Why won’t agents do a NYC Flat Fee MLS Listing in NYC if it’s potentially a way to drum up business and brand awareness? Are they just too used to earning 6%?
First of all let’s define just what a flat fee MLS listing in NYC is:
A NYC Flat-Fee MLS listing is a way for a FSBO seller to list his/her property in the city’s broker database without having to pay 6% to a traditional listing agent.
Typically a FSBO seller will pay a discount, or “flat fee” listing agent, up to $2,000 upfront to list their property on their local MLS (Multiple Listing Service).
In NYC, there is not actually a dominant and traditional ‘MLS’ database. This is because there is no dominant National Association of Realtors (NAR) related MLS in the city that’s used by all of the city’s brokerages.
If NYC doesn’t have a traditional MLS, how is a NYC Flat Fee MLS listing even possible?
Instead, most brokers use the equivalent inter-brokerage database which is called the RLS (REBNY Listing Service). This broker database system is accessed by buyer’s agents through a variety of REBNY approved RLS vendors such as OLR, Nestio, RealtyMX or RealPlus.
In order to list on the NYC RLS broker database (MLS equivalent), a FSBO seller must sign a flat-fee MLS listing agreement with the discount broker. This is typically an “exclusive agency agreement” or a modified “exclusive right to sell agreement”. This agreement makes it clear that the broker is offering limited service to the FSBO seller in exchange for the FSBO seller having full responsibility to respond to buyer inquires and conduct showings.
If a buyer comes through a buyers’ agent (most likely because of the brokerage database) and the FSBO seller accepts an offer from a represented buyer, the seller will have to pay the buyer’s agent commission he agreed to offer in the REBNY RLS. However, if the ultimate buyer is an unrepresented buyer, the seller has lucked out and ends up paying no percentage points in brokerage commissions.
Now this seems like a clever idea and an easy way for a broker short on listings to drum up some business, appear to have more listings and make a quick buck upfront for some data entry work.
However, a flat fee MLS listing in NYC continues to be a rarity. Why?
Let’s first review some of the upsides for agents:
Agents get exposure and the appearance of success with their listings all over the web
Agents make some cash upfront for inputting the NYC flat-fee MLS listings
Agents may convert customers to full-commission, full-service
Now let’s consider some of the downsides for NYC agents:
Damage to the agent’s reputation. Remember that these are ultimately For Sale By Owner home owners, not professionals. For most of them, it is their first or second foray into real estate.
FSBO sellers could ask silly questions, not respond in a timely manner or at all, get in arguments with buyers’ agents, incur MLS fines or penalties on the agent or hinder showings or open houses with their inexperience.
Even if an agent’s state doesn’t have minimum service level requirements or liability for Flat Fee MLS Listings, everything a FSBO seller does reflects on the agent. Since FSBO home sellers often refuse to pay for professional photographs to save money, they’ll usually have terrible photos which means the agent’s listings have terrible photos.
And if the agent is trying to hide the fact that he is doing flat fee limited service listings, forget about having the client protect the agent’s reputation. For Sale By Owner sellers are by definition penny pinchers, ruthlessly focused on saving the maximum amount of money for themselves, and will more often than not be willing to throw their flat fee listing agent “under the bus.”
Doing a flat fee MLS listing in NYC can result in confused buyers’ agents and the appearance that the listing agent has an “out of control” client.
How can I use a NYC Flat Fee MLS Listing Package if most agents won’t offer it?
NYC FSBO sellers have faced a number of problems over the years which have resulted in a historically high failure rate. These problems mostly centered around the poor quality of the available NYC Flat Fee MLS listing package providers.
Here are a few of the problems that NYC FSBO sellers had and still have with their NYC Flat Fee MLS companies:
National NYC Flat Fee MLS Companies – Problems:
Lists NYC FSBO seller properties on the wrong MLS. Even today we continue to hear stories of NYC FSBO sellers hiring a national FSBO company who doesn’t know that RLS is the main broker database in NYC. What good is being listed on the New York State MLS when it’s not used by any of the biggest buyer’s agents in NYC?
Doesn’t list your home on StreetEasy. Considering that most NYC home buyers don’t even know what Zillow is, not being listed on StreetEasy is an unforgivable crime which legitimately decimates your chances of selling for the highest price or selling at all.
