Flat rate broker

hadleyJune 26, 2009

Has anyone used any of the flat brokers operating in the Northeast? What has been your experience?

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dave_donhoff

What kind of broker are you referring to, bricks & sticks or money?

    Bookmark   June 26, 2009 at 12:40PM
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linda117117

I probably should refrain from commenting on this because I am an agent who is NOT a flat rate broker. But in the interest of giving "advice" on this forum I can tell you, in my area, their listings never seem to sell, the homeowners wound up going with a more traditional real estate companies after their contract expired and there are no more left in my county. They have all gone out of business. When I have had the opportunity to list one of the homes that didnt sell with the flat rate company, the complaints were always the same. They didnt do anything, stuck me in the computer and thats the last I heard from them. Honestly, I think that is the purpose of a flat rate company. They get you in MLS, but you must do the rest. If you are willing to do that, you should be ok. I would just caution about being competitive with the commission rate you offer a buyers agent. If its not competitive with other listings, you probably won't receive many showings.

    Bookmark   June 26, 2009 at 1:31PM
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sweet_tea

I did not sell in the NE, but I sold and had used a flat rate broker. Actually, the broker basically placed the property in the MLS for around $500. I took and submitted the photos and wrote the MLS description and filled out a detailed template provided by broker. I determined listing price without broker assistance or comps. Broker forwarded all MLS generated emails/calls to me(seller).

I was very, very happy. All I wanted was to get the property into the MLS. I scheduled all showings, created flyers, custom sign, provided lockbox and instructions, etc. I also did the negotiation and simply let the flat rate broker know when the property was under contract and then sold. I think the broker supplied the blank disclosure form which I filled out.
I offered 3% to agents that brought buyer but ended up selling to a buyer that did not have an agent. It was an open listing, so I only paid the $500 listing fee and no commission.

    Bookmark   June 26, 2009 at 2:19PM
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hadley

sweet tea has the idea I am thinking of. Any other experiences?

    Bookmark   June 27, 2009 at 8:46AM
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elle481

My son used one when he sold his home in Richmond, VA 2 years ago. Worked out great. I also had friends that used one up here in CT. They were disgusted with their original full priced RE who was doing very little for them and the market was just continuing to spiral down. They had bought a home to flip, were convinced to price too high and needed to cut their losses. After 1.5 years on the market and lowering their price several times to chase it, they finally listed with a discount broker who just did the basics (MLS). They did pay a little more to have a virtual tour of their place and still photos, but they did the rest - received appointments, negotiated, etc. The people who ended up buying it had origianlly seen it with an agent at the begining, and they came back a year and a half later to purchase it at a bargain basement price!
We, on the other hand, have sold 3 homes in the same area and because of this awful market, decided to list with a full priced broker again and negotiated a 5% commission. If the market was better, we would have gone with a discount brokerage. Also we really didn't think we had the time to do all the schedulings, showings, etc. On our current home we thought we signed a 3 mos listing (because that's what we agreed on with the agent) but we just reread the contract (because we were thinking of making a switch)and we realized it was a 4 mo. listing!!! Shame on us! You really need to watch REs when they fill out your forms as we have caught this "practice" several times before with other agents in regard to their % commission but totally missed it on the date this time (and when we have caught mistakes before they are very apologetic and correct immediately, so who knows!) My DH and I were discussing changing brokers or going with a discount broker, but alas, our home just took a deposit at 3 mos.! (Crossing our fingers that all goes well, as we are now negotiating on our next home. Well post info after things are together!)
Honestly though, with the internet, agents do very little to promote properties now days. Unless you didn't have the time or schedule to show your home, I really do think a discount broker is the way to go!
(BTW - years ago, I was a RE agent, did quite well, and hustled like crazy when I had a listing. Back then MLS was a book that came out weekly with updates on the antiquated net. A lot of agencies also had their own listings in house so the only way to buy what they had was to go to that particular agency. While MLS was still a big draw, Print advertising, big photo ads, direct mail, etc. was where many home buyers began their search. The advertising was expensive and also came out of our commissions.)

    Bookmark   June 27, 2009 at 12:37PM
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ncrealestateguy

Just like anything in the business world... you get what you pay for.
Most of the limited service providers around here are hurting or are already gone.
Elle recommends using a limited service provider, but for some reason did not use one to sell her own place...

    Bookmark   June 28, 2009 at 8:32AM
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cmarlin20

Elle recommends using a limited service provider, but for some reason did not use one to sell her own place...
Read her post, in it she gave her reason.
She also gave a very detailed response addressing the pros and cons of using a flat rate broker.
No reason for you to try a spin.

