Flat Fee MLS, For Sale By Owner, Home Buyer Rebates

How limited service and MLS entry only models can help homesellers in a down market.

Much of the real estate news today focuses on the "eminent" housing market downturn. What after the longest run of increasing house prices since World War II, it seems likely that the housing bubble must end at some point, sooner rather than later.

During these residential real estate market boon years, alternative discount and limted service models of real estate brokerage have proliferated and flourished. Under a "sellers market" it’s easy to understand how home sellers might need fewer services and less marketing in order to sell their homes. In a seller’s market homesellers have obviously been able to sell their homes without paying a traditional 5-7% commission because of the demand for housing.

But what happens when the bubble bursts? Won’t sellers come running back to the traditional Realtors?

Not according to Claude Davenport, President of limited service brokerage, InSight Realty. "InSight has operated in markets throughout the Mid-Atlantic since 2001. And during that time, not all of these areas have experienced the same housing boom as most of the United States has for the past 5-7 years. The tremendous success we’ve had in those areas where housing sales have been sluggish is indicative of how limited service brokerages can assist sellers in a down market." 

His point is that in a down market, the key to selling property is competitive pricing, not as many traditional agents contend, more services. By charging clients less to sell their homes, limited service and "MLS entry only" companies allow sellers to pass on those savings to their buyers thereby undercutting the competition in terms of house pricing.

Most Realtors will tell you that the ultimate amentity is price. The lower the price, the easier it is to sell a home. It makes sense then that if you are not paying a relatively high real estate commission, the largest single expense of the sale, you would be able to offer your property to a buyer for that much less thereby attracting a larger portion of the market to your home.

"If you can sell your home in a down market for 2-3% less than your neighbor because you don’t have to pay those monies to a Realtor, your going to sell your home faster." Davenport said. "You really can’t get much more marketing exposure for your home than you can with an MLS listing and posting on Realtor.com, so the differentiating factor then becomes price."

If all of the recent forecasts and forewarnings of a bearish housing market come to pass, we may find out for sure fairly soon.

See Also

• Free market suffers setback over real estate turf battle
  Attempts to ban limited service and MLS only models