HOUSEPAD LLP Study Finds Low Commission Dispute Rates for Flat Fee MLS Listings

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Do flat fee MLS listings have more legal problems than traditional full service listings? Preliminary data over an eight year period suggests flat fee MLS listings have a lower rate of commission disputes with a cooperating broker than full service listings.

HOUSEPAD

After 19,000 flat fee MLS listings since 2003, so far there have been only 3 arbitration cases involving a commission dispute.

Are For-Sale-By-Owner's (FSBO's) more or less likely to get into disputes? Based on a flat fee MLS broker's historical data, commission disputes appear to be extremely rare among flat fee MLS listings. HOUSEPAD LLP has done over 19,000 flat fee MLS listings since 2003, and so far there have been only 3 arbitration cases involving a commission dispute with a cooperating broker, for an occurrance rate of less than two hundredths of one percent (0.0157%).

This data cannot currently be compared to the overall arbitration rate, because the National Association of REALTORS (NAR) has not currently released data on the number of commission dispute arbitration cases that it handles. MLS and REALTOR rules normally require commission disputes to be submitted to arbitration prior to court action.

Ryan Gehris, a broker with Housepad, comments that "this goes against the common claim that FSBO's are more likely to get in legal trouble. We are dealing with a large dataset here, and we have been amazed at how few claims have resulted from transactions in which the owner is managing the sale." FSBO's typically use flat fee MLS listings as their preferred method of marketing to the brokerage community.

"This also should reassure agents that they can attempt to sell flat fee MLS listings without fear of their commission not being protected," Gehris adds. On flat fee MLS listings, the selling broker is paid the same way as on traditional listings, which is the closing company debits the seller for the commission amount, and writes a check to the selling broker at settlement.

About HOUSEPAD LLP: The company specializes in listing property on behalf of for-sale-by-owners or real estate investors on a limited service, flat fee basis. The brokerage services for sellers are set up as a real estate equivalent to online stock trading.

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Ryan Gehris
HOUSEPAD LLP
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