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A Problem With Flat-Fee Brokerages

competition flat fee transparency Apr 13, 2023

Do you ever compete with a flat-fee company?  If your company offers full service, be sure to confirm what your competitors are really charging and how they communicate with potential prospects.  Knowing that will help you demonstrate why you have chosen your company and how your negotiating skills differ from the discounters’.  Last week, I did a little investigating.  Here’s the story:


I received a form letter from a local Realtor offering a “flat fee.”  It included this further enticement, “…so in addition to trying to relieve the stress of marketing your home, I can help you keep more money in your pocket!”


The letter went on to say that the agent has a buyer looking for a townhouse in my neighborhood, and they are “hard to find.”


My curiosity was piqued so I called her.


I said, “How much do you charge?”

She said, “Our flat fee for each listing is $4995.00 paid at closing”.

I said, “So the buyer’s agent gets part of that?”

She said, “No.  We pay out 2.5% to the buyer’s broker.”

I said, “Wait, what?  So, you’re a flat fee company PLUS a percentage of 2.5%?”

She said, “There are lots of flat fee companies out there and we’re just trying to differentiate ourselves."

I said, “Why doesn’t your company believe you are worth a full commission?”

She said, “We can leverage technologies so that the listing side is not as labor intensive as it used to be. The current commission model is outdated. If an agent can sell 4-5 homes a year and still make $80,000, that seems a little aggressive.”


If you’re a Wickman-trained Realtor, you know we believe that there is a reason why sellers have insisted for over 100 years that commissions be paid on a percentage of the sale price, not on a flat fee.

A real estate transaction is a partnership, a joint venture, where everyone is incentivized to get the best price and terms for all parties. That is precisely why negotiating skills are so useful in serving our clients.  And who has better negotiating skills than you?


Do the research into your competition.  Are they really flat-fee only?  What tools and services do they actually offer?  What’s their DOM (Days On Market) compared to yours?  Maybe most importantly, what is their percentage of list price to sales price?  And what kind of training does their company offer?


You’ve got this!

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