Top Ten Ways To Avoid Getting Ripped-Off By Flat-Fee Real Estate Agents

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Think all flat-fee listing services are the same?  I did too until I talked with John Prell, Broker of Creekview Realty, a flat-fee agency in Texas.  He had a lot to say about how some agents misrepresent their offerings and why it’s important to do your homework when choosing a flat-fee real estate agent.  Here are some tips that John strongly recommends to keep you from hiring the wrong flat-fee agent.

  1. Only work with flat-fee agencies that belong to your local MLS

    By hiring locally, you can usually either get a lower price or better service packages, and only local agents can add your listing to the local MLS. Try to avoid flat-fee companies that have national coverage because you pay them, they take a chunk and pass the scraps to the local agency you’ll be dealing with.  What’s their selection criteria?  Who’ll do it the cheapest.  You’ll end up getting cut-rate service, mainly because their rates got cut and rarely is the lowest bidder ever impressive.  Basically, it’s someone you wouldn’t otherwise want to deal with and would never have hired directly.

  2. Find out if they’re a licensed Realtor, and check their references on your state’s Real Estate Commission

    Search your state’s Real Estate Commission to make sure they are licensed in your state to practice real estate.  Find out if they are a Realtor, and a member of a local Realtor Board in your area.

  3. Make sure you know exactly what you’re getting BEFORE you hiring them

    Before you hire an agent, you need to find out what your roles and responsibilities are in the whole process and what they will be responsible for.  Be sure to understand what you getting and not getting with each level of service they offer.

  4. When shopping around for the best price, make sure you are comparing the total costs of all the options you want, not base prices

    Flat-fee services are a la carte, meaning everything extra, beyond the package offered, costs extra.  It adds up quickly.  Make sure you get the final price for all the services you want.  Use that price to price shop around with other agencies.

  5. Don’t buy less than the bare minimum to properly market your home

    • A listing on your local MLS.  IT MUST BE IN THE LOCAL MLS.
    • The maximum number of photos allowed in MLS and
    • An electronic SUPRA (or equivalent)  keybox
    • Registration on the local showing service, CSS where available (Dallas/Ft Worth, Houston, San Antonio, etc.)
    • A professional real estate yard sign from a real estate agency
    • A pre-determined buyer’s agent commission posted in the MLS
      (if you don’t have everything listed here, you’re wasting your money)
  6. Find out if there is a “full-service” upgrade should you ever need it, and how much it costs

    There may come a point when you need the services of a full-service agent, but if your flat-fee agency doesn’t offer full-service realty then your stuck until your contract expires.  Or worse, you discover that you will be charged the full commission on top of what you’ve already paid.

  7. Assuming they offer a full-service realty upgrade, are they experienced enough to handle it?

    If they offer the upgrade, but only handle a few full-service clients a year, why would you want to use them when there are better full-service real estate agents out there?  Find out what type of full-service agent they’d be before you hire them as a flat-fee agent.

  8. Be sure to talk to the agency’s broker, not just a salesperson

    You will want to meet, or at least speak with, the broker to find out their involvement in your transaction and to see how many clients they are currently serving and how many they’ve worked with over the past 6 – 12 months.  You will also want to know how many listings resulted in sales and how many failed to sell.

  9. Call some of your agent’s listings to find out what their clients think about them

    Talk to current and past clients to discover how they were treated because that’s how you’re going to be treated too.  Find out what they like and dislike about the process and what they wished they could have done differently.  Also find out if they’d use this agency or your agent again.

  10. Know your exit strategies and find out if there are any penalties

    Lots of homeowners find out that selling a house isn’t as easy as it seems and they learn to appreciate the services of a full-service real estate agent.  What happens if you want to hire a full-service agent outside of that agency?  Will they let you terminate early or are you stuck using them?

If you’re wanting to save money and don’t want to pay for a full-service agent, flat-fee services are better than trying to go it alone.  I’d never sell my home without some form of help from a real estate agent.  It’s worth paying for a lockbox, a quality MLS listing, etc to get your house noticed by real estate agents and a large majority of the home buying public.  So if you’re just stubbornly set on selling your house without using a full-service real estate agent, then at least shell out a few hundred dollars and hire a flat-fee real estate agent to make your house agent-friendly and sell faster.  But keep one thing in mind.  The goal of flat-fee listing agents is to sell listing packages while the goal of a full-service real estate agent is to sell your house.


Thanks again for sharing your advice and insight on the flat-fee industry.

If you are buying or selling a house and are looking to hire a successful real estate agent to help you through the process, take a look at AgentHarvest's list of top-ranking local Realtors in your area. We found these agents by examining their sales track records, awards, rankings, client testimonials and by conducting personal interviews.

This entry was posted in Hiring an Agent, Selling Your House by Bill Petrey, Realtor. Bookmark the permalink.

About Bill Petrey, Realtor

Bill Petrey, the CEO and Founder of AgentHarvest, has been written about in the Los Angeles Times, Inman News, AOL Real Estate, and Inman Next, among others. He founded AgentHarvest for the sole purpose of making the process of finding a good Realtor better and easier. Bill Petrey is an author and editor of both The AgentHarvest Blog, Real Examples of Really Rotten Realty Blog, and the creator of Really Rotten Realty.

5 thoughts on “Top Ten Ways To Avoid Getting Ripped-Off By Flat-Fee Real Estate Agents

  1. Excellent points here, especially number four on comparing apples to apples in pricing plans – sometimes flat fee MLS clients hone in on base price and don’t realize that a listing plan may not even include a listing on the local MLS, or perhaps only carries with it a fraction of the allowable property photos their local MLS allows.

    Another point for clients to consider is the communication process used throughout the life of the listing. We encourage our flat fee MLS clients to test the integrity of the communication process around their MLS listings with Entry Only. Key to observe is whether unrepresented buyer leads are being passed to agents or directly to the FSBO, and whether buyer inquiries are being turned into leads for the listing brokerage or transparently passed to the FSBO – both of which can have serious implications for a FSBO.

  2. Dean Charles,

    Can you explain what you mean by the latter paragraph? Which option as a flat listing seller do you want? TIA

  3. So how exactly is a flat fee realtor any worse than a regular 3 percent realtor? Don’t all of these points apply to regular Realtors? Or am I missing something?

    • This article doesn’t compare regular -vs- flat-fee. Instead, this article points out the different things you need to look out for specific to flat-fee agents plus things you need to be aware of regarding any type of agent.

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