FSBO sellers who want to market their house broadly post their house on the local Multiple-Listing Service (MLS), a database and property-listing service created and maintained for different markets by local Realtor associations. Specifically, the database allows real estate brokers representing sellers under a listing contract to share information about homes with a wide range of brokers representing potential buyers or seeking to work with a seller’s broker in finding a buyer for the home. The MLS is the primary way agents locate properties for their clients who wish to buy a home. Web sites such as Realtor.com and Homes.com have made it possible for anyone to search MLS listings, including unrepresented buyers.
While individuals can generally search the MLS free of charge, an FSBO seller cannot directly place a listing for the home into the MLS. Sellers seeking to list a house on it must instead go through a real-estate agent who has agreed to list the property and pay the agent an agreed-upon commission or flat fixed fee.
Real estate brokerage services have traditionally been provided as part of a combined package including services such as: assisting the seller in establishing a list price for the home; marketing and advertising the home for sale, including listing it in the MLS; dealing with buyer inquiries and showing the home to prospective purchasers; holding “open houses” to enable the public to preview the home; preparing contracts and negotiating on the seller’s behalf; and managing the sale of the home to final settlement. For these services, agents have generally received a commission on the gross sale of the home of between 5 to 7%.
More recently, however, the unbundling of services caused primarily by advances involving the Internet has led many brokers to provide services on an individual basis. One such service is the listing the property on the MLS for a set fee. In most fixed fee service situations, the seller will offer a “Buyer’s Agent Commission,” which amounts to 2.5 to 3% of the home’s selling price. This commission, however, is eliminated by the flat fee, leading to substantial savings. The commission is also eliminated when the contract allows the seller to advertise as a FSBO seller and the seller finds a buyer on his or her own.
In most flat fee MLS situations, the fee is paid to the agent at the time the property is listed instead of at settlement or closing as is the case with traditional real estate agent services. This price can range anywhere from $200 to $500, depending on the location, which is only a fraction of the typical commission paid to a full-service real-estate agent. In addition to the savings in costs, the fixed fee service gives sellers the option to cancel the listing at anytime and place the listing elsewhere. Most flat fee companies do not lock sellers into the contract for a minimum time period.