What is flat fee real estate, and what are the benefits of using a flat fee broker versus a traditional agent? If you’re thinking about selling your home and want to save money on commission fees, read below to learn about this cost-effective alternative to traditional real estate services. In this article, we’ll explain exactly what flat fee is and answer six common questions to help you make an informed decision about your home selling options.

Simply put, flat fee real estate agents charge the same rate, regardless of how much work they do on your behalf. Whether you sell a home for $100,000 or $1,000,000, the fee doesn’t change, and you end up saving a lot of money when it sells. And the even better news? With this type of straightforward pricing, you won’t have any surprise fees when your house sells, and the cost to you remains the same.

6 Common Questions About Flat Fee Real Estate

1. What is Flat Fee Real Estate?

Flat Fee Real Estate is exactly what it sounds like. Instead of paying a traditional real estate agent a percentage of the sales price of your home, you only pay a low, flat fee for their service. In a traditional real estate transaction, you can expect to pay anywhere from 5% – 7% in commission fees when selling a home. However, with Scout Realty, you can list your house for a low, flat fee instead, which allows you to retain more of the equity that you’ve built up in your house.

Scout Realty adopted this strategy in order to shift the real estate experience in favor of the homeowner. By doing so, we are able to provide an unparalleled customer experience, regardless of the price of your home. Whether your home sells for $200,000 or $2,000,000, you still pay the same flat rate. As our founder, Jonathan Harris, explains it, “We’re on a mission to eliminate commission fees. This is how we best serve and create value for our clients.”

2. What are the Benefits of Using a Flat Fee Broker vs. a Traditional Agent?

There are a variety of reasons to sell a home – whether relocating for a job, up or down sizing, or maybe the equity in your home is too good not to capitalize on. Making a profit might not always be the reason you’re selling a home, but one thing is for sure – no one wants to lose the equity that they’ve built up by paying outrageous commission fees. In fact, by selling your home for a flat fee, you’re able to save over $10,000 on average. This is cash that can be used to make a down payment on a new home, or maybe to take that dream vacation you’ve been wanting to take for years.

In order to truly capitalize on the equity you’ve gained in your home, it’s important to understand the difference in how much money you’ll be spending when selling your house with a traditional agent versus a flat fee broker, like Scout Realty. With Scout, we don’t charge a crazy 6% commission fee that most traditional brokers do. We only charge one flat rate when you sell your home. Because a traditional real estate transaction has a standard brokerage fee of 6% on average, the listing agent and the buyer’s agent typically split that commission fee. If a listing agent doesn’t offer the standard rate of 2.5% – 3% commission split, buyers’ agents might refer their clients to other properties, which will slow down the process of your home being sold.

3. How Do Commission Fees Really Work?

 In a traditional home sale, the commission fee is typically around 6% of the final sales price of your home. The commission is split evenly between the listing agent and their broker, which means each party receives roughly 3% of the sales price.

Here’s an example: if your home sells for $500,000 and you agreed to pay your agent and the buyer’s agent a total of 6% percent of the sales price, then you’re automatically out $30,000 in commissions, and can be down over half of YOUR equity! Use our free Instant Savings Calculator to see how much you can save when you sell your home with Scout.

When you choose a flat fee real estate broker like Scout, there’s no need to worry about the crazy overhead of selling your home, regardless of how much a buyer agrees to buy your home for. Instead of worrying, you’ll know BEFORE you go under contract exactly how much you’ll pay to sell your home. There’s no hidden fees or charges – with Scout, it’s one flat fee no matter what.

4. Is Scout Realty Considered a Discount Brokerage?

At Scout Realty, we believe that discounting your cost and discounting your value are two totally different things. We create something that we call ‘Value Innovation’. We’re often asked “how do we create value for people if we don’t charge a full 6%,” or “if we don’t charge 3% on the seller’s side, are we considered a ‘discount brokerage’?”

Our goal at Scout is to:

1. Eliminate or reduce our costs for our clients.

2. Raise or increase the value we provide for them. So, whenever we reduce or eliminate commission fees, this automatically increases the value we have for our customers and provides them the opportunity to retain as much of their home equity as possible.

