For years, extremely knowledgeable home sellers, like commercial real estate agents, real estate attorneys, and former residential agents, would contact their friends in the residential real estate business, asking them to cut a deal. “Just put me in the Multiple Listing Service (back then, it might have been referred to as the Multi-List) for a small fee, and I will handle all the work,” they would say. Occasionally the residential real estate agent would oblige, although they would want to keep the arrangement secret from their total paying customers. Although the home seller did not have a way to list their property on the MLS directly, they could gain access through their Realtor friend. The Realtors would not offer something like this to the general public.
In recent years, there has been so much demand for this type of service that real estate agents have realized that it may be a viable business to focus on this niche exclusively. Flat fee real estate brokers effectively unbundled their services by charging a base listing fee for the listing and offering upgrades that a customer could pay for, for instance, signs, lock boxes, and virtual tours. These money-saving programs are becoming increasingly popular for one reason, they work. Many sellers close escrow on their properties, having saved thousands or tens of thousands of dollars.
Homeowners need to understand a “by owner” listing on the MLS. First, the listing is not technically “by owner” at all, since anytime you list with a broker, even a flat fee broker, your property is no longer considered for sale by the owner or FSBO. It is treated like any other listed property on the MLS. Buyer’s agents find the property in their regular search process and show it, knowing that the seller will pay a particular compensation level at closing if their buyer purchases the property. However, the “by owner” concept helps understand that the owner controls their listing. They can decide how showings will be handled when to hold open houses, and how they want to negotiate. For some sellers, having control over their listing is their primary motivation for a flat fee MLS listing; the money they save is a bonus. They can price the property how they see fit. They can hold firm to a particular price or come down on price to make the sale happen. Since money is saved in commissions, they often will walk away, netting more money in their pocket. Some sellers like that they can answer their cell phone for all prospective buyer and Realtor calls instead of worrying about those calls being unanswered.
Listing by owner on the MLS, flat fee listing, flat fee MLS, or whatever the term may be, has grown in the last few years and continues to grow even in a down market. Preserving one’s equity is essential to homeowners regardless of market condition. After all, when a Realtor sells their property, they usually do it themselves, offer a commission to a buyer’s agent on the MLS (often 2.5 or 3%), and save thousands in the process. Homeowners want to list their properties in this same fashion and now have the option.