Flat Fee News

Why Flat Fee Real Estate Canceled Its Realtors Membership

Many people believe that in order to be a real estate agent, you need to be a "Realtor". This is incorrect.

A "Realtor" is simply a person that is a member of a trade association or lobbyist group. The most well known real estate trade association and lobby group is the NationalAssociation of Realtors. In Vermont, we also have other real estate trade associations and lobbyists, including the Vermont Association of Realtors and local Realtor associations.

The primary goal of these real estate trade associations and lobby groups, like any trade group or lobbyist, is to promote the interests of its members. The overwhelming majority of the members of these associations are real estate firms that offer traditional models of brokerage services based upon a percentage of the sales price. These firms typically charge between 5-6% of the sale price as their fee.

Because the majority of members and those making the policy decisions for the "Realtors" associations support a 5% or 6% commission based model, their policies, practices and decisions are aimed at preserving this model.

While these trade associations have done a very good job of marketing themselves and conveying concern for the interests of buyers and sellers of real estate, they actually care much more about ensuring that their members continue to profit enormously from buyers and sellers of real estate by preserving the 5-6% commission based model.

Because their primary goal is to ensure that the 5-6% commission based model continues to enjoy a market dominance, they must take action against any threat to that market dominance. Flat fee real estate services such as ours represent the greatest threat to this market dominance.While it is possible that a decade ago a business like ours would not have been competitive, thanks to the great advances in technology and the internet, a business like ours is now not only competitive but represents the wave of the future in real estate brokerage services.

FlatFee RealEstate was a member of the NationalAssociation of Realtors, the Vermont Association of Realtors and the NorthwesternVermont Board of Realtors from 2008 until late 2011. During this period, there were several instances where it became clear that these associations had no interest in having FlatFeeRealEstate as one its members or protecting the alternative commission model we were promoting. In fact, at one point they demanded that we remove the blog post regarding real estate agent pay from our website because they were clearly concerned that the public would be alarmed by the outrageous commissions of "Realtors" inVermont.

It was after the "Realtors"Association demanded that we remove this posting that we decided to voluntarily cancel our membership in these trade associations. We could no longer in good conscience be a member of a lobbyist group like the NationalAssociation of Realtors. Like many lobby groups today, the National Association of Realtors is designed to protect the business interests of its members to the detriment of the pulic and FlatFee does not believe that the public's interest should take a back seat to those of lobbyists.

In addition to canceling our membership, we also ceased using the forms created by these trade associations. The Purchase and Sale Contract that members of the Vermont Realtors Association utilize was drafted by an attorney for theVermont Realtors Association. While most Realtors do not bring it to their clients attention, the Contract actually includes two provisions which limit the liability of the Realtors even though the Realtors are not a party to the contract. We believe these provisions, at a minimum, violate the agents fiduciary duty and loyalty to the client and may even represent a violation of the State of Vermont Consumer Fraud Act. This is yet another example of the Realtors Association putting the interest of its members above those of buyers and sellers inVermont.

FlatFee believes deeply in the spirit of healthy business competition inVermont and cannot in good conscience be a member of any organization which cares more about the interest of its members than it does in ensuring business competition.

To learn more about cases where "Realtor Associations" have been accused by the FederalTrade Commission of restricting competition visit the FTC's Website OnRealEstate Competition

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Real Estate Agent Pay - Chittenden County

The average Vermont family makes $51,200 per year. What do you think real estate agents make?

According to data from the MLS and based upon the traditional 6% commission model charged by other firms, the top 5 agents in Chittenden County so far this year (January to July 22nd) have made between $292,000 and $587,000. Thus, they are on pace to make between $600,000 and $1,000,000 this year alone.

It is remarkable during the worst recession in history that real estate agents in a small community like Chittenden County can make in excess of $500,000 per year, much less $1,000,000 per year, and continue to get away with it.

We believe the public should demand fairer compensation models from real estate agents. We believe that our flat fee model represents a fairer compensation model and keeps our compensation much more in line with average Vermont incomes.

To learn more about Flat Fee's payment model, click here.


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      • Gabriel on

        Oh what a good question.People buy life isranunce, usually in trust so it doesn't also get included in the estate, in order to pay estate taxes. That's about 97% of what you need to know. Outside of that you just need to look around for the specific information you're looking for.

        What Is Important to You?

        In an effort to create a more interesting blog, we at Flat Fee Real Estate want to know what is important to buyers and sellers of real estate in Vermont. Please post questions or topics you would like to see discussed regarding Vermont real estate and we will do our best to answer your questions and/or write a meaningful post regarding the topic.

        Thank you from Flat Fee Real Estate.

        Leave a commen below or contact us here.

        Flat Fee Facebook Contest and Giveaway

        We are proud to introduce the Flat Fee Facebook Contest and Giveaway. As of right nowour Facebook Page has 75 fans. Our goal is to reach 100 Facebook fans. We are challenging our current fans and their friends to help us achieve that goal.

        If our current fans are succesful in convincing their friends to become fans of Flat Fee Real Estate on Facebook and we reach our goal of 100 Facebook fans, we will begin giving away a prize to one of our Facebook fans every 2 weeks.

        The prizes will be merchandise such as Apple and Sony electronics products. Thus, we encourage everyone, even those with no connection to Vermont to become a fan of ours on Facebook.

        Thank you and we look forward to seeing you on Facebook.


        1. Jamika on

          People buy life insurance, ualsuly in trust so it doesn't also get included in the estate, in order to pay estate taxes. That's about 97% of what you need to know. Outside of that you just need to look around for the specific information you're looking for.
          • Jussara on

            Thr'ees nothing like the relief of finding what you're looking for.

