The rise of flat fee buyer agent brokerage

Buying & Selling Real Estate
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The rise of flat fee buyer agent brokerage

Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes

Considering the current circumstances, what is stopping me if I create brokerage that is offering buyer agent only with flat fee of 5k-10k ? My job is to submit bid and negotiate only.  Buyer go to open house directly.

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Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
2y

Most attention has been directed towards buyers and buyer agency in response to the agreed upon settlement which introduces the possibility of fee shifting depending on whether a cooperating fee is offered. However, expect greater transparency and heightened consumer awareness that has come out of media attention and NAR settlement to impact the listing component of seller agency as well. Lost in all of this has been the significant role technology now plays in listing and selling real estate. I am not knocking listing agents, but majority of their time and effort is spent getting the listing. Once the property is on the MLS, it is visible through any number of consumer websites. Expect to see more brokerages reduce their fees for listing real estate as they move towards fee models that not only recognizes but accounts for the role technology plays. Especially now that consumer awareness and knowledge is at an all time high, expect the consumer to arrive at this same conclusion and ultimately demand this. I beleive offering buyer agency fees will ultimately be where sellers should allocate most of their marketing money, not in listing fees.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    2y

    Most attention has been directed towards buyers and buyer agency in response to the agreed upon settlement which introduces the possibility of fee shifting depending on whether a cooperating fee is offered. However, expect greater transparency and heightened consumer awareness that has come out of media attention and NAR settlement to impact the listing component of seller agency as well. Lost in all of this has been the significant role technology now plays in listing and selling real estate. I am not knocking listing agents, but majority of their time and effort is spent getting the listing. Once the property is on the MLS, it is visible through any number of consumer websites. Expect to see more brokerages reduce their fees for listing real estate as they move towards fee models that not only recognizes but accounts for the role technology plays. Especially now that consumer awareness and knowledge is at an all time high, expect the consumer to arrive at this same conclusion and ultimately demand this. I beleive offering buyer agency fees will ultimately be where sellers should allocate most of their marketing money, not in listing fees.

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  • Carlos Ptriawan
    OP
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Stuart Udis:

    Most attention has been directed towards buyers and buyer agency in response to the agreed upon settlement which introduces the possibility of fee shifting depending on whether a cooperating fee is offered. However, expect greater transparency and heightened consumer awareness that has come out of media attention and NAR settlement to impact the listing component of seller agency as well. Lost in all of this has been the significant role technology now plays in listing and selling real estate. I am not knocking listing agents, but majority of their time and effort is spent getting the listing. Once the property is on the MLS, it is visible through any number of consumer websites. Expect to see more brokerages reduce their fees for listing real estate as they move towards fee models that not only recognizes but accounts for the role technology plays. Especially now that consumer awareness and knowledge is at an all time high, expect the consumer to arrive at this same conclusion and ultimately demand this. I beleive offering buyer agency fees will ultimately be where sellers should allocate most of their marketing money, not in listing fees.


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  • Sebastian Bennett
    Investor · Bucks County · Member since 2023 · 196 posts · 157 votes
    2y

    I've been thinking about getting a real estate license. Not necessarily to represent buyers and sellers but more so for my own research. Do you believe it will now be more cost effective to hold a license or do you believe the expenses will go up with what I assume will be a flight from the business by low producing real estate agents?

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  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    Quote from @Sebastian Bennett:

    I've been thinking about getting a real estate license. Not necessarily to represent buyers and sellers but more so for my own research. Do you believe it will now be more cost effective to hold a license or do you believe the expenses will go up with what I assume will be a flight from the business by low producing real estate agents?


     Expenses are about to go up considerably.

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  • Manny VasquezBusiness Member
    Real Estate Agent · Orange County · Member since 2022 · 320 posts · 293 votes
    2y
    Quote from @Sebastian Bennett:

    I've been thinking about getting a real estate license. Not necessarily to represent buyers and sellers but more so for my own research. Do you believe it will now be more cost effective to hold a license or do you believe the expenses will go up with what I assume will be a flight from the business by low producing real estate agents?


     If you are getting a license just for "research" purposes, save your money.  There are many, many tools out there that you can use that don't require a real estate license.

    3Reply
  • Brian Kloft
    Investor · Arizona & Oregon Coast · Member since 2023 · 128 posts · 113 votes
    2y
    Quote from @Carlos Ptriawan:

    Considering the current circumstances, what is stopping me if I create brokerage that is offering buyer agent only with flat fee of 5k-10k ? My job is to submit bid and negotiate only.  Buyer go to open house directly.

