What is a Flat-Fee Brokerage? Things You Need to Know

Just mention the word "commission" and both buyers and sellers will likely feel an unpleasant jolt in the stomach. 

For sellers, the real estate commission is the largest closing cost they will face at the end of the transaction. For buyers, it’s something they’ll have to consider in certain scenarios if they choose to have representation and a seller doesn’t offer to pay their buyer’s agent commission as part of the negotiation of their transaction.

As buyers and sellers look for ways to minimize the expense of commission fees, alternatives to traditional real estate brokerages are appearing more often in people’s Google searches. 

A flat-fee brokerage is one of the top alternatives to help manage this cost.

While traditional real estate agents typically take a percentage of the sale price, flat-fee brokerages offer a refreshing twist on that model. 

As the name suggests, these brokerages charge a set fee for their services, no matter how high (or low) your home sells for. So, whether your property is worth $200,000 or $2 million, you’ll know exactly what you’ll be paying upfront. It’s no surprise that flat-fee brokerages are gaining popularity with homeowners looking to save a few bucks during the selling process.

But what exactly is a flat-fee brokerage, and is it the right choice for you? Below, we will dive into the details of flat-fee brokerages to help you answer that question as thoroughly as possible.

What are flat-fee brokerages?

• Definition of a flat-fee brokerage
• How do flat-fee brokerages work?
• Flat-fee brokerage vs. Flat-fee MLS
• Pros and cons of using a flat-fee broker
• When should you consider a flat-fee brokerage?
• Common services offered by flat-fee brokerages
• How to choose the right flat-fee brokerage

Definition of a flat-fee brokerage

Instead of paying a percentage of the final sale price of your home, as is the norm with most traditional real estate agents, flat-fee brokerages charge a set amount for their services. 

This model offers predictability and control over your selling or buying experience, making it increasingly popular among savvy homeowners and buyers alike.

Why has this shift gained momentum? The answer is simple: transparency and cost savings. 

With a flat-fee brokerage, you know exactly what you’re paying for upfront. There’s no guesswork, no percentage-based surprises. Whether your home sells for $200,000 or $2 million, your flat fee stays the same. It’s a refreshing change of pace for anyone looking to keep their costs in check while still receiving essential real estate services.

How do flat-fee brokerages work?

Instead of a traditional commission based on the home’s sale price (typically around 3% to 6% of the sale price), flat-fee brokers charge a fixed fee or dollar amount for their services. 

This set amount is agreed upon upfront, so you'll know exactly what you'll be spending regardless of how much the home sells for.

What services can you expect with this model? That depends on the package you choose. Most flat-fee brokerages offer a basic package that includes listing your home on the Multiple Listing Service (MLS), which gives it the exposure it needs to reach potential buyers. 

Additional services like marketing support, open house scheduling, or contract negotiation assistance are usually available as add-ons, allowing you to tailor the level of service you receive to your needs and budget.

This can be a game-changer for sellers. You maintain control over the selling process while avoiding the hefty commissions of traditional agents. 

Buyers, too, can benefit from the reduced costs and simplified approach of flat-fee services, especially in competitive markets where every dollar counts.

Flat-fee brokerages vs. Flat-fee MLS services 

While they sound similar, they represent two distinct approaches to selling a home, and it’s important to understand how they differ so you can choose the option that best suits your needs.

A flat-fee brokerage provides a range of services for a fixed cost. Unlike traditional agents who charge a percentage of the sale price, flat-fee brokerages offer a predetermined fee for their services, no matter how high or low your home sells. Depending on your chosen package, this might include full-service for a specific dollar amount, or it might be an a la carte package of MLS listing, marketing, open houses, and even contract negotiation. The benefit of using a flat-fee brokerage is that you still may get many of the services a traditional agent offers but at a lower and more predictable cost.

