Flat fee MLS (sometimes referred to as "Discount", "flat rate mls" or "fixed fee mls") refers to the practice in the real estate industry of placing pertinent information about a property for sale into the database of the local Multiple Listing Service (MLS) for a set fee or dollar amount as opposed to a commission based on the sales price of the property.
In this instance, the listing contract between the real estate broker and the property owner typically requires the broker to enter the property into the MLS and calls for the seller to pay the broker a flat fee for the service. The net effect is to remove responsibility from the listing agency and make the real estate industry's standard MLS available as a marketing tool in exchange for a reduced cost.
The flat-fee service is typically much different than using a traditional real estate broker when it comes to listing contracts. In most states, there are two (or more) different types of contracts. The first and most common is called an "Exclusive Right to Sell" contract. In this contract, the seller will not only pay a commission if their property is sold through their listing broker or another MLS broker (buyers agent), but even if there is no agent involved in the sale the full commission is due to the listing broker. This means that if a seller finds their own buyer through advertising, word of mouth, family or friends, they still owe the full commission to the broker who listed their property. This is the most typical type of contract but it is not the only type as some brokers may lead sellers to believe. The second type is called an "Exclusive Agency" contract. This type of contract creates a win-win situation for the seller. It allows them to list their property on the MLS, but also allows them to continue to sell "By Owner" and pay zero commission if they are successful in finding their own buyer. This is the typical contract sellers would be given when listing with a flat-fee broker.
The listing fee for a "flat fee MLS" can range anywhere from $200–$900 plus 1.5% to 3% for a "Buyer's Agent Commission", paid to a co-operating broker who brings a buyer. However, the commission which is normally paid to the "listing" broker is replaced by payment of the flat fee. Depending on the area, while traditional brokers charge a total of 4% to 6% of the selling price of the property, that amount typically being split between two brokers involved in the transaction or two agents/brokers from the same company. In some cases, a conventional broker will keep more commission for his office than is offered out to a buyers agent on the MLS. This can put sellers at a unfair disadvantage.