Most of us are familiar with the commission-based model that we pay to a real estate broker. On the other hand, flat fee brokers list property for a fixed flat cost. This model is gaining popularity as many real estate brokerages adapt to consumer demand for alternatives.
With traditional commission real estate, sellers typically pay around 3% of the sale price to their broker, while a flat fee realtor like Roger & Adam Lowe offers a more straightforward approach, allowing sellers in Oregon to retain more equity and avoid high commission costs.
What is flat fee real estate?
In real estate, sellers who choose to pay a flat fee can do so regardless of the sale price. For instance, after paying the buyer’s agent, the total cost for selling a $600,000 house with a $5,000 flat charge come to almost $23,000. In concrete terms, this saves almost $13,000 in comparison to standard commission.
What is commission real estate?
Sellers of commission real estate must pay a portion of the transaction price at closing, typically between 5% and 6%. For instance, the listing and buyer’s agents split a $36,000 fee on a $600,000 home sold at a 6% commission.
Since agents put in a lot of labor upfront and are not guaranteed money until the sale is completed, this approach can be expensive. Although commission rates are unregulated, sellers are free to bargain for reduced costs agents are not obliged to accept such arrangements.
What are the pros and cons of flat-fee commissions?
Pros:
1) Cost savings
Pay a set fee that is often lower than a percentage-based commission, which is especially beneficial for high-value properties.
2) Avoid unwanted services
Select just the services you actually need to avoid paying more for ones you don’t.
3) Enhanced control
Maintain greater involvement in the selling process, allowing you to make decisions that align with your goals.
4) Transparent pricing
Know upfront exactly what you will pay without surprises or hidden costs related to a percentage of the sale price.
5) Equity retention
Keep more of your home’s equity since flat fees don’t scale with the sale price, maximizing your overall profit.
Cons:
1) Non-refundable fees
You have to pay an upfront fee whether you can sell your property or not.
2) Extra costs for additional services
Services such as staging, professional photography, legal advice, or closing costs may incur extra fees not covered in the flat fee.
3) Limited support and guidance
Flat-fee brokers could offer less individualized assistance, which could be a drawback for sellers who require more direction during the transaction.
4) Broker incentives
Brokers may have limited motivation to promote your property aggressively since their income is fixed, regardless of the sale outcome.
5) Potential for increased workload
As a seller, you will bear the cost of any extra duties, which includes marketing or negotiating cost.
Conclusion
Finally, you can clearly see the positives and negatives of a flat-fee model so that you can decide whether you should opt for this model or not when you are planning to sell your property.