Expensive. We still can’t believe that many of these national FSBO companies still get away with charging FSBO sellers up to $2,000 for the wrong MLS listing in NYC!
Shameful customer service. Most of these national FSBO companies have no awareness of the local NYC real estate market and probably barely know their network of flat-fee broker affiliates. This means that as a FSBO seller, you may have a very hard time making changes to your listing or being paid attention to at all.
Local NYC Flat Fee MLS Companies – Problems:
Poor reputation. From the moment a NYC brokerage begins marketing itself as a ‘discount broker’, many of the city’s traditional buyer’s agents will begin to boycott the discount brokerage and steer clients towards listings from traditional, full-service agents. The rationale behind this is simple. Buyer’s agents who make a livelihood of earning 6% commission on deals don’t want to help out brokers who challenge the status quo by charging less!
Unreliable. As a NYC FSBO seller, you’ll want to be sure that your NYC Flat Fee MLS provider is reliable and takes you and your listing seriously. Many small ‘mom and pop’ shops in NYC don’t necessarily have the reliability and responsiveness which, even as a FSBO seller under a limited service arrangement, you’d expect from your flat-fee broker.
Hauseit’s NYC Flat Fee MLS Listing Service solves all of these problems. How?
Hauseit is New York City’s largest, most experienced and reliable NYC Flat Fee MLS Listing company. We were born in NYC and have an intimate familiarity of how the city’s real estate market actually operates.
Our benefits to NYC FSBO sellers include all of the following:
We list you on the correct MLS in NYC – RLS
We list your home on StreetEasy
We have excellent customer service (check our reviews everywhere online)
Our affiliates are all full-service, REBNY member firms with excellent reputations
We are reliable and available for our clients
Our NYC Flat Fee MLS product works
Upgrading to a Full-Service Listing Agent
If customers upgrade to full service they will typically use another broker than the one used for the NYC flat-fee MLS listing.
Many agents get tantalized by the prospect of doing flat fees listings in the hope that the sellers will eventually tire of going it alone and will upgrade to full-commission, full-service. The truth is, they often do, just not with the flat fee listing agent.
The thing is, once sellers have worked with a flat fee listing broker, they don’t view said listing broker as a viable alternative once they want full service. The problem is once an agent performs a flat fee listing for a client, the client doesn’t view them as a real broker anymore. So when it’s time to choose a full-service listing agent, the flat fee listing agent won’t typically even be a candidate the seller will consider.
They won’t be any more likely to purchase their home through the flat fee listing agent. We’ve seen many cases of brokers who will offer a flat or reduced fee to list a client in exchange for a promise to buy their next home through them. The problem is For Sale By Owner sellers are for the most part 100% only in it for themselves.
Any promise or goodwill the agent thinks he has can’t be relied upon. We’ve rarely ever heard of a case where a FSBO home seller pays back the favor to a flat fee listing agent by buying their next home with him. And in a city of extremely demanding, aggressive Type A personality people like NYC this is often after they’ve worked the flat fee listing agent like an indentured servant.
NYC FSBO Seller Nightmares
FSBO sellers can waste a lot more of the agents’ time than expected.
We’ve heard horror stories from listing agents about countless hours wasted on re-ordering photos, editing descriptions, non-stop status changes, and endless phone calls for advice. This is an especially acute problem for agents doing a flat fee MLS listing in NYC because the clients happen to be the most demanding, type A personality people in the country.
It is especially ironic because many New Yorkers are so focused on the bottom-line that they almost never stop to realize that they signed a limited service listing agreement and only paid a few hundred dollars vs the average $100,000 broker commission in NYC.
The most egregious example we’ve heard from listing agents is a customer who emailed and called at all hours of the day with the most extreme and unusual of requests, including at one point asking the listing agent to investigate and find out the support email of a search website which was almost impossible to find.
This was after the customer had made numerous listing customization requests on third party websites which were not controlled by the listing agent. Guess what, when the FSBO seller decided that things weren’t going exactly her way, she chose a full service listing agent without even giving the flat fee listing agent a chance.
The listing agent found out by an email one morning the customer sent, copying the new full-service agents, to cancel the listing agreement. Absolutely brutal.
