more, but you'll still have your buyers to work with. Just keep your integrity, do a good job, offer all of the services a full service listing agent would offer, and stay in regular contact with your clients. I hear from sellers all the time how their last listing agent never called them, they felt like they just disappeared. Yes we're busy, but talking to your client every few days is essential.
1 vote Thank Flag Link Thu Oct 28, 2010
In my own experience with flat fee listing or selling agents, if you want to talk about a low level of service. . . . . I've taken expired listings from sellers who were previously listed with flat fee agents who complained they never got feedback, never did any promotions, etc. I've sold some of my listings thru flat fee agents whom I never saw or spoke to after they showed the house and prodiced the offer. In fact in some instances the buyers called ME because their agent did not return the calls.
1 vote Thank Flag Link Thu Oct 28, 2010
Beach Broker,
I do agree that we have some listing agents that just do not do a good job. They do not answer the phone, returns calls, make it difficult to show, and make it difficult to send an offer. I also agree that it is amazing that these agents get paid the same as the other side when you clearly do more work.

However, it is hard to know the current situation and each situation is different. I think that some of these agents are just so inundated with listings from banks that they cannot service efficiently. And who says no that is too many for me? Please give the work to someone else. No one in their right mind! Instead one would take the work and get help to do it.

Now these REO listing agents don't share their secrets which makes it harder for other well qualified agents to get the work. The asset managers don't want to work with too many different agents because that can be a head ache too. So I see the dicotomy. I know there is a better way. I just don't know what it is.

I sure would like to be one of the agents that has the Asset Managers calling and saying here is a listing and 10 more are coming next week! That is a good problem to have.

As far as the fee for service goes; I have adjusted my commission before and when I do there are certain things that I won't do if the full amount isn't being paid. For example; at a reduced commission I will not put an ad in Harmon Homes or run a weekly ad in the news paper. Those are costly expenses in selling a home. Some listings will require more work than others also. Or the seller use to be an agent and wants to do some of the work, etc.. So a fee for service paradigm may not be a bad idea.

In general my first response is "No I will not reduce my commission". But it depends on the situation and the price point of the home.

Raschel A. Kloos_Realty Executives
760-845-4744 Lic # 01242504
1 vote Thank Flag Link Wed Oct 27, 2010
I'm seeing more FULL SERVICE brokers offering services for a flat fee, and I think it will become much more common in the future. On the buyer's side there is an undisputible conflict of interest when paying a broker a commission - that broker gets a smaller paycheck when he is successful in negotiating a better price for the buyer, therefore there is no financial motivation to get the price down (forget repeat business and referrals, I'm talking about for the specific deal on the table). There are definately times when offering full service for a flat fee will make sense, and I believe there are some brokers out there who are smart marketing guys and will find a way to slap a successful marketing message on that product in the future.
1 vote Thank Flag Link Wed Oct 27, 2010
As a listing agent in NYC, I certainly earn my fee. The listing agent must be present at every single showing. Between marketing, showing, negotiating, and then seeing the rest of the process through from accepted offer to closing, it is a tremendous commitment of time, effort, and energy. I am also in constant communication with my sellers. I earn every penny and probably then some. I realize in some parts of the country with locked boxes much less is required of a listing agent, but here we run ourselves ragged.
1 vote Thank Flag Link Wed Oct 27, 2010
@Janet - We use the lock boxes so it seems like it is a little less onerous than being at every single showing. I couldn't imagine the amount of time involved with that and wouldn't consider flat rate with that service level. Thanks for stopping by!

@John - You touched on what I have been thinking about - full service for a fee with options to add more or less. I am wondering if the problem becomes that the type of person you attract with that type of arrangement is more of a taker and will want the base fee with all the bells and whistles thrown in. Thanks, I appreciate your perspective.

@Raschel - I wasn't even considering my experiences with REO listings when I was describing listing agents - that is a whole other story! Maybe I should spend so more time with expireds and see what they have to say... Thanks!

@Louis - From Help U Sell to RE/MAX - I'd say that is a trade up! I'm not thinking about the $500 and I'll sign you up on the MLS deal. And I don't want to carry a stigma as a "discount broker", which is a term I fundamentally disagree with simply because a commission rate is negotiable and not a standard - so what is a negotiated commission fee discounted from? Anyways, I guess I am just trying to look realistically where we are going and be ahead of the curve. I do find it interesting that no flat fee brokers have jumped on this thread and talked about how great it is.... Thanks for your insights!

@Jerry - at least you had black and white flyers at the big brokerage listings you have been too!!! I have seen big brokerage, none-REO listings with no flyers at all. The clients I work with appreciate the service I provide as well and because I love what I do, it is generally easy and enjoyable. I am not talking about taking their money and sending them on their way to sell their house. I fully want to make sure they are taking care of.

I was just thinking as a way to differentiate, going to a fee for service model while still providing over the top service could help increase my volume and exposure. Stuff I would cut out and add as additional items would mostly be print ads like Raschel was talking about and out of pocket stuff that doesn't have a lot of direct benefit to the seller (my opinion). I feel that so much of what agents do is putting money toward building image to gain more prospects and it seems with the internet, their are other alternatives that don't require client subsidies via higher commissions to get huge results.

But, on the other hand - I agree with Louis' observation that many people feel that something is more valuable if it costs more. Thanks - got anything coming up in the Rancho San Pasqual area? I am looking with a client behind the gates there.

J R - The listing agent you describe I will never be, even for free! And I don't want to be even remotely labeled in the group of agents you your experience is very helpful. Thanks!
0 votes Thank Flag Link Thu Oct 28, 2010
Beach Broker,

Keep representing buyers and eventually you'll get the listings......Look at Zip Realty

As to flat fee services, I can speak from experience as I use to own a Help-U-Sell franchise. Depends on the area your in. My area I use to give them more service for the flat fee and they prefered the full fee as they felt they were getting more. It also continues to amaze me how smart people will pay more for less. Its mostly in how the spiel.

There are also companies that will list a home on our mls for a flat fee of 500 as an entry only listing.....amazing what our industry has come to.
0 votes Thank Flag Link Thu Oct 28, 2010
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