Flat Fee MLS

Alternative online models pushing real estate agents out of spotlight

The Internet has created another money saving opportunity for consumers. A new breed of company has emerged as a power player in the real estate industry in recent years due in large part to the current run of continually rising home prices in the United States.

As the cost of homes has risen, so have the accompanying commissions paid for selling a home with Americans paying out more than $70 billion last year. As a result, more and more home sellers have decided to look for alternatives to paying the relatively high commission rates charged by traditional real estate brokers.

A successful variation of the discount brokerage theme has emerged in online flat fee MLS listing. According to this model, home sellers can list their properties in the Realtor MLS system through an online broker for a low, one-time flat fee. And in true Internet fashion, they never have to leave their homes or spend precious evening hours interviewing real estate agents.

Online flat fee MLS listing sites such as MLSLion.com provide home sellers with an affordable method of garnering the same marketing exposure for their homes once only available through traditional real estate brokers charging 6% or more. With a flat fee MLS listing sellers receive a listing in the local Realtor Multiple Listing Service and on Realtor.com.

With online flat fee MLS listing, sellers handle the showing and sale of the property themselves. If a broker member of the MLS sells their property, they pay just 3% or half of what tradtional brokers charge. However, importantly, home sellers retain the right to sell their home directly to a buyer without paying any commission.

See Also

• Limited Service Sites Provoking Backlash
  Prevalence of Flat Fee MLS becoming a problem for real estate agents
• Office of Federal Housing Enterprise Oversight Report
  OFHEO forsees no immediate end to home price increases

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GAO report finds MLS may discourage discounted commission rates

According to a report published today by the Government Accounting Office (GOA), the Realtor Multiple Listing Service (MLS) system prevents competition in real estate commission rates charged to home sellers.

One of the notable findings of the report was that it seems that the same system designed to promote cooperation among real estate brokers may be used to discriminate against home sellers offering a lower than average commission rate.

Real estate agents are able to view the commission rates being made available to Realtors by home sellers through the MLS system. Agents may determine whether or not to show a property based on the commission they will be paid for bringing a buyer to the property. All things being equal, an agent may elect not to show a property with a lower than average commission rate being offered.

The report notes that although housing prices have steadily increased in many areas in recent years, along with the associated commissions paid, the amount of work performed by real estate agents has remained relatively stable.

See Also

• Competition in Real Estate
  GAO Report on factors that may affect competitive commission rates
• DOJ Targets Realtors
  NAR real estate policies come under fire

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