When you bought your house, you probably didn’t pay much attention to real estate agent commissions. After all, it’s part of the total amount you brought to the table to close the deal. But if you think about the fact that it amounts to 3% to 6% of the sale price, the number can be hard to swallow. You’re wondering if there’s any way to save money on your sale, perhaps by using a flat fee real estate broker.
Jesse Allen, an experienced agent who sells homes 56% faster than the average agent in Jeffersonville, Indiana, explains, “A flat fee brokerage charges up front, typically a flat fee of $3,000-$5,000.” While sellers can save money by selling FSBO (for sale by owner), they may still be compelled to cover the buyer’s agent fee, which amounts to 2% to 3% at closing, depending on the negotiations.
Given that you still pay 2% to 3% of the sale price, can a flat fee broker still save you money and get your home sold? And are they a good option for your home sale?
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What are flat fee real estate brokers?
To understand what flat fee real estate brokers are, we must first tackle how traditional agents are typically paid.
For decades, the average commission rate in the U.S. has ranged from 5% to 6% of a home’s sale price. However, with the recent changes to agent commission rules following the historic National Association of Realtors® settlement, both the typical commission percentage and the party responsible for paying it have started to shift.
Previously, sellers were typically responsible for paying the full commission rate of 5% to 6%, which was divided between the listing agent and the buyer’s agent. Under the new commission structure, sellers are no longer required to pay their buyer’s agent’s fee, thus reducing the cost to about 2.5% to 3%, depending on negotiations.
While the new rules are set to reduce fees, some sellers still feel the need to cover the buyer’s agent’s fees to entice more buyers or expedite a sale. In such cases, working with a traditional agent still means paying a commission of 5% to 6% of the home’s sale price.
For example, if you sold your home for $450,000 with the help of a traditional real estate broker, the total fees would average $27,000. If both the listing agent and the buyer’s agent get a 3% commission, each would receive $13,500. If you’re trying to walk away with the most money, it’s hard to think about deducting that much from your sale proceeds.
While working with a traditional agent involves paying a commission for their services, partnering with a flat fee agent means being charged a set, upfront rate.
A flat fee real estate broker is a company that sells your home for a fixed dollar amount. The average flat fee agent in the U.S. charges between $3,000 and $5,000, but it’s always important to read the agreement terms carefully because some brokerages charge an additional 1% commission, or higher fees, in some areas of the country. Input your address on the brokerage websites to find out what you are agreeing to pay.
Taking the example above, paying $5,000 instead of $13,500 for the listing agent’s commission would put the total commission at $18,500. A lower number may appeal, but what are you getting for that cost savings? What are the pros and cons of using a flat fee broker?
Pros of using a flat fee real estate broker
You can budget for their fee.
If you’re on a tight budget, it’s comforting to know what you’ll pay for the sale. You can budget your net proceeds and thus, how much money you might have to put down on the next house. Some home sellers prefer reducing the uncertainty in their home sale and knowing upfront how much the agent will make.
They’re focused on your satisfaction, not commissions.
An agent who has already been paid, or who knows how much they’ll make, might focus more on making you happy. The fruition of this benefit will depend on the agent and brokerage. They may feel less pressure to engage in aggressive sales tactics or hard-pitch their services.
The market sets the price for your house.
Market forces influence your home price when you use a flat fee agent. Agents who work on commission could underprice for a quick sale or overprice your home, wasting valuable time while it sits on the market.
You may have more control.
With so much on the line, it’s hard to feel like you’re just handing your largest asset over into someone else’s care. With some flat fee agents, you can set the price, choose how to market it, run open houses yourself, and handle the negotiations. You’re also not necessarily tied to their schedule or availability for showings, which could conflict with your family’s calendar.
Cons of using a flat fee real estate broker
You might not get top dollar for your house.
An agent working on commission has the motivation to negotiate and get you top dollar for your house. They’ll market it online and through their network, and may already have interested buyers in their agency. When it’s time to negotiate, they’ll know which seller concessions are common in your market.
Flat fee brokerages often make their money on volume — selling as many homes as possible — and might not invest the same amount of time and attention to your property. And they could rush through negotiations just to close the sale and move on.
You might not save as much on commissions as you think you will.
Real estate commissions can be confusing, which is why many homeowners might think the flat fee is all that they’ll pay. However, be prepared to pay more than just the flat fee Realtor’s commission. A seller can budget for the listing agent’s fee, but there’s still unpredictability in the final selling price. And if you want to attract more buyers or speed up the home sale, you may still feel compelled to cover the buyer’s agent’s commission.
You could incur additional expenses.
Some flat fee services only provide the bare minimum. Read the fine print and find out what that flat fee covers before you sign their contract — because, according to Allen, there’s wide variability in what flat fee brokerages will and won’t do for the client.
He says that some of them “charge additional money for photos, signage, and lockboxes, and there’s not going to be any open houses in your home. The client is still in charge of scheduling showings and negotiating contracts. You’re only paying for a service of getting your home on the multiple listing service (MLS).” If you want your listing to attract interested buyers, you could wind up paying a lot out of pocket.
