For years, extremely knowledgeable home sellers, people 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 full paying customers. Although the home seller did not have a way to directly list their property on the MLS, they were able to gain access through their Realtor friend. The Realtors would not, however, 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, lockboxes, 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.
Home owners need to understand what “by owner” listing on the MLS is. 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 owner or FSBO. It is treated like any other listed property on the MLS. Buyer’s agents find the property in their customary search process and show the property knowing that a particular compensation level will be paid by the seller at closing in the event that their buyer purchases the property. The “by owner” concept is useful, however, in understanding that the owner is in control of their own listing. They can decide how showings will be handled, when to hold open houses, and how they want to negotiate. For some sellers, simply having control over their listing is their main motivation for a flat fee MLS listing; the money they save is an added 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 phone 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 important to homeowners regardless of market condition. After all, when a Realtor sells his or her own 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 own properties in this same fashion, and thankfully now have the option.