    Why would a buyer pay you $5-10k and have to go to open houses only? They would miss out on seeing a big percentage of the houses on the market. 
    5Reply
  • Mark Brown
    Member since 2022 · 30 posts · 18 votes
    2y
    Quote from @Carlos Ptriawan:

    Considering the current circumstances, what is stopping me if I create brokerage that is offering buyer agent only with flat fee of 5k-10k ? My job is to submit bid and negotiate only.  Buyer go to open house directly.


    So I think there could be plenty "stopping you". For one is that an appropriate price point for the supply/demand curve intersection? Is this job worth this flat fee without any value being demonstrated. This means you essentially have to save buyers 3x(5k-10k) = $15k to $30k through negotiating, finding the best deals, adding value with your property management or contractor contacts, etc.

    Lawyers use flat fee, hourly, and contingency pay structures primarily. 

    In place of a flat fee I can see the transition being something based on referral (did my buyer agent get me a trades person, lender, home inspector, etc. I couldn't have gotten myself?) or best on deal value add (how many offers did I need to submit before going under contract? Did I have to waive many contingencies? Did my realtor not even advocate for me?)
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  • Sebastian Bennett
    Investor · Bucks County · Member since 2023 · 196 posts · 157 votes
    2y

    @Russell Brazil Why do you expect expenses to go up? I appreciate your insight on these forums, thanks in advance!

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    Quote from @Sebastian Bennett:

    @Russell Brazil Why do you expect expenses to go up? I appreciate your insight on these forums, thanks in advance!


    E&O insurance, MLS fees, electronic lockbox fees, association dues, contract fees, every software agents use.

    Many of these fees could be close to doubling by the end of 2026.

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  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    Quote from @Russell Brazil:
    Quote from @Sebastian Bennett:

    @Russell Brazil Why do you expect expenses to go up? I appreciate your insight on these forums, thanks in advance!


    E&O insurance, MLS fees, electronic lockbox fees, association dues, contract fees, every software agents use.

    Many of these fees could be close to doubling by the end of 2026.


     My bad. You said, why, not what.

    Because there is going to be a large drop in licensees. Less licensees paying into the pot means everyone's costs go up. Combine that with insurance raising rates not just for dropping licensee count, but also to cover increased lawsuit risks.

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  • Nadiyah MalbonBusiness Member
    Realtor · NJ · Member since 2020 · 104 posts · 31 votes
    2y
    Quote from @Sebastian Bennett:

    I've been thinking about getting a real estate license. Not necessarily to represent buyers and sellers but more so for my own research. Do you believe it will now be more cost effective to hold a license or do you believe the expenses will go up with what I assume will be a flight from the business by low producing real estate agents?


     I wouldn't recommend this for research purposes.  Holding a license requires fees.  You can simply build a relationship with a great Real Estate agent or sign up for Propstream. 

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  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Carlos Ptriawan doubt many would hire you based upon exactly what you've proposed!

    If it was me, I'd look at it this way:

    1) Paperwork: I can hire an attorney at an hourly rate to write up a purchase contract, etc. 
    -So, I'd only be willing to pay you a flat fee for that service that is CHEAPER than an attorney.

    2) Negotiating Price: theoretically, I can negotiate myself and MAY just need someone to communicate my offer(s) to seller. Not sure how well any given agent can actually assist a buyer in negotiations. If you actually can, then "put your money where your mouth is" and I'd only expect to pay you a percentage of what you could actually save me.

    3) Property Tours: not sure who much value you could add to #2 above if you didn't walk thru a property?

    I wouldn't have any problems paying an agent under terms like this for their service(s).

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  • Carlos Ptriawan
    OP
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Michael Smythe:

    @Carlos Ptriawan doubt many would hire you based upon exactly what you've proposed!

    If it was me, I'd look at it this way:

    1) Paperwork: I can hire an attorney at an hourly rate to write up a purchase contract, etc. 
    -So, I'd only be willing to pay you a flat fee for that service that is CHEAPER than an attorney.

    2) Negotiating Price: theoretically, I can negotiate myself and MAY just need someone to communicate my offer(s) to seller. Not sure how well any given agent can actually assist a buyer in negotiations. If you actually can, then "put your money where your mouth is" and I'd only expect to pay you a percentage of what you could actually save me.

    3) Property Tours: not sure who much value you could add to #2 above if you didn't walk thru a property?

    I wouldn't have any problems paying an agent under terms like this for their service(s).