You’re exposed to liability.
Do you know the laws in your state for seller’s disclosures? While they vary by state, most require that sellers provide some basic information about the home to potential buyers. If you fill these forms out incorrectly or purposefully omit something, you could face legal ramifications.
With a flat fee real estate broker, you’re often on your own for completing much of the sale paperwork. Depending on the brokerage, they may not provide guidance (or could charge extra for legal help) when you complete these disclosures. A full-service agent will know what you must disclose and make sure that you’re protected legally.
What is the difference between a flat fee Realtor and a flat fee MLS?
A flat fee Realtor should not be confused with a flat fee MLS, such as ISoldMyHouse.com or FSBO.com. A flat fee MLS service is considered an alternative to selling a house through the traditional process of using a real estate agent and is typically used by “For Sale by Owner” (FSBO) sellers.
The service allows FSBO sellers to get their homes listed on the MLS. Normally, only licensed real estate agents can access and post listings on the local MLS, which means that FSBO sellers could have difficulty reaching buyers. A flat fee MLS service at least makes your home visible to the market.
Can I negotiate a flat fee with a traditional real estate agent?
Yes. In real estate, almost everything is negotiable. Allen says that his agency will negotiate commissions, and sometimes accept a flat fee, depending upon the situation.
“It comes down to just a few things: how easy is the home going to be to sell, how much advertising we’re going to have to put into it, or if we have to spend additional money on online advertising,” he says. “Everything we do for our clients costs our money.” If they know the listing will go extremely fast, or if the seller is also buying from them, they’ll lower their commission.
Don’t be afraid to reach out to an agent, discuss your home sale, and ask if they’ll negotiate a lower price. You might be pleasantly surprised.
How do I find a flat fee Realtor?
Here are some of the flat fee services in the country. Some list a flat fee on their websites, but others won’t quote a fee until you input an address or select an area of the country.
Some of these companies work with licensed real estate agents. Others pay agents a salary. Many are nationwide, but Allen points out that this could prove to be an issue. If they’re not from the area, “they don’t understand market trends, seasonality, which neighborhoods are hot, and can’t help you on the pricing things.”
Should I use a flat fee real estate agent?
The decision to use a flat fee real estate agent depends on your circumstances. If you’ve bought and sold several homes, you likely have some confidence in your negotiating skills. You know how the process works, and could likely navigate it without the hands-on guidance of a full-service agent.
If this is your first time selling a home, it could be more difficult to work with a flat fee agent. Before agreeing to sell with a flat fee agent:
- Research agent reviews
- Interview at least three agents
- Check the agent’s relevant experience
- Ask what’s included in their fee
- Be honest about what you can and will do yourself (marketing, open houses)
Above all else, ask if a flat-fee agent will ultimately save you money. Cost savings are the primary reason most sellers choose flat fee brokers, but there are alternatives.
When should I use a flat fee real estate agent?
Aside from accommodating budget-conscious sellers, there are specific scenarios where flat fee agents are ideal. Here are some situations you’ll find these professionals particularly useful:
- When you already have selling experience: Homeowners who are familiar with the selling process and can handle negotiations with buyers and marketing on various platforms can benefit from the fixed cost of a flat-fee broker.
- When you’re in a favorable market: In a seller’s market where homes are likely to sell quickly, a flat-fee broker can be an affordable choice without sacrificing exposure.
- When a home sale is deemed “simple”: Sellers with homes in good condition, who don’t require extensive repairs or staging, may find a flat-fee service sufficient for a smooth transaction.
Find an Agent 100% Worth Their Fees
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What are some alternatives to a flat fee Realtor?
Look for discount, low-commission, or limited-service agents in your area. These agents still take a commission but agree to a lower percentage. Some provide the same level of service as any other agent, while others will only handle key parts of the transaction.
You could also try selling by owner if you feel comfortable handling your home sale from start to finish.
Be aware that you’ll have to research your home’s potential value to set a listing price, arrange for photography, possibly still pay to have it listed on the MLS, and manage all showings yourself. It’s a full-time job on top of your other responsibilities.
Partner with a top-performing agent when you need results
There is solid data that you can get exceptional results with a top-producing, full-commission agent who has a proven sale-to-list price ratio. This ratio tells how much, on average, an agent gets for the homes they sell compared to the asking price. Our data shows that the top 5% of real estate agents across the U.S. sell homes for as much as 10% more than the average real estate professional.
With a flat fee broker, it’s hard to know the level of service you’ll receive. You could have a smooth, easy transaction and save some money. Or, you could deal with the unnecessary stress of managing your home sale and make less money overall.
If you’re interested in talking to a top agent in your area, HomeLight can connect you. After answering a few short questions, we’ll match you with several agents who fit your selling situation. It’s worth taking the time to talk to them — because if you want the best return on your home investment, not just any agent will do.
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