            Burlington VT Real Estate

            FlatFee RealEstate is headquartered inBurlington, Vermont along the shores of Lake Champlain. Its founder,Rob Foley, is also a resident of Burlington,Vermont.Rob and his wife also attended the University of Vermont inBurlington.

            Because of these ties, FlatFee RealEstate has a great wealth of knowledge about Burlington real estate and the real estate in surrounding communities.

            Burlington has a population of approximately 42,000 according to the most recent census data. While theCensus data shows that Burlington's population's increased by 7% over the past decade, it appears that much of the growth may be due in large part to increases in enrollment at the University of Vermont and ChamplainCollege.

            For those looking to make a move, Burlington represents a great alternative to larger metro areas like Boston. While it does not have all of the amenities that you will find in a large City,Burlington has many of the key amenities found in larger cities.

            First and most importantly, Burlington has an InternationalAirport. BurlingtonInternationalAiport is served by major airlines, including JetBlue, US Air and Delta.

            Second, Burlington has a prominent teaching hospital,Fletcher AllenHealthcare. Burlington is probably one of the only cities inAmerica with less than 50,000 residents that is served by such a high class medical facility.

            Third, Burlington is home to several educational institutions, including the University of Vermont and ChamplainCollege. Thanks to the stability of employment created by these institutions, Burlington's current unemployment rate is less than 1/2 the national average and lower than the average in the rest of Vermont.

            Fourth,for a small City, Burlington has the cultural resources of a larger city. Burlington was recently named one of 10 cities inAmerica for "foodies" to visit. Burlington also has musical and theatrical venues such as the FlynnTheater and Higher Ground.

            Finally, because it is located on the shores of the 120 mile long Lake Champlain, the outdoor activities rival that of any City located along the eastern or western seaboard.

            In addition to having the amenities of larger cities, Burlington has attributes that make living inBurlington better than living in a major City. First, Burlington's real estate market is more stable than many large metro areas. The stability of its institutional employers, such as UVM, and its size help ensure that Burlington real estate will not suffer the major swings that we see in other more volatile areas.

            Second, Burlington has a better quality of life for raising families.In Boston, many parents endure average commutes of 1 to 2 hours. In Burlington, your average commute will likely be less than 10 minutes. Also, there is a lower crime rate and cleaner air than in larger metro areas.

            Third, travel is easier. Whether by car or plane, it is easier to escape a smaller City like Burlington than a large metro area such as Boston.

            Finally, there are few sights that can rival a sunset in Burlington. Sitting along the shores ofBurlington peering back toward the purple and orange glow above the Adirondack will make you wonder why you ever lived anywhere else.

            To learn more about Flat Fee and Vermont real estate, contact us anytime.

            Vermont Ranked Healthiest State Again

            According to the Burlington Free Press, Vermont has been ranked the healthiest State in America for the the 4th consecutive year.

            Many observers believe that Vermont's vast outdoor recreational activities are one of the reasons that the State consistently ranks at the top. Whether its skiing in Stowe, Sugarbush, Killington, Okemo or Woodstock's Suicide Six or swimming at one of the beaches in Burlington or Colchester, there are plenty of opportunities in every Vermont city and town.

            Impact of National Franchises on Local Property Values

            First let's review how national franchise companies make money from local real estate transactions. The most common model of compensation is a percentage of every transaction is paid to the national company by the local brokerage firm. Typically a local brokerage firm will pay the national company 8-10% of their fee from every transaction. Thus, if a broker sells a home for $300,000 and charges a 6% commission, the broker pays the national company $1,800 of that commission.

            The question is not whether these companies make money (we know they do), but how does a national affiliation help a buyer or seller. The short answer is that they do not help buyers or seller locally.

            The level of service provided by brokers without national franchise affiliations is the same as those with national franchise affiliations. There is nothing locally (MLS, Realtor.com, Free Press, etc...) that requires a national affiliation or that is benefited by a relationship with a national franchise company.

            While the service level provided is the same, brokers with a national affiliation must charge buyers and sellers more. As described above, brokers who have national affiliations must pay the national franchise company. Because of this, they must pass along this cost to their clients. Therefore, if you choose a firm with a national affiliation, you will likely pay a higher rate or the broker will have less room to negotiate their fee because of the extra fees paid to the national company.

            Because brokers with national affiliations must charge more, the cost of these relationships eventually trickle down to each transaction and make property more expensive locally. As I pointed out in the last issue, broker fees are a transactional cost that is added to the price of property in every transaction. Ultimately, if the seller needs to pay their broker more because their broker has a national affiliation, then it only stands to reason that the seller must factor that into the price of their home when selling. The seller then passes that cost along to the buyer by making the buyer pay a higher price for the home to cover their broker's fees.

            Therefore, at the end of the day, property is more expensive locally when national franchise companies are present.

            Even though national brands may lend immediate credibility to a broker, they do little to directly help the clients of the broker. In fact, many of the most recognizable brands are owned by the same company (Realogy), including Coldwell Banker, Century 21, ERA and Sotheby's. It is difficult to see how clients benefit when such an inherent conflict exists in the national company supporting the various brands.

            The only way that national franchise companies can make more money is to sell more franchise units. They are constantly looking to increase the number of franchise units in the same market area. Most national companies are willing to have the same brand located within 1/2 mile or less of another office owned by a different broker. Thus, you might have the same brand in the same town with two or even three different owners.

            Flat Fee Real Estate has not and will not affiliate itself with a national franchise. We want to continue providing our services for a flat fee of $3,500 per transaction and do not believe that we could if we were to partner with one of these companies who keep pressure on brokers to maintain the traditional 6% commission based model. We also want to ensure that local property remains more affordable for our clients by not having to pass along the costs of a national franchise to our clients.