I’ve had a rash of clients interested in Flat Fee MLS services. I actually considered offering a Flat Fee to my potential clients. It has been bothering so I decided to do some investigations of my own.
I expected to see “sellers can’t sell using a flat fee service”. I was surprised at my findings. They do sell! I thought this was more fuel added to the fire and that maybe I should defy my fellow Realtors® and do it anyway….
I’m going to share my data, but I am going to eliminate the names of the Flat Fee Services. I only chose 4 services to compare to our service. I chose these 4 because existing clients have used them and one of these services is emailing me every week with recruiting emails… I find that quite annoying!
We will call them FFA, FFB, FFC, (which stands for Flat Fee Company A, B, and C) and KW-WL (that stands for Keller Williams West Loop).
Closed Transactions for Attached Properties in 2010
FFA – 49 closed transactions (listing side)
FFB – 4 closed transactions (listing side)
FFC – 23 closed transactions (listing side)
KW-WL – 31 closed transactions (listing side)
Ok, so now what? These FF companies are selling! Next I looked at “Expired” listings.
FFA – 38 expired listings
FFB – 3 expired listings
FFC – 4 expired listings
KW-WL – 19 expired listings
Well, FFC is doing pretty good only 14% expired listings while KW-WL is around 38%. (The other two were at 56% and 57%) Well, I already know that 25% of all listings can not sell and there is nothing we can do about that. The market simply rejects them.
There is another MLS status called “Cancelled”. Some Realtors® I know use this cancelled status to rejuvenate interest in a property. It also allows the Listing Market Time to reset to 0 days, (It does NOT reset the Market Time so think twice before using this – I don’t like it and I always look at the total market time with my buyers!) But I do know that some sellers DO cancel, so I am going to look at it anyway.
Cancelled Listings
FFA – 110 cancelled listings
FFB – 18 cancelled listings
FFC – 85 cancelled listings
KW-WL – 69 cancelled listings
Hmmm…. Should I even do the math? Anyway, I’ll do it, but I don’t know if will completely believe the results… FFA is selling 33% of their listings, FFB is selling 19% of their listings, FFC is selling 25% of their listing and WOW, we (KW-WL) are selling 35% of our listings! We win! (Remember, I don’t completely believe in this statistic because of the unnecessary cancelling of listing to relist the same property). So to satisfy my own needs, I will continue searching for reasons why I shouldn’t offer a flat fee service; after all, it appears to be working!
I researched the Market Time (not the listing market time, because I don’t like the cancelling of a listing to reset listing market time – even though I might consider it if I have a property that needs that extra juice) and what I found is that KW-WL only sells properties a few days quicker than the FF services (using a median value).
Next I decide to compute the List Price to Sell Price ratio. BINGO! I found the reason I should NOT consider a flat fee service! I am a FULL SERVICE REALTOR® and I spend hours on numbers and calculations and I KNOW my market figures.
I will never offer my hours of research for $299 or whatever that fee might be, and I do not have it in me to let a client “choose their own listing price because that’s what they want”. I know buyers don’t care what the seller wants, they don’t care what the sellers need, and not to mention the potential for a failed transaction because the property will not ever appraise!
Here are the results. The percentage of SOLD PRICE to LIST PRICE
FFA – 93.36% of list price
FFB – 93.85% of list price
FFC – 93.09% of list price
KW-WL – 103.57% of list price
Median Sold Price
FFA – $252,000
FFB – $197,000
FFC – $209,000
KW-WL – $290,000
Sellers need TWO things. The first is a knowledgeable agent to help sell their property and a negotiator who will act in their best interest. Look at the 10% spread between the FF Services and the Full Services Realtors®. 10% on $300,000 is $30,000. And I do not charge $30,000 for my services! But I do know my markets, and I do fight for the price that will give you the highest possible dollar in the shortest amount of time.
I have decided that my services are WORTH my commission and that I will not offer a flat fee. I have a heart, so also do not believe in loosing a clients $30,000, nor do I have it in me to sit back and let my clients do their own work. I have to remain a Full Service Realtor®.
Robert Jarvis
