In the early to the mid 2000’s when the housing market was on fire, there were all sorts of real estate pay models, or commission structures, to choose from. There were the traditional real estate agents, who typically charge around 6%, but there were also flat fee listing services, or reduced or cut rate services that provided minimal guidance and marketing.
The theory at this time was that the market was so good anyone can sell a house, and that sentiment wasn’t entirely wrong. But enter the market correction and by 2008, virtually all of these alternative pay model companies had disappeared or suspended operations, though this was also true of many traditional real estate agents. But as the market has begun to make a comeback in the past few years, and so to have alternative pricing companies, as well as the thought that anyone can sell a home.
Seattle based Redfin for example pays its agents a salary and they don’t get to share in the brokerages commission. However, they can receive a bonus for positive feedback from their clients. Other companies offer the choice of a flat fee or a commission based pricing structures, however most of the flat fee programs do not offer listing on the MLS system or other marketing strategies to let other brokers know that the home is for sale. Many companies are trying to fill the gap between for sale by owners and full scale brokerages.
So are these companies a threat to the traditional real estate model? Probably not, but it’s a good sign overall that they are coming back in business. A hot real estate market is better for everyone.