How to Choose a Flat Fee Broker

There are undoubtedly many choices available to a person when they are selecting a Flat-Fee broker. Flat-Fee brokers are those brokers that offer a For Sale by Owner service, known as FSBO through a flat fee MLS service. In this article, we will discuss a handful of factors that we think are of the utmost importance when choosing who to list your home with.

Referral Companies vs. Direct Brokers: First let us briefly explain the difference between the two different business models. As the name implies referral companies are just that. They snag the seller and then refer them out to a licensed broker for the state the property is located in. There are roughly three big national referral companies that spend a ton on advertisement and therefore pull in most of the business; Owners.com, FSBO.com, Forsalebyowner.com. There is nothing particularly wrong with this business, however there are some major draw backs when using a referral service. Typically, they have to charge more, sometimes significantly more, due to the fact they’re acting as a middle man. With a referral service you’re going to end up paying more money for less service. Less photos, charges for changes, slow service etc. Their level of service tends to be inconsistent due to the fact they’re always trying to increase their profit margin by working with the broker that will list for the lowest price. Some of these referral companies actually have bidding platforms that brokers have to use to compete for business. This may be good for the referral service by increasing their profit margins but it is most certainly going to result in a much lower level of customer service satisfaction for the consumer.  The reality is that nobody is going to return your calls or forward showing requests if there is no incentive for them to do so. In a DYI economy, using a referral service is something that we do not recommend nor feel it is necessary to be able to list your home for sale by owner. Not only do they over charge for a sub-par service they have been known to put properties in the wrong MLS. We’ve had sellers that originally listed their properties with referral companies and found out their properties were listed on an MLS in another state. Needless to say, the owners felt like they were robbed. Realtors use their local MLS to find homes for sale thus paying a flat fee to be listed in another state’s MLS didn’t serve much purpose.

Paper vs. Paperless: The vast majority of flat fee brokers are still using paper forms, very few companies can actually provide 100% paperless service. We are one of the only handful of companies that is paperless in the Nation and the only Michigan Flat Fee MLS provider that is paperless. Not only does a paperless listing process save you from having to do the paper shuffle, it also helps facilitate the listing process by having the property listed within hours compared to days, the same applies for changes. Ability to list a home for sale by owner in minutes and have it listed on the local MLS, Realtor.com and other sites from the luxury of your home or office is a real time and money saver.

Price: In our opinion, price is supremely important during the decision making process, but it most definitely should not be the pivotal factor in a client’s choice of whom they want to list their home with. A lot of flat-fee brokers will advertise lower pricing, but then nickel and dime the sellers once they have them under contract. For example, one of our biggest Michigan based competitors will charge $25 every single time a client wants to make a change to their listing. Most flat-fee brokers apply this same thinking and outline.

A lot of seller’s sweat over pennies when they should be stressing over dollars. What we mean by this is, you have to look at the big picture. What are you getting for your money? Is there a system in place to assure that the showing requests go directly to you or are the showing requests first going to the broker? There are a lot of fly by night companies that advertise extremely low pricing, take your money and then could care a less what happens to your listing after they’ve received it. In the grand scheme of things; is a couple hundred dollars really something to stress about when hundreds of thousands of dollars are on the line? All it takes is one missed showing request. Just because you are paying a small flat fee, it doesn’t mean you have to accept bad client care.

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