Real Estate Fees: Fee-for-Service vs. Commission Model

by | Dec 15, 2021

When selling a property, two common ways to pay for the real estate agent’s services are a flat fee, often called fee-for-service, or commissions. While both have their pros and cons, in our opinion, paying a flat fee is often the better option.

Why All Sellers Use a Licensed Real Estate Agent Regardless of How Their Fee Model Works

Here are a few key reasons why using a professional licensed real estate agent is the best option for sellers.

  • Agents have access to a wide range of resources, including marketing tools and databases of potential buyers. They also know the local market and what buyers are looking for, which can help you price and market your home in the most effective way possible.
  • Agents are held to a high standard of professionalism and must follow a code of ethics. In Florida, it is crucial to know that an agent is considered a “transaction broker” unless you request that the agent transition to an agent. An agent who acts as a single agent must have their clients’ (not customers) best interests.
  • Using a well-trained agent can make the process itself much more effortless. For example, well-trained agents know what sort of documentation to expect when it comes time for closing, which means you won’t be caught off guard by last-minute requests or demands that could cost you money or take up your time.

What is Flat-Fee or Fee-for-Service?

A flat fee is a sum of money agreed upon by both the real estate agent and the seller that acts as payment for services provided. Generally, this fee covers professional advice on how to best market and sell the property, taking into consideration data such as recent local sales and listings in addition to comparable properties.

What is Commission?

Commissions are based on the selling price of the property and are split between the buyer’s agent (generally up to 3% depending on where you live) and the seller’s agent (also generally around 3%, but varies from state to state).

What is the Difference Between Flat-Fee (Fee-for-Service) and Commissions?

With a flat fee, you pay the real estate agent a set amount of money regardless of how long it takes them to sell your property. This can be a great option if you need to sell quickly, if your property is unique and may take longer to find a buyer, or if it’s a seller’s market and you want to save a considerable amount of home equity from being eaten up by real estate commissions.

On the other hand, commissions are paid as a percentage of the sale price of the property. For example, if you sell your property for $200,000 and the real estate agent’s commission is 6%, they would receive $12,000. Sounds good on paper, but there are some serious financial drawbacks to commissions.

Real estate commissions are typically not flat rates. You can expect them to be anywhere from 2-6% of the sale price of your home. For homes that sell for $200,000, this would mean you pay the real estate agent $12,000, whereas a fee-for-service model like Sell Street’s would pay $5000 to use for the listing and a percentage (or an additional flat fee) to the buyers’ agent.

Are real estate commissions that bad?

Absolutely. Unless there is a good reason to hire an agent on commission, they can be financially detrimental to sellers in the long-term, especially when you factor in the agent’s commission as well as the fees associated with selling a property (e.g. closing costs, title insurance, etc.), you’re looking at spending 7-8% of your home’s sale price on fees alone.

Fee-for-Service is Changing the Real Estate Industry

The flat-fee model is changing the real estate game by allowing buyers and sellers to save their hard-earned money without sacrificing service or experience. Selling a property shouldn’t have to come with a substantial financial burden.

Paying a flat-fee to sell a property is always better than paying commissions to real estate agents.

With a flat fee, you know exactly how much you will be spending, and there are no surprises. CommiOnother hand, are vcommissions ariable and can add up to thousands of dollars depending on the sale price of your property.

If you are interested in flat-fee service or fee-for-service real estate, contact us at +1-321-926-4105, and we would be happy to help you learn more about our flat-fee services and how you can save you thousands of dollars in equity.

The information on this page may have changed since we first published it. We give great legal advice, but this page (and the rest of our site) is for informational use only and is no substitute for actual legal advice. If you’d like to establish an attorney-client relationship, reach out to us and we’ll tell you how we can make it official. Sending us an email or reading this page alone doesn’t mean we represent you.