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Flat-fee MLS

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Flat fee MLS (sometimes referred to as "flat rate mls") refers to the practice in the real estate brokerage profession of placing pertinent information about a property for sale into the local Multiple Listing Service (MLS) for a set fee or dollar amount as opposed to a commission based on the sales price of the property. The Listing contract between the real estate broker and the property owner gives the broker the right to enter the property into the MLS and calls for the seller to pay the broker a fee for the service.

The term "flat fee mls" is used to describe the service and fee structure provided by real estate brokers and agents who offer real estate services on "limited service" basis rather than as part of a bundled suite of services as provided in the traditional, full service model. Since the seller is paying only and specifically for a listing in the MLS, the seller most often takes responsibility for the other services typically provided by a full service real estate broker and is, for all intents, selling the property as a For Sale By Owner (FSBO).With flat fee mls, typically, the flat fee is paid at the time of listing rather than at settlement or closing as is the case with traditional brokerage services.

History

Traditionally real estate brokerage services in the United States have been delivered as part of a bundled package including such services as (i) assisting the seller in setting a list price for the property; (ii) marketing and advertising a property for sale, including listing the property in the MLS; (iii) handling buyer inquiries and scheduling and arranging showings of the property to prospective home buyers; (iv) holding "Open Houses" to allow the public to preview a property for sale; (v) handling contract preparation and negotiation on behalf of the seller; (vi) management of the real estate transaction to final settlement (or closing escrow). The fee structure for this bundled package of services has generally been to pay a commission on the gross sales price of the property of between 5-7%.

In recent years, with the unbundling of services brought about by the advent of the Internet, a number of brokerage models have developed to cater to the FSBO market by providing services on an "a la carte" basis. The widespread availability of information about properties for sale has caused a downward pressure on real estate fees in the United States.

Issues Affecting Fee-For-Service Brokerage

One of the current issues affecting a property owner's ability to select individual real estate brokerage services from a fee-for-service broker, such as "flat fee mls" listing, is the imposition in certain states of "minimum service laws". These laws require real estate professionals entering into exclusive service provision agreements with their clients to provide a state-mandated minimum service package that includes many of the duties associated with negotiating a property sales contract.

In some States, such as Texas, these laws have already been passed. New Mexico's Real Estate Commission passed a similar set of rules for real estate brokers in that state, but rescinded them after pressure from the Department of Justice.

Termed as "anti-competitive" by the Federal Trade Commission, these laws have come under scrutiny by the United States Department of Justice. Citing a lack of proof of any harm to or complaints from consumers or any calls from consumer groups for such stricter regulation of the industry in this regard, the DOJ says these laws tend to require real estate brokers to charge more for their services and restrict choices for consumers.

An alternative to "minimum service laws" is a written disclosure to home buyers and sellers of exactly which services will be offered and which services will not be offered. Proponents of this method point out that a disclosure based alternative allows consumers to be fully informed about the services they may not receive using flat fee or limited services while still allowing them a choice in the types of services to be purchased. Virginia is one state that has recently passed legislation to allow a new form of representation called "limited service representative" which calls for the real estate practitioner to (i) disclose that the licensee is acting as a limited service representative; (ii) provide a list of the specific services that the licensee will provide to the client; and (iii) provides a list of the specific duties of a standard agent.

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General Information on Flat Fee MLS

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