The arrangement between the real estate broker and the property owner ("seller") typically requires that the parties enter into an exclusive-agency listing agreement, a listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms. The owner reserves the right to sell without paying a commission if he or she sells to a prospect who has not been introduced or claimed by any specific broker (i.e. a partially "Brokerless MLS" transaction). In return, the seller will be required to pay the listing broker a flat fee for his/her limited services provided.

This essentially reduces contractual risks between the seller and the listