We are selling our loft by owner and we see it is listed on your website, but that it hardly has any pictures – and certainly not the types of pictures that would attract buyers. Is there any chance you could replace the main picture on your website’s listing and perhaps add more pictures? I’m attaching some photos of the loft. We like the first photo the best.
John and Jane Doe
(Names obviously changed. My emphasis in bold)
Here is what is going on.
John and Jane have “listed” their home for sale with what is typically called a “Flat Fee” or “MLS Only” real estate brokerage. For some set fee (typically $250 – $500 or thereabouts) a real estate broker will enter home sale data into the Multiple Listing Service (MLS). Some also provide a for sale sign, maybe a lock box. Services vary.
What these types of brokerages will not do though is represent you in a real estate transaction. No marketing, no advice, no negotiations, no handling of offers. No nothing other than putting your data into the MLS. Everything else in on the sellers. There will even be notes in the MLS to buyer agents that all offers must be presented directly to the sellers. A prudent buyer agent will ask the sellers to sign an “Unrepresented Seller” addendum should their clients decide to make an offer.
When listings go into the MLS, they are shared across real estate websites via an “IDX feed” (Internet Data eXchange). Basically the MLS data — verbiage and photos — are fed to other local (and national) listing sites for display.
Sites like this one.
So what John and Jane are seeing when they see their home “listed on this site” is the MLS data their flat fee agent entered into the MLS.
I can not change that data. Only the agent (or their broker) that entered the listing into the MLS can change the data. This makes perfect sense if you think about it. There is no reason for me to be able to change the data. It’s not my data. And you don’t want different variations of the same listing spread across hundreds / thousands of web sites.
There is nothing I can do to help John and Jane better present their listing. That’s their agent’s job.
But they don’t really have an agent…
Why Would You Use a Flat Fee MLS Only Broker?
Ostensibly, to save money. Let’s face it, real estate commissions are not cheap. Typically, homes are listed at 5 – 6% commission, with that amount typically being split 50/50 between the listing brokerage, and the brokerage representing the buyer. (Of note, I emphasis typically. Real estate commissions are not fixed and are negotiable.)
So, for example purposes only, let’s say John and Jane list their home with a full service brokerage and negotiate a 6% commission — with 3% going to the listing agent and 3% to the buyers agent. If they sell their home for $150,000, then they would have to pay a total commission of $9,000; $4,500 goes to the buyer’s brokerage, and $4,500 to the listing brokerage. That is not an insignificant amount of money.
The vast majority of flat fee MLS Only users understand that they still have to offer a commission to a buyer’s broker. Without that, it would be difficult to attract buyer’s agents. After all, real estate agents are people too (really!) and few people have the means to work for free.
So the sellers utilizing a MLS Only brokerage can, in theory, save 3% (or so) on commissions. They don’t pay any commission to the MLS Only broker.
But those considering using an MLS Only brokerage should consider a few things other than just the “savings”.
- Their time. You’ll be doing legwork an agent normally does. Argue all you want that real estate agents don’t earn their commission. But don’t tell me you won’t have to spend some time doing things (like emailing some broker a bunch of pictures hoping he can change your “listing,” among other things). Time is money.
- Their knowledge. It is readily apparent that John and Jane had no clue about how IDX works. Let’s hope for their sake they have more of a clue about all the required disclosures, the legal ramifications of failure to complete those disclosures properly, contractual date-sensitive clauses, and the legal and financial ramifications of failing to meet those dates.
- Their ability to negotiate with a buyer’s agent. Not to sound crass, but if I am presenting a buyer’s offer to an unrepresented seller, I am going to do my best to eviscerate them at the negotiating table (in a polite fashion, naturally). That’s what my buyer pays me for.
- Knowing who is inside your home when you are not. Some MLS Only brokerages will provide a lockbox so buyer agents can access the home. What they may not provide is the report saying who was in your home and when they were there. And if you think putting “call for an appointment to show” into the listing will prevent agents from walking into your home uninvited, think again.
- There’s more. I think you get the idea…
I’m not slamming MLS Only brokerages
I am on the record countless times saying that there are many different brokerage models out there, and for the most part, they all serve a purpose (just don’t get me started on the “hire anyone with a license and a pulse” model. That serves no purpose other than lining some broker’s pocket). Different models promote innovation and competition, and both of those are good for agents, brokers, and home buyers and sellers. If you have the means to sell your home yourself, go for it. Nothing wrong with saving yourself some coin. Personally (and professionally) I don’t think you will actually save all that much money, and there is certainly a price tag on saving yourself a lot of hassle and possibly placing yourself at legal and financial risk.
I will freely admit that I’ve been noodling this article all day, trying to come up with a truly valid reason for using an MLS Only brokerage.
And I can’t.
Momentarily I thought to myself, “Well, if a homeowner is on the hairy edge from an equity perspective, where saving even a few hundred dollars is the difference in not having to short sell, maybe MLS Only makes sense.
Maybe. On the other hand, maybe if you are that close to the edge of entering the short sale abyss what you need more than ever is professional representation…
Help me out here. Drop me a comment with a solid argument for using a MLS Only brokerage. As in a tangible benefit over using a full service brokerage. Surely there is one and I’m just not thinking of it…
Disclosure: As the Broker / Co-owner of a full service real estate brokerage, I am quite aware of my bias toward full service. I did my best to present this information as impartially as I could.
Photo Credit: Money. By 401K on Flickr. CC Licensed.