5. Will My Home Be Listed on the MLS?

An important thing to note is that even when you use a flat fee realtor like Scout Realty, your home will still be listed on the Multiple Listing Service (MLS), so that it can be found just like every other home that’s listed in Nashville. The MLS is the main online directory that real estate agents use to list their properties and share them with other agents that also belong to the local MLS. This is an important thing to note because many third-party services, such as Zillow, Realtor.com, NextDoor, Trulia, etc. pull their listings from the same MLS, so your home will get maximum exposure for only a fraction of the price.

6. Would My Home Sell Faster With a Traditional Broker?

In the month of May, Scout Realty sold our flat fee Nashville listings in an average of 6 days. The average for all other Nashville homes that were sold by other brokerages during the month of May was 12 days. This is great news for anyone looking to move quickly and avoid paying thousands of dollars in commission fees. 

Another thing to note is that when you meet with a traditional real estate agent to discuss the sale of your home, you’ll generally get a presentation on how well they plan to market your home. However, an overwhelming majority of properties are sold by the cooperating MLS agent, rather than a listing agent. So, why would you invest a large portion of your equity in someone who will more than likely lean on another agent to sell your home instead? 

This is where Scout Realty comes in. In our Core listing package, we provide professional photographs listed on the MLS, an open house to generate maximum exposure, a feature in our email blast, organic posts on social media and much more! We offer a fully-integrated marketing strategy for every property that lists with us, designed to help your home sell as quickly as possible. 

With a traditional agent, you’re typically required to pay 6% of your home’s sale price. This can be upwards of $15,000-$20,000 in many markets! On the other hand, Scout agents charge a flat fee for their services and consistently sell homes faster and for more money. If you’re looking to save money on commissions or get more exposure than what is offered by most real estate agencies, then we recommend considering our team at Scout Realty. We have an extensive network of local buyers who are actively seeking homes like yours right now so don’t hesitate any longer. Reach out today!

See what you can save with our Instant Savings Calculator!

Zinga’s Provides Expert Advice with unmatched convenience

Scout Realty provides vetted service provider recommendations for all things home ownership. From buying and selling to repairs and beyond — our Preferred Provider Program connects you to top-notch professionals in your area.

Why we love Zinga’s Blinds: They give expert advice and provide unmatched convenience — THEY EVEN bring the showroom to you! Zinga’s Blinds loves their customers and provides great service with their lifetime warranty, best price guarantee, no-pressure estimates and in-home design consultations.

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When selling a home, you want to sell for the most money in the least amount of time possible.

We get it — you want more money if you’re going to put in extra work to sell your home. So we’ve narrowed down the top 5 (realistic and quick) home improvements that give you the best boost on your home value.

Paint

A new coat of paint will refresh even the most tired home. Neutrals are great to appeal to a wide variety of potential homeowners.
The ultimate goal of painting is for people to see a blank canvas — to envision themselves living their daily lives in each space.

Kitchen Refresh

The kitchen is the heart of the home. Make sure that your kitchen makes a statement by updating light fixtures, knobs, and pulls, or even adding a fresh coat of paint on the cabinets. Any boost you do in the kitchen will help your home stand out from among the crowd.

Updated Bathrooms

Make sure that every bathroom is fresh and clean. Updating the finishes such as faucets, vanities, mirrors, and light fixtures is a great cost-effective way to make the space look and feel more updated.

Floors

Did you know you can rent a carpet cleaner from your local Lowe’s or Home Depot? If you can’t replace your carpet, cleaning them is a great way to make sure that your home is putting its best foot forward — not to mention, potential buyers will immediately notice if your home smells like pets.

Energy-Efficient Features and Windows

Buyers love investing money in a home that saves them money in the long run. Adding energy-efficient features to the home will add to the overall value.

Is your real estate equity eroding? 

It easily might be. Turns out, a simple solution can reverse this trend and build your net worth.

Your inevitable timeline

Financial planners often take their clients through an exercise. On a vertical line, they pinpoint you (or you with your family) at one end of this timeline which represents the present. Then, they place you (or you with your family) at the other end of the timeline which represents the future. 

Along this timeline, no matter if it spans ten or fifty years, you’re going to face financial decisions. They could be to invest, to save for a child’s college, to buy or sell a home, or many other options. As you do so, one of two things will happen. Your future self is either going to have more money or less money. Which will it be? The outcome is entirely dependent on the type of decisions you make along your timeline.

