Real estate brokers and agents are self-employed business owners who charge a fee for their services. In most cases, fees are commission based. This is to say that brokers and agents are paid a commission out of the total sale proceeds of a home. Yet there are exceptions. Some brokers and agents work on a flat fee basis.
You may have heard about flat fee real estate agents. You might also have heard warnings about working with them, based on the old adage that you get what you pay for. So, what’s the deal? Is it safe to use a flat fee real estate agent?
Just a Payment Option
Right off the top, the question really isn’t one of safety. The fact is that a flat fee arrangement is just one payment option for agents. A real estate broker might choose to work on a flat fee basis as a means of distinguishing his agency from commission-based competitors. Others offer flat fees because they believe it simplifies the process.
Flat fee services are just as ethical and legal as commission-based services. So again, it is not really a matter of safety. It’s a matter of knowing exactly what you are getting for the amount you are paying. That’s it. As long as you are comfortable with the services rendered, going with a flat fee agent is no big deal.
Flat Fees and Bare-Bones Service
It is generally understood that flat fee services are discount services. In other words, you pay less to save some money. You get less in return. This is really the main difference between flat fee and commissioned agents.
Commission agents do everything from staging a home to accompanying buyers during viewings. They are there to answer questions and offer advice. They are there to write offers and counteroffers. Commissioned agents will do just about anything to help, according to CityHome Collective in Salt Lake City, UT.
Flat fee agents have to be very specific about their services. This suggests that a flat fee agent is not going to go the extra mile to help you. The agent will stay strictly within the parameters of the services outlined in their contract.
Sometimes this means that flat fee agents offer bare-bones services. A listing agent may offer only limited marketing, for example. They will list the home on their website and get it up on the MLS. But they probably won’t offer anything extra – like open houses.
A Good Middle Ground
Flat fee real estate brokers and agents occupy a good middle ground for buyers and sellers looking to save some money. They do not leave you to fend for yourself, like a for-sale-by-owner scenario, but they also do not charge the equivalent of 6% of the sale price. You get help with the most important aspects of the transaction; you handle the rest yourself.
The key in all of this is to make sure you get a signed contract up front. You and the agent need to clearly understand each other’s responsibilities in the transaction. Everything needs to be spelled out in writing. This stipulates avoiding flat fee real estate agents whose contracts are vague or ambiguous.
It is completely safe and legal to utilize a flat fee real estate broker or agent. But just as you would with a commissioned agent, make sure you know what you are getting into before you sign on the dotted line. Do plenty of research, ask any questions you might have, and make sure you feel comfortable about the arrangement right from the start.