Flat-fee multiple listing service or flat-fee MLS refers to the practice in the real estate industry of a seller entering into an "à la carte service agreement" with a real estate broker who accepts a flat fee rather than a percentage of the sale price for the listing side of the transaction.
In most cases, the seller saves approximately half of the traditional commission and maintains complete freedom to sell on their own.
[1] The FTC eventually stepped in and ruled that the Flat-fee model be able to remain in place because it gave the home sellers another option which would save them money and introduce more competition to the marketplace.
The fee structure for this bundled package of services in the United States and Canada has generally been to pay a commission on the gross sales price of the property of between 5-7%.
The widespread availability of information about properties for sale has caused downward pressure on real estate fees in the United States.
A useful overview of real-estate payment practices in the United States is found in an October 2006 report by the AEI-Brookings Joint Center for Regulatory Studies.
The study notes that "real estate broker commissions are strangely unrelated to either the quantity or quality of the service rendered or even to the value provided."
However, the flat fee industry prefers the term à la carte broker because the services are not limited.
It is important that the consumer understand there is not currently any standard terminology for nontraditional real estate services though à la carte is probably the best description.
Because every State requires a listing agreement between a real estate broker and property owner, the rapid explosion of flat fee service providers has created a gap in the States developing laws governing flat fee services provided by real estate broker.
This "Exclusive Agency" is one form of agreement that can be used to allow the seller to market their property "By Owner" and pay zero commission if they are successful in finding their own buyer.
[11] While the DOJ and FTC monitor and challenge real estate laws or changes to law perceived as anti-competitive in all States, this Press Release from April 2005 is an example of their effort: "The Department of Justice and the Federal Trade Commission (FTC) issued a joint letter urging the state-created Texas Real Estate Commission to reject a proposed regulation that would change current rules by imposing new restrictions on the ability of Texas real estate professionals to offer flexibility in brokerage services.
Practicality dictates the need to outline the scope of services provided in order to create any kind of listing agreement.