    Bookmark   June 28, 2009 at 7:57PM
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elle481

Thanks cmarlin20!!!! I was kind of stunned for a second by ncrealestateguys post -

In our area of the country we also use lawyers for closings and they have been worth their weight in gold and cost very little. I do understand that is not common in many parts of our country. Our son bought a home in FL and the agent did all of the work (we were not happy about him not have legal representation but it wasn't our call!!) also fyi, the commission was paid by the home seller not the buyer. My stand is your are making the largest purchase in your life so get legal representation. It honestly doesn't cost much and can save you tons down the road if you have problems or issues!
Once a deal is done, the lawyer keeps on top of things and it's lawyer to lawyer and the seller is kept informed. I also know as a buyer (we have bought and sold more than 5 properties in the last 15 years and not when I was in the business) I have always been on top of what was going on. I would be stupid not to with the money spent on homes. My RE experience has helped by giving me knowledge of the agent side in buying, selling, negotiating, and closing, but it's not anything a normal person could do on their own with a little research and if they have the time!!!
Most REA don't go soliciting customers to buy your home unless they have an extensive customer list they can call on and that comes from years of work in cultivating their clients. If they or someone in their office happen to have a customer that fits a listing, they would bring them to see your home. Most of the time it doesn't happen like that and the agents are as up on MLS listings as anyone else. Once a home deal is negotiated , an inspection is done and concessions are made (and these are all things that any on the ball seller can do), there is very little that the agent does except keep on top of the deal to make sure it goes through. That is something that the homebuyer can do along with the lawyer and many time the home buyer/seller and lawyer know issues and problems before the agent does.
As I said before, if you have the time, a discount broker may fit you to a T and going FSBO in a hot market is also an option. In our area, most home buyer come from the town we live in or the surrounding towns, and that has been the case with each home that we have sold. We also bought all of our past homes in the same town we live in.
Look, please don't get me wrong, I am not knocking REAs. Most full time agents are on top of the market, work very hard, put in countless hours running their tail off to make a buck and deserve to get their commision. But if you can do the work yourself, I say go for it and put the money in your own pocket. For us, at the time we were ready to list, due to our schedules, we just didn't have the time to do the showings, so it was worth negotiating a fair commision with a RE agency to have them do it.
Also, a REA can be a great buffer if you don't want to go face to face with a buyer.

    Bookmark   June 28, 2009 at 10:31PM
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Billl

Not in the NE, but we used a flat rate broker to sell last year.

Yes, you get what you pay for. We knew that going in. We had to do some additional legwork, but it was worth it. We offered 2.3% to buyers agents, so we saved 3.7% compared to full price listings in our market. The particular company we used had a call center staffed 24/7 to field calls for showings. The call center then had all our cell/work/home numbers and email, so they would try all the numbers until they got us. That was very convenient and helped us maximize showings. Probably 90% of the calls came from buyers agents who wanted to show the house themselves. That was good because a surprising number of showings were in the middle of workdays. I did end up having to take a few hours off from work on a couple of occasions to show the house myself. Generally though, the people without agents seemed to have day jobs and preferred to view in the evenings. The people who called after seeing us on craigslist and zillow were the worst and most demanding, and frankly, the least qualified buyers. It was frustrating to take off work to show the home and then find out the "buyer" wasn't serious.

The negotiations were the toughest part. It is hard to disconnect from the personal nature of home ownership and just view it as a business transaction. In this market, buyers agents are VERY aggressive in what they are willing to ask for, so you need a thick skin to negotiate. My wife and I are both very practical people, so it ended up working out fine for us. I can definitely see how people who react more emotionally would have troubles though.

An important note - you still have to pay a buyers agent. Let's assume you pay 3% + a $500 listing fee instead of 6%. On a $100k home, that is $3,500 instead of $6,000. If an agent is a $2,500 better negotiator than you, you really don't save any money and end up doing more work. On the other end, if you have a $500k house, the difference is $14,500. If you are comfortable negotiating, that is a lot of money for your efforts.

    Bookmark   June 29, 2009 at 10:40AM
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sweet_tea

Also note - when I sold FSBO and also used the flat rate broker to get into MLS - I did so in a very depressed real estate market which was a very strong buyers market. Many comparable homes had been listed for 12 months with full service realtors and had not sold. I sold FSBO in less than 90 days at that time and did not sell the house for too cheap but also did not have it overpriced. For me, the key was pricing correctly and also I work very, very hard marketing and showing the home. In my case, going FSBO and using flat rate broker worked perfect.

    Bookmark   June 29, 2009 at 2:26PM
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