Flat Fee Realtors: What They Are, and How to Find One

Posted on May 09, 2022


Just as change has come to the taxi industry, the book industry, and takeout food thanks to digital technology, real estate is one of the next big innovation frontiers. That’s because the industry is still operating the way it did 30 years ago - despite the advent of the internet and other technological efficiencies that make it much easier to sell homes.

That’s where flat fee Realtors come in. Rather than receiving a percentage of your home’s sale, these agents receive a flat fee - in other words, a set price you both agree to before the home is sold.

Interested in knowing more about flat fee Realtors? Here’s what you should expect.

Selling a home shouldn’t cost 6%

Have you ever wondered what the lowest rate is that a Realtor can charge? There’s a reason you’ll see such a wide range of options: it’s because it doesn’t really cost 3% of a home’s selling price to sell it (with 3% to the buyer's agent as well).

Some agents would like to make you think that 3% is an untouchable industry standard, but we know that isn’t true. There isn’t actually a set price or percentage agents have to charge. Some charge as low as a $500 flat fee. In these situations, though, you’re getting a different experience. For $500 the agent will usually get your home listed on the MLS, and that’s about it - you’ll be on your own for most of the experience.

A flat fee MLS listing won’t get you professional photography, set up open houses, navigate appraisals, or come with an in-depth understanding of the dozens of complex documents associated with a home sale. Unless you have experience in this industry, it's not a great idea to take all this on by yourself - not only will it be highly stressful, but you're a lot more likely to make costly mistakes due to inexperience. For this reason, it makes sense to use a Realtor.

Still, selling a home doesn't require 3% of a home's selling price to sell it.

Decades ago, this might’ve been true - but the internet and modern economies of scale have greatly reduced how much it costs to sell a home. Homes can be added to dozens of home sale sites powered by the MLS with a click of a button, and much of the marketing for homes has moved online - allowing brokerages to market many homes at once, more efficiently.

What is a flat fee Realtor?

Flat fee Realtors - and by extension, flat fee real estate brokerages - offer listing services for a set price rather than a percentage of commission. So rather than paying 3% of your home sale - a number that could go up or down depending on how much your home sells for - to your listing agent, you only pay a set amount to the Realtor, whether that’s $1,000, $5,000 or $10,000 (you’ll go over that when you sign the listing agreement).

Oftentimes, flat fee Realtors are simply cutting out the unnecessary "fluff" that makes your agent look busy, but doesn't actually help sell your home.

"Flat fee agents are optimized and focused on the details that sell your house for the most money," explains Dave Speers, VP of Client Experience at Houwzer. "As Ikea does for furniture, flat fee Realtors focus on value for their clients rather than flashy distractions that just eat away at your profits and don't add value. They do what works, nothing more."

Keep in mind you'll still need to pay the buyer's agent. It's often more difficult to charge a flat rate for buying, though, because it's harder to scale those operations. Regardless of how much tech improves other parts of real estate, the buyer agent will still need to take time out of their day to accompany you to each and every home. And if buyer agents don't like your commission cut, they may never even show your home to their clients.

How to choose a flat fee Realtor

Are flat fee Realtors good at what they do? Well, it depends. Not every flat fee Realtor is the same - and there are a few things you should consider before contacting one. There are definitely some flat fee Realtors who might add a lot of stress and confusion to your home's selling process. 

It's important to look for a full service flat fee Realtor. Ideally, you’ll want a Realtor who provides all of the services you’d typically receive with a commission-based Realtor. Otherwise, you’ll save money initially - only to spend $1,000 out of pocket on professional photography. Or worse - you don’t pay for professional photography, your house gets less interest online, fewer buyers put in offers, and it ends up selling for $10,000 less as a result. Some services aren't worth cutting because you'll save a little money now, only to lose a lot later in potential profit as a result.

"Selling a home is an incredibly emotional process for most people and can be overwhelming at times. You need a trusted advisor who's seen it all and can dispassionately guide you through the rapids without losing their cool or adding to the drama," explains Speers. "Flat fee agents are selected, trained, and see enough deals that they don't get fazed and don't lose their cool. They know they have a job to do and they are laser-focused on getting you the best price without sacrificing peace of mind."

While you might be looking to save money by opting for a flat fee brokerage, it’s important to make sure that you’re working with an expert who knows their field. Otherwise, you might save $5,000 on Realtor fees, only to lose $10,000 at the closing table because your Realtor doesn’t know how to negotiate in difficult situations. 

Reviews matter

Reviews are an essential part of determining the right Realtor for you. Some agents are great at selling themselves, but less adept at actually selling a home. They might have too much on their plate, making it hard for them to prioritize you - or too little experience. Make use of sites like Zillow and Google that allow anyone to leave honest reviews about their experience.

"Client reviews tell you everything. A good flat fee agent will have reviews that are on-par or better than traditional agents," notes Speers.

When you google “flat fee real estate brokers near me,” look for reviews that emphasize good communication, strong negotiation skills, and a responsive agent who works through issues that arise (because issues almost always arise in a home sale!). And the “near me” part is important - local agents are going to have a better understanding of the unique challenges involved with selling in your particular neighborhood, etc.

One Brokerage is Already Doing Things Differently 

Houwzer is a flat fee brokerage that offers clients full-service listing services for $5,000. That’s the price they’ve determined that it takes to cover everything - including the agent’s time, professional photography, data-driven online marketing, signage, and more. While other flat fee brokerages might charge money upfront, agencies like Houwzer only charge it once the home sells.

They’re able to do this by paying their agents a base salary with benefits, reconfiguring the brokerage/agent relationship. That way, agents are never motivated to give the advice that first benefits them and their bottom line. Instead, their focus can be 100% on the client’s needs and satisfaction.

Houwzer also sets the commission for the buyer's agent at 2.5%. To take the example of a $600,000 home,  Selling a $600,000 home with a traditional agent will cost you $36,000 ($18,000 to each agent) - selling with Houwzer will cost you $21,000 ($5k to Houwzer, $16k to the buyer agent) – a savings of $15k.

Talk to a Houwzer listing agent

For Further Reading

For Sale

Get the Knowledge You Need to Win


Subscribe to our newsletter to get essential real estate insights.

Interests
Regions

Recent Articles

Buying a House While Renting an Apartment: Read This First

Buying a House While Renting an Apartment: Read This First

Posted on May 16, 2022

According to Pew Research Center, more households are renting than at any point in the last 50 years. Many people, however, dream of getting out of the rental cycle and into their own homes. For some, it’s an opportunity to build equity; for others, it's about gaining control and stability - not having to worry about getting kicked out when a lease ends, or dealing with an unexpected $200 increase in monthly bills when the landlord raises the rent.

Flat Fee Realtors: What They Are, and How to Find One

Flat Fee Realtors: What They Are, and How to Find One

Posted on May 09, 2022

Just as change has come to the taxi industry, the book industry, and takeout food thanks to digital technology, real estate is one of the next big innovation frontiers. That’s because the industry is still operating the way it did 30 years ago - despite the advent of the internet and other technological efficiencies that make it much easier to sell homes.

Moving to Annapolis, MD: Read This First

Moving to Annapolis, MD: Read This First

Posted on May 05, 2022

Coastal Annapolis has plenty to offer, so it’s no surprise that many people are exploring it as a living option - especially because it has a lower cost of living than nearby Washington, DC. A strong sense of historic preservation meets a contemporary collection of amazing bars and restaurants in this cozy coastal city.