Where is the advantage? Sucess rate of traditional versus flat fee business model

Many times my customers ask “How successful is listing homes for a flat fee?” I have always told them that we have been very successful and cite the fact that we have closed over 100 million dollars in homes in 2006 alone. I also tell them that I would expect a full service broker to have a higher success rate of closing deals.

The logic goes like this…They are local experts and should do a better job at pricing your home. Additionally they will offer staging tips after touring your home. A traditional agent will also lock you into a set time period so most home owners give them a longer time period to be successful. That being said, I do not believe that traditional agents have any kind of home marketing advantage over flat fee realtors. Especially given that 80% of buyers look for homes on the internet and we put them on the largest real estate websites.

Today I did a quick survey of the MLS to see if I could quantify what that advantage is. I went to the MLS and looked up how many listings we sold versus how many were cancelled or expired for the last 12 months. I also looked at another flat fee brokers listings and 4 traditional real estate offices (2 Coldwell Banker offices, Baird & Warner and Schiller) data for 12 months. Now granted there is some inaccuracies as I did not account for properties that were cancelled and relisted as new listings but with the same office. Additionally the sampling was small.

I was surprised by what I found. Basically there was no difference between the two types of business models. Both models averaged out to around a 47% success rate as far as listings turining into closings. I still believe that full service has an advantage but perhaps I have given them more credit than was due.

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