Your timely real estate impact

Along their timelines, the average homeowner buys and sells every five to seven years. This means a person will own about seven or eight homes and have about fifteen real estate transactions in their lifetime. Under the traditional real estate model, people pay a percentage of their home value each time. This directly correlates to their net worth eroding.

Inevitably, you have built up equity and value in your house. Two thirds of American homeowners have their networth tied up within their homes. As you pay a percentage of that net worth, your future self (at the other end of your timeline) will have less money.

Your way out

How can you avoid this negatively correlated erosion of net worth? Meet a fair fixed fee for services. Put very simply, this model doesn’t charge you outrageous real estate commissions which will erode your net worth. In fact, every time you buy and sell under this model, you’re actually preserving your net worth.

Who are “luxury agents?”

I’ve been in the real estate business for 18 years. We’ve done over 1,500 transactions for over half a billion dollars in sales. Because of this, we’ve learned a thing or two. Historically, I’ve seen many agents desire to be called a “luxury agent” who can focus on the “luxury market.” 

What does “luxury” mean?

When someone says they want to be a “luxury agent,” it typically has a lot to do with getting close to rich people: being their friends and charging them commission based on the value of their home. If the commission is based on home value, “luxury agents” can then often increase their pay without equally increasing their work.

What about non-luxury?

Rarely will you see an agent who says “I want to focus on first time home buyers! I want to focus on people who are struggling and don’t make a lot of money. I want to focus on teachers, policemen, and firefighters because they need our help.”

Unfortunately, you’ll tend to see agents migrating towards the luxury market. On Shark Tank, Kevin O’Leary actually calls this out, saying that the world has a big problem: real estate agents. I’ve been in the business for years, and at first it felt like he was taking shots at me, but I had to admit that he had something there. He said agents are eroding people’s net worth and equity.

What about your equity?

When agents want to focus on the luxury market, it has tangible effects. Sticking to only the selling side, if an agent sold one luxury home at $500,000, she’d make $15,000. If she were to sell another luxury home priced at $1.5 million, she’d make $45,000. 

What has this luxury agent done that’s worth earning $30,000 more for the second home sale? They may talk about doing a wine and cheese for brokers (and it better be some quality wine and cheese they’re utilizing). They may highlight a certain magazine where the home is listed, but do these services account for the additional $30,000?

Just because you have the money, net worth, and dream home does not mean that you should give it away when you sell. 

What now?

If you hear from someone who focuses on the luxury market, make sure they can quantify exactly what they will do for you to merit the extra money they’ll make. Ask questions, and do pay them more if they have a clear value proposition and clear additional benefits you’ll be offered.

And if they don’t? Preserve your equity. Don’t pay more just because you’re worth more.

I want to tell you a secret.

You’re not going to hear this from other real estate agents. If you know this, it can make you a lot of money. It can equip you to make better decisions.

What’s the secret? Buyer markets and seller markets really dictate the home sale.

Where’s the market balance?

The National Association of Realtors has said that a balanced market is six months. This means that if your home is listed for 180 days, neither the seller nor buyer has the advantage. However, if it sells before 180 days, the seller is winning. If it’s after 180 days, then the buyer is winning. 

What drives the sale?

Does the listing agent actually move the sale of the house, or is the market really driving the value and sale? Even though most real estate agents base their commission on the value of the homes, the listing agent is rarely in a position to actually sell the house. Almost always, the sale is market driven as the type of market is going to drive the sale of the home.

Who’s the seller?

There’s more. I’ve been in the business for 18 years; we’ve done over 1,500 transactions for over $500 million in sales. What I’ve seen is that, typically, the buyer’s agent is showing and tangibly “selling” the house. The listing agent usually has very few opportunities to actually sell the house. The buyer’s agent is the one who brings the buyer, unlocks the door, and walks through the house without the seller’s agent there.

Why the commission? 

Why would you pay a commission in a seller’s market to the seller’s agent, the? On top of it all, the sale is heavily market driven. All home values are determined by what a buyer will pay for the property and what the seller accepts. In essence, the buyer and seller are coming together and saying yes.