     So this is not something new, I've used Flat Fee agency before and I know how these guys are working.
    It' small shop operation, 3-6 guys, with 1 TC. No open house offered, no problemo. Paperworks is not problem because to submit the bid we only need to get one docusign template. It's standard contract. There's always typical question like contingency etc etc, that's easy to solve.  Negotiation, I could use zoom/webex meeting and give advice. Flat fee Buyer agent never needs to go to the house itself. Everything is done by buyer. If they want referral, I can give some names, but they can take a look at themselves too.

    So in reality, buyer agent is doing like transaction coordinator only. I can still do my other job, LOL. 

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  • Carlos Ptriawan
    OP
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Nadiyah Malbon:
    Quote from @Sebastian Bennett:

    I've been thinking about getting a real estate license. Not necessarily to represent buyers and sellers but more so for my own research. Do you believe it will now be more cost effective to hold a license or do you believe the expenses will go up with what I assume will be a flight from the business by low producing real estate agents?


     I wouldn't recommend this for research purposes.  Holding a license requires fees.  You can simply build a relationship with a great Real Estate agent or sign up for Propstream. 


    well yea, i used to use software like propstream and i've been telling you folks I know my market much way better than my licensed real estate agent. Usually my agent is the one asking me to how to calculate ARV and find cost to fix the bathroom,etc. With software like propstream I can even look at seller mortgage details and MLS private remark.

    Getting license you only know the legality aspect of being an agent but doesn't necessarily means you would be a smarter one to get to know the market.

    The only thing that I can not do with propstream is I can not download all disclosures when I try to purchase. But I can always ask listing agent to send the link to me.

    Usually I am analyzing 2-3 disclosures every other week before I even visit the property. Most of the time it's "mehhhh"....

    I can literally selling this service to buyer lol

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  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    2y

    There have been brokerages offering flat fees and failed. One example is Purple Bricks. They barely lasted in California (they are based on London).

    The challenge is (1) you are assuming all listings have open houses and (2) there are a lot of moving parts that can happen behind the scenes. It will ultimately depend on price point and what level of service you want to provide. 

    I don't know of any top producing agents who are with discount brokers. This is mostly because they can't provide the high level of service that Buyers deserve and for now Sellers are still generally paying. 

    I think there will be a market for it and you will gain some market share, but I don't think there will be tons of profits coming in.

    0Reply
  • Albert Hepp
    Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes
    1y
    Quote from @Carlos Ptriawan:

    Considering the current circumstances, what is stopping me if I create brokerage that is offering buyer agent only with flat fee of 5k-10k ? My job is to submit bid and negotiate only.  Buyer go to open house directly.

    We have this option in Minnesota now, and it looks like in 10 other states that I am aware of (California, Texas, Florida, Virginia, mostly the big population states). Here is how flat fee buyer agency works:

    1. The buyer signs a representation agreement with no locked in period, with the flat fee buyer agency.
    2. The buyer representation agreement states that the buyer commission amount offered by the seller (usually 2% to 3%) is credited/refunded to the buyer. Yes, the buyer, not the buyer agent. This is a key difference from traditional buyer agency, where the agent keeps this commission.
    3. The flat fee buyer agency fee reduces the amount of the buyer credit/refund, generally by $6,000 (although options range from $999 to $8999, depending on how much help the buyer wants from the agent). Example: $500k home sales price, typical buyer agent commission of 2.5%, meaning buyer agent commission is $12,500. Subtract the flat fee buyer agency fee of $6000, meaning the buyer is credited $6,500 at closing. For more expensive properties, the flat fee means the credit/refund increases exponentially, like $19,000 on a $1 million property.
    4. At closing, the buyer and their lender determine whether the credit will reduce down payment, closing costs, or as a credit.
    5. The key is that using a flat fee buyer agency enables the buyer to control the buyer agent commission that nearly all listings offer. Buyers who go directly to the listing agent will not see the same savings, if they see any savings at all. Typically, a buyer going directly to the listing agent just doubles the commission that listing agent receives, will little or no savings to the buyer (or seller).
    6. The buyer decides where they want professional help, and what steps they want to do themselves.

    Have you found anyone offering flat fee buyer brokerage/agency in your area? Thanks.
    0Reply
  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    1y

    Because there is tons of competition for flat fee brokers for as little as $99. They have been around a very long time. You wouldn't be competitive with the price you stated in your post.

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  • Albert Hepp
    Real Estate Investor · Minneapolis, MN · Member since 2011 · 49 posts · 19 votes
    1y

    Flat Fee MLS Brokers for sellers have been around for a long time, but Flat Fee Broker/Agents for buyers with a cash credit/rebate of the buyer agent commission are quite new and just starting to get some market share. I predict that the substantial home price cost savings and greater control they enable the buyer to have will make them grow in popularity.

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