If you think 6% was a lot to pay for real estate brokerage services, how about brokerages that add ‘ABC’ fees to their clients commissions? Real estate brokerage companies faced with lower profits have been attempting to add to their bottom line by charging additional ‘closing fees’. A recent ruling allowing a class-action lawsuit to proceed against an Alabama-based brokerage RealtySouth has captured the attention of other companies that could face similar claims that they are violating the Real Estate Settlement Procedures Act, or RESPA. In passing RESPA, HUD said, Congress meant not only to protect consumers against kickbacks, but “uneccessarily high settlement charges.”

In their defense, RealtySouth maintains that the cost of their services has increased while at the same time agents are demanding a higher split with brokers leaving little for the brokerages bottom line. The added fee helps them to offset the loss. RealtySouth isn’t alone in charging these additional fees. Most large brokerage companies recognizing diminishing profits have found that these fees are easier for consumers to swallow that an additional percentage or fractional percentage point.

IMHO, the problem isn’t that traditional commission based brokers are charging add-on fees, it’s that the commission based brokerage system is just that, ‘broke-n’.
The reason that brokerages companies fail to maintain profitability isn’t because they’re not charging enough, it’s because the traditional commission based system makes no sense for either the consumer or the broker. The system rewards brokers who are able to sell homes quickly with little time and resource expenditure and penalizes companies that take longer to sell homes and invest more money into the marketing process. That’s why the number of brokerages swells in periods like we had in the 10+ year run-up prior to the recent recession and why, now, we have brokerage companies failing on a collossal scale.

One might argue that in a good seller’s market, the need for high commission charging brokers greatly diminishes since properties are in many cases, in essence, selling themselves. In buyer’s markets like the present one, the costs associated with taking a listing, marketing the listing, engaging the time and resources of the brokerage’s office, staff and agents all toll up to unprofitability for traditional commission based firms. As long as the present system continues inequities will remain.

Consider that a traditional commissioned based broker earns the same amount of money for a listing that takes 1 year or longer to sell as it does for one that takes 1 week. This unalteratingly means that the lower the price the broker or its agents can encourage the seller to list the property for, the faster it will sell and the more money the brokerage will net. Of course, this is generally at odds with the goals of the firm’s ‘clients’ who would like to see a higher sales price even if the broker is required to expend more time, resources and marketing dollars to acheive a higher sales price.

Until real estate brokerages determine, en masse, that the more profitable business venture is a model that either charges by the hour or on a flat-fee ‘a la carte’ basis, consumers and brokers will continue to suffer.

Preparation is the key to many things, selling a home not the least of them. When it comes to selling a home, by owner or with a real estate agent, the first thing you want to do is prepare your home to sell. Just like you wouldn’t try to sell your car without first taking it to the car wash and fixing anything that might detract from its value, you don’t want to let potential buyers see your home without first getting it ready for the market.

The first thing you’ll want to do is clean your house from top to bottom paying particular attention to the kitchen and baths. These areas really need to sparkle. Throw away or store anything that clutters the home or makes rooms look smaller by its presence. Groom and manicure your lawn and landscaping. Fix any items that need attention. You may even consider getting a pre-sale home inspection to determine if there may be any hidden defects that could affect your ability to sell.

Selling a home in the current market takes a little more effort. That’s why good preparation is an important factor that cannot be overlooked.

What’s the secret to selling FSBO (for sale by owner)? Well actually there are 2. 1) Pricing your home to sell 2) Marketing to as many people as possible.

The first part takes a bit of work. You’ll need to find recent home sales (within the past 12 months) that are similar to yours in terms of location, style, year built, size and amenities. There are several automated valuation services online (zillow.com, electronicappraiser.com, etc) that can get you in the ball park, but if you want an accurate idea as to the market value of your home or property you’ll need an appraisal by a licensed appraisal firm.

The second part is easy. Find a reputable flat-fee MLS listing company that can have your home or property entered into the local MLS and onto the leading real estate websites. Since over 80% of home buyers now use the Internet to find a home and 85% of homes sales nationwide take place through the Multiple Listing Service (MLS), just this step alone should provide you with enough potential home buyers to help you make the sale.

Combined, pricing your home right and marketing to the largest audience will allow you to join the ranks of millions of home sellers who have saved the commission by selling FSBO!

The Spring market appears in to be in bloom as the housing industry continues to improve. Houses under contract rose by over three percent in March and the available inventory for houses in down to ten months. Over seventy percent of those polled believe that now is a good time to buy a home. If you’re thinking of selling ‘flat fee MLS’ this could be the time to make the leap.

Flat Fee MLS Listing

Spring is a great time to put a home on the market as landscaping and yards tend to improve aesthetically for the next few months. More buyers are tempted onto the market as well as the weather improves and people are spending more time outdoors. Selling with flat fee MLS allows you to price your home so that buyers see the value of your home compared to those listed with traditional real estate agents.

Solution to the housing market? Lower sales prices. Seems obvious, but if you’re a home seller that may not be the answer you’re looking for. So how can you lower your sales price and still come out ahead. Flat fee MLS allows home sellers to list their properties in the Realtor Multiple Listing Service (MLS) without having to pay a listing commission. For example, on a typical $250,000 home the traditional real estate commission is 6% or $15,000. Of that total fee, $7,500 is the listing commission and $7,500 goes to the buyer’s agent. With flat fee MLS you eliminate the listing commission. Now you can lower your sales price by, say, $5,000 to $245,000 and still come out $2,500 ahead.

But a even more significant thing can happen with flat fee MLS that can’t happen with traditional real estate brokerage. With flat fee MLS you still have the right to sell your home directly to a buyer and not pay ANY commission. In that case you could lower your sales price by $10-12k and still end up with more money in your pocket. Now there’s a smarter way to sell your home.