What about a flat fee?

If you want to hang onto your equity and preserve your wealth in such a market, negotiate a flat fee for your agent as you understand that they may not be driving the sale of the house. It may have more to do with market conditions, what the willing and able buyer has said, and what the buyer’s agent has done to promote the house. If you’re selling your house, in a seller’s market, and things are selling in less than a hundred days, a flat fee may be your best solution.

What about Scout?

At Scout, we offer a flat fee starting at $5,000. This $5,000 is full-service because we understand that we are sellers in a sellers’ market. Since our sellers are winning, we want to position you to win. Welcome to behind the curtain of how markets influence sales, with strategies of how to succeed.

What does the federal reserve’s deception of the housing marketing mean for you? 

Looking at a twenty year history of the value of homes, we can find the average home value–$200,000–in American during the early 2000s. Looking forward to this year, 2020, we see that house prices have increased to $400,000. They’ve almost doubled in twenty years. 

The increase for agents

This housing price increase is great for real estate agents working off commissions. If you attach a 3% sliding scale, agents who were making $6,000 in 2000 and now are making $12,000 in 2020. We need to ask what agents are doing to warrant making double the income.

To figure this out, since I’ve been in the business for eighteen years, I asked myself what I was doing even just 10 years ago. In 2010, the average home price was around $260,000 which meant the average agent was making about $7,500 per sale. Since the current 3% agent commission rate on an average home means the agent comes away with $12,000, what differences in services result in the $4,500 increase in pay?

The impact of technology

Working back in 2010, the real estate process was actually much more physical and manual. We had to get wet signatures on physical, paper documents. I had a call log; if people wanted to see a house, I’d write down the name, number, and everything else to coordinate with the seller. We had desk computers, SD car plugins, and perilous MapQuest. 

Now, in 2020, we have digital signatures so we can email documents, and with a click and signature, everything stays online and is very easy. We have laptops. We have iPhones to help with photography. We have apps to unlock doors and pull up surrounding listings.

In the ten years as commission doubled for agents, technology has made many things much more efficient, faster, and easier for agents as well. And, this technology has even decreased costs. Often, agents can work less and make more. Unfortunately for the customer, there has not been a clear pass down of benefits. 

The results for you

Home values are skyrocketing. That means your equity should be increasing. Whenever the agent has technological advances that makes their job quicker, easier, and more efficient, I believe there should be a monetary pass down to you as the client.

And that’s just what we’ve done for you at Scout. We decided that we just can’t ride this wave and make money off you. We’re just going to establish what we feel like our services are worth and set a very low fee. This has worked; our clients are saving around $10,000.

The bottom line

Don’t allow the agent community to erode your net worth. Be an informed seller, make decisions based on your best interests. And we know you’ll come out ahead on the other side. At Scout, we know it’s about a win-win and hope that we can win for you.

Have you ever wondered why real estate companies do not offer clear value for the customer? When customers consider all the various local and national real estate brands, how easy is it for them to notice what separates one company from another?

What about sellers and buyers?

It’s very uncommon to find a real estate company that clearly says “hey, if you’re a seller or buyer, this is the benefit of working with us.” In essence, most companies place their value proposition in being agent-centric. They aim to attract agents, because if they do so, theye figure the agents will go and attract clients.

However, companies like Zillow or Red Door have emerged with a great online platform. These companies are able to write an offer right off the bat without even listing the house. Even with their challenges, they, unlike the more traditional real estate companies, are doing a much better job of being client-centric. 

Why does client-centrism matter?

Being client-centric is simple. It means that everything the company and agent is thinking about is with the client in mind. 

The traditional real estate environment could learn from this model by simply asking “what are we doing uniquely different and especially beneficial for the customer? That’s why, at Scout, we started to innovate.  We realized there’s so many companies focused on the agent and the benefit of the agent. And, it’s not that we don’t value, love, and want to serve and benefit agents (because we do). It’s just that we want to be client-centric first and have the agent come second. That’s why, if you visit our website or see our ads, we aim to speak right to the heart of the customer.

What’s the Scout difference?

We are obsessed with adding value to our customers. We’re obsessed about over-delivering, about creating wins for them, about offering flat-fee service pricing rather than charging outrageous real estate commissions.