On the other hand, a flat-fee MLS service focuses solely on listing your property on the MLS (Multiple Listing Service) for a one-time fee. The MLS is the most critical tool for getting your home in front of buyers, as it’s the main database real estate agents often use to find available properties. With a flat-fee MLS service, you essentially pay for the listing and handle the rest—marketing, showings, and negotiations—on your own. 

Using a flat-fee MLS company to sell your home is a more DIY approach to selling your home and best suits sellers who are comfortable managing the process independently.

So, how do you choose? If you’re confident in your ability to take on most of the home-selling responsibilities and simply need exposure to the MLS, a flat-fee MLS service can be a cost-effective solution. However, a flat-fee brokerage might be better if you want more hands-on support throughout the process without the high commission costs of a traditional brokerage.

Pros and cons of using a flat-fee broker

The most obvious benefit is a flat fee. You avoid the larger commission percentages that can add up, especially if your home is on the higher end of the market. This means more money in your pocket, whether buying or selling. 

Another perk is control—you can choose the level of service you need, from basic MLS listings to more robust support with marketing, negotiations, and paperwork.

The cons often involve a limited offering of services. Flat-fee brokerages often provide only the essentials, which means you might be on your own for certain tasks, like hosting open houses or handling documentation. For first-time sellers, or those who aren’t familiar with the intricacies of real estate, this could be a challenge.

When comparing flat-fee brokerages to traditional brokerages, the experience can vary widely. Full-service real estate agents often provide more personalized attention and can offer strategic advice, especially regarding pricing or deal terms and contingencies. However, if you’re comfortable managing parts of the process yourself, a flat-fee brokerage can be a cost-effective alternative without sacrificing too much in terms of service quality.

When should you consider a flat-fee brokerage?

Experienced sellers who know the ins and outs of the real estate market and are confident in their ability to manage aspects of the sale independently will find flat-fee services particularly useful. This model is also a great option in high-demand markets, where homes tend to sell quickly and don’t require as much hands-on marketing and support.

Additionally, sellers of higher-value homes stand to gain the most from this setup. Since traditional agents earn a percentage of the sale price, the higher your home’s value, the higher the commission. With a flat-fee broker, the cost remains the same regardless of your home’s price, which can translate into substantial savings.

On the other side of the experience spectrum, if you’re new to selling a home or need more guidance, a flat-fee brokerage may not provide the support you need. In these cases, you may consider a traditional agent or look for a flat-fee broker offering more comprehensive services.

Common services offered by flat-fee brokerages

The most basic service is usually an MLS listing with syndication of your listing to major real estate listing portals, essential for getting your property in front of potential buyers. 

Many flat-fee brokers also provide marketing support, such as professional photos, yard signs, and digital advertising, to increase your property's visibility.

Other services you might encounter include open house scheduling and contract reviews to ensure all legal aspects of the sale are in order. While some flat-fee brokers offer more comprehensive packages that include negotiation assistance, closing support, or title and escrow services, others might require you to handle these tasks independently or hire additional professionals to help.

It’s important to note that flat-fee agents are generally more hands-off than traditional agents, especially in personalized support. Sellers may need to be more proactive, managing showings and interacting with potential buyers directly. That said, for those willing to take on these responsibilities, flat-fee options offer high flexibility.

How to choose the right flat-fee brokerage

Start by looking at reviews from previous clients to get a sense of their experience. 

Were they satisfied with the services provided? Did they feel they received good value for their money? Next, ensure the brokerage is clear about its pricing structure—there should be no hidden fees or surprises down the line. Ask what’s included in the flat fee and whether there are added costs for pursuing more services at a later date.

Additionally, consider the level of support you need. 

Some flat-fee brokerages offer only the basics, while others provide more robust services at a higher cost. Think about your level of experience with real estate transactions and whether you’ll need help with specific tasks. A basic package might be all you need if you’re confident in your ability to handle the process yourself. However, if you’re looking for more guidance, consider a brokerage that offers a more hands-on approach.