1. How can Flat Fee charge less than other firms?
- Thanks to improvements in technology, all real estate agents are much more efficient today than they were 5 years ago and significantly more efficient than they were 20 years ago. It takes much less time for an agent to assist in a transaction today than it did in the past.
- Despite these improvements in efficiency and reduction in time, real estate agents have not changed their pricing models. Most agents charge the same fees today that they did 20 years ago. Most charge a commission of 6% of the sales price. In terms of real dollars they are actually charging more today than 20 years ago because property values appreciated substantially over that same time period.
- Flat Fee was formed in 2008 on the basis that the public deserved a real estate brokerage pricing model that accounted for all of the improvements and advancements made over the past two decades.
2. What services won't I get if I hire Flat Fee?
- Flat Fee provides the same services that all other Vermont firms do but we simply charge less.
- For sellers, we visit the property and meet with the seller, conduct a market analysis, list the property in MLS, attend showings, assist in negotiations and provide ongoing guidance and advice until the property sells.
- For buyers, we send new listings, schedule and attend showings, assist in negotiations and contract drafting and provide ongoing guidance and advice until a property is purchased.
3. Does Flat Fee do open houses of its listings?
- Until November 2010 Flat Fee did hold open houses for listings as a regular part of our services. We made the decision based upon our data that open houses are not an effective way to sell a home in the 21st Century. As a result we reduced our flat fee to sellers by an additional $1,000.
- Today buyers are no longer attending open houses. Instead they scour over listings of property on the internet. Once they find listings that appeal to them they either call the listing agent or their buyer agent and schedule an appointment.
- Qualified buyers prefer "exclusive" showings with an agent rather than having to jostle around others at an open house.
- In some cases our agents will use their discretion to hold an open house but only if they deem that there are special or unique circumstances that warrant it and in no case will they do it solely to generate new business for themselves, which is the main reason many firms continue to provide open houses as part of their regular set of services.
4. Will agents from other firms still show my property if I list with Flat Fee?
- After 11 years in business and more than $450,000,000 in total sales, we can confidently say that other firms are very interested in showing Flat Fee's listings.
- If a property meets an buyer's crtieria then the buyer wants to see the property regardless of what their agent says.
- If for some reason an agent refuses to show a buyer a property, the buyer will simply hire a new agent.
- In an age where buyers are searching for homes online, the buyers call the shots not their agent.
- Finally, real estate agents have a legal and ethical obligation under Vermont law to look out for the best interest of their client and to put the client's interest above their own so if the buyer likes the property then they have a legal obligation to show them the property and advocate for them to buy that property.
5. Are there any hidden fees or charges?
- There are no hidden fees or charges.
- For sellers, we do not get paid unless your house sells.
- For buyers, we do not get paid until you purchase a home.
6. Do I have to pay Flat Fee up front?
- We do not get paid until closing.
- For sellers, we do not get paid unless your house sells.
- For buyers, we do not get paid until you purchase a home.
7. Will a larger firm be able to sell my home quicker?
- No. This is one of the great misconceptions created by the larger firms. There is no empirical support showing that larger firm listings sell quicker just because the firm is larger.
8. Are you members of a trade association or lobby group such as the National Association of Realtors?
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 National Association 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. In fact, a jury just found the National Association of Realtors guilty of antitrust violations and awarded consumers (home sellers) in Missouri $1.78 billion in damages because of NAR's illegal behavior.
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.
Flat Fee Real Estate was a member of the National Association of Realtors, the Vermont Association of Realtors and the Northwestern Vermont 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 Flat Fee Real Estate as one its members or protecting the alternative commission model we were promoting. In fact, at one point they demanded that we remove a 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" in Vermont.
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 National Association 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 Flat Fee 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 the Vermont 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 in Vermont.
Flat Fee believes deeply in the spirit of healthy business competition in Vermont 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 Federal Trade Commission of restricting competition visit the FTC's Website On Real Estate Competition