This is an example from one of our partner listing brokers who experienced abuse from the overly aggressive wife of a flat fee RLS listing customer. The wife of this customer had not bothered to understand the limited service nature of her “owner managed” listing. She had somehow expected the affiliate listing broker to coordinate her showing by phone which is completely unreasonable for someone who paid nothing versus 6% of their home sale price in commissions.
Hi boy, the world does not just work on email, especially in real estate which you should know is about real time responsiveness. Why was the buyer’s agent under the impression you would meet her. This is not good. Are you based in NYC or are you in a call center in India somewhere? Trust me, I get asked if I can recommend Hauseit all the time and I am not impressed in the least. I am not someone you want to displease. If you were really sorry you would get on the phone with Ian or myself to figure out how we connect with the buyer’s agent NOT by email but by phone like real REAL ESTATE agents. Are you a real estate agent or a call center boy?
Our affiliate listing broker addressed this with a very professional response:
Rebecca / Joseph, I just got back to my desk and want to address this immediately! I do apologize for the brevity of my previous emails. I just came back from showings for the day for our full commission listings. Our offices are in TriBeCa [address redacted]. We have 39 exclusive sale listings in NYC with over a dozen in contract. We are a full-service REBNY Member Firm and the $399 option is only something we’ve tried recently with Hauseit primarily for the prestige of additional listings and referrals.
I want to make sure we’re on the same page in terms of expectations since you are paying nothing versus $89,000 in commissions (6% x $1.485mm). The $399 listing package is an owner managed option. We are only responsible for forwarding you inquiries per our listing agreement. This option does not come with phone support. However, you have been forwarded every text and voicemail (automatically transcribed).
I am happy to call you on a one-off basis to make sure we are on the same page. Phone support and additional advice for the $399 plan is normally available here. Thank you.
NYC FSBO Seller Harrasment
Other firms will harass and try to convert listings they discover to be flat fee. This can become a major issue once other brokerages begin to assume that all of an agent’s listings are flat fee. As you can imagine, this can be a major impediment to business if the agent is trying to balance both a flat fee and a full service business. This is a major issue for home sellers to consider before choosing a flat fee MLS listing in NYC provider.
Often times they are a one man shop without proper listing syndication reach or the right brokerage database access; moreover, because they typically do this full time most full-service brokers may either ignore their listings or treat them as a fresh source of potential listing conversions.
As you can imagine, there are more costs than benefits for most agents to providing a flat fee MLS listing in NYC which is exactly why it is so uncommon. Hauseit works exclusively with full-service listing brokers who enjoy the occasional boost to business without compromising their reputations.
We offer a self service, full NYC listing package where the FSBO seller is listed on StreetEasy, REBNY’s RLS Database, OLR (On-Line Residential – NYC Broker Database), Nestio (NYC Broker Database), RealtyMX (NYC Broker Database), RealPlus (NYC Broker Database), Realtor.com, Agorafy, Placebee, Padlister, NYBits, Naked Apartments, Hotpads, CitySpade, Zillow, Trulia and dozens more – all at once!
Has Anything Changed in the New Decade?
With the popularity of shows such as Million Dollar Listing, real estate agents are as hesitant as ever to become discount brokers in NYC and nationwide. The truth is, no one becomes a real estate agent to earn a flat fee. They become a real estate agent because they see on TV how much 6% on a multi-million dollar condo in Manhattan is.
Furthermore, the same problems plaguing the flat fee MLS industry that we described still exists. It simply doesn’t make sense for even most discount brokers to completely ruin their reputations by accepting flat fee listings, and thus essentially being treated as some sort of gimmick or robot by other agents.
This is evidenced by the closure for new business of RealDirect, which was a former flat fee MLS listing provider and discount broker in the city. Per their website, they are no longer accepting new customers and are focused on a new direction based mostly on their technology.
Fortunately for consumers, Hauseit is here to stay and will continue to offer flat fee MLS listings both directly (as of 2020) and through our brand name partner brokerages. Drop us a line and get started with your listing today!
Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided. Hauseit LLC is a Licensed Real Estate Broker, licensed to do business in New York under license number 10991232340. Principal Office: 244 Fifth Avenue, Suite 2950, New York, NY 10001.