How does the NYC MLS restrict flat fee listing competition?
Inter-brokerage databases have traditionally restricted discount brokers from competing by only allowing “exclusive right to sell” listings.
An “exclusive right to sell” listing is the most commonly used type of listing agreement. It gives the listing broker the exclusive right to earn a commission by representing the owner and bringing a buyer, either through another brokerage or directly. The owner pays both the listing and cooperating (or buyer) broker fees (typically 6%, which may be equally shared with a buyer broker). The owner cannot sell the property herself without paying a commission, unless an exception is noted in the contract. Keep in mind that a commission is owed when the listing broker has produced a ready, willing and able buyer at the seller’s terms. If the seller wishes to back out after such a buyer has been found, the seller will still owe the listing broker the full commission.
Sometimes inter-brokerage databases also allow “exclusive agency” listings.
In an “exclusive agency” listing contract the owner appoints a real estate broker as his or exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect that has not been introduced or claimed by the broker. Essentially, this type of listing agreement allows the owner to not have to pay any commission if he or she finds a buyer directly.