Does anyone about CongressRealty.com?

Question

I am looking at a home in Arizona that is represented by Congress Realty. It appears to be a flat fee MLS company. The homeowner answers the phone when calling the number on the sign in the front yard. What are the pros and cons to buying through this company?

Thank you for your help!

Jonathan Minerick · Answer

There is one big advantage of working with a seller who has their home listed with a flat fee MLS company and it relates to commissions.

Let's say a seller signs a listing contract with a traditional agent and that agent charges a 6% commission. If a buyer comes along with an agent, that buyer's agent will typically get half of the 6% commission (3%). If the buyer does not have an agent, under the traditional listing agreement, the listing agent gets the entire 6% commission.

Now let's say the seller gets a flat fee MLS listing and offers 3% to buyer agents on the MLS. If a buyer comes along with an agent, then that buyer's agent gets the 3%. However, if the buyer comes along without an agent, then under some flat fee listing agreements, the seller pays 0 commission (this is how we set up our flat fee listing agreement).

What this means for you, as the buyer, is that if you are working with a seller who has a flat fee MLS listing, you can potentially capture some of the money the seller would save since you do not have an agent. In the above example, if you knew the seller was offering 3% commission to buyer agents then you could say offer the seller 2% less than the asking price and this would be a more valuable offer than a full price offer from a buyer with an agent. Here is how that pencils out:

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Buyer 1 (with an agent)

$500,000 offer amount

- $15,000 buyer agent commission (3%)

$485,000 net to seller

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Buyer 2 (you without an agent)

$490,000 offer amount

- $0 buyer agent commission (no agent on your side)

$490,000 net to seller

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As you can see from above, the seller would make more money with a lower offer from you - and you have less debt than if you were represented by an agent.

Tyler Williams · Answer

Jon is accurate in his assessment. Regarding Congress Realty, I know they sell an astronomical # of homes in the state of Arizona.  I'm unsure about other states.

Leslee Wilson · Answer

@Jon Minerick thank you for the info.

UPDATE:  We are passing on this house.  Our hunt continues......