As an investor, there comes a time in the lifecycle of every property when it is time to sell it. Depending on the deal, this could be a wholesale flip to another investor or a sale to a retail customer.
There are basically three ways to sell your retail property. You can do it as a FSBO, you can give the listing to a realtor or you can do something in between. Part of doing something in between is using a flat fee MLS service to list your property in the MLS and on realtor.com which is generally included in the package.
So what is a no fee MLS listings service and what can it do for you?
Usually a realtor offering such an arrangement will have a concierge offering of other services at flat fees or percentages of the sales price that you may also be interested in - including services like contract preparation, negotiation of the deal, etc. You are not required to take these extras but they are available if you need them.
So lets assume that you paid the $300 or so to one of these flat fee MLS services. Will you get your money’s worth from the additional exposure? Will it just create a hassle for you?
Those questions really depend on your personality and another decision you must make when starting this process.
Lets look at the MLS first. Who is going to see an MLS listing? Most likely just the realtors as they are searching for homes that meet their client’s profile.
If they find your house, the first thing they are going to check is the commission paid to them. When they see that no commission is to be paid to them, they will not show the client your house.
Hmm… that scenario didn’t work out too well.
But you can make it better. As part of your flat fee listing, you can agree to pay the selling agent a commission that you specify - anywhere from 0.5% to whatever you want. Of course the higher the commission, the more interested the realtors are in showing your house.
So lets say, you want to be competitive in selling your $200,000 house. You would want to set the commission to say 2.5% to 3.5% to ensure that most realtors will include your property in the list that they present to their clients for viewing. If you do this, you will get showings from realtors but you will have to pay that commission as part of the closing costs.
But what about realtor.com? As mentioned, most flat fee MLS services will list your property in realtor.com.
That sounds pretty good. Realtor.com is a consumer site after all. That means that interested house hunters will be able to see your house and contact you to see it and make a purchase offer. We all know many people use realtor.com so you will be getting great exposure to many potential buyers.
Now before you breathe a sigh of relief thinking that you can save on that commission, think again.
Many realtor.com house hunters look there to get an idea of what houses they want to see and then they will generally contact the realtor with the listing that appealed to them the most. And if the realtor is any good at his job, that house hunter will use that realtor to look at all the houses on the list.
And the realtor will use the same process of building a list of houses to show the client. Meaning your house will once again not be shown. And if the client asks specifically about that house, the realtor will most likely tell the client that he won’t show that house as it is really a FSBO house and they would have to deal with the seller directly. (Or a really ambitious realtor may call you up to try to get you to sign a listing for that showing or something similar so that a commission can be earned.)
So if you are looking at one of these services to avoid paying a commission to a realtor, chances are you are throwing money away.
But if you are looking at this as a way to pay only one half of the going commission rate in your community, you may have a good deal in using a flat fee MLS service.
So back to the example house for $200,000, you need to consider three things before using a service like this.
- Assuming you offer a 3% selling agent commission, is the extra activity the MLS will generate worth the $6,000 it will cost you when you sign a deal.
- Do you want to take that same $6,000 and use it to market the house yourself, schedule showings, do contract negotiations, etc. by yourself?
- When you do a full fee listing with a realtor, there will be a marketing program for your house. The realtor will try to push it within his network of agents, there will be advertising in various newspapers around town, etc. When you do a flat fee MLS, you will lose these marketing services. You could argue that most of the time the listing agent is not also the selling agent. And you would be right. But the selling agent could very well have presented your house due to the buzz generated by your listing agent.
So is it worth doing a flat fee MLS listing? If you are willing to pay a customary level of commission to the selling realtor, it probably is. If you are not willing to offer a commission, you are probably better off investing that money in newspaper advertising.
In fact, the best situation is for you to actively self promote your property and use the flat fee MLS? You can get great exposure by marketing your house yourself and you will also get to tap into the powerful network of realtors all researching the MLS for houses to show their clients.
However, if you know that your time is better spent researching the next deal, doesn’t it make sense to just hire a realtor to do everything so you have nothing to do except sign the sales contract?
The decision is of course up to you. Just weigh the cost of working with a realtor vs not working with a realtor. And remember that time invested doing your own showings, waiting for people who don’t show up, negotiating your own closing, etc. is also a significant cost. Once you weight all the pros and cons, you will know which route is the best for you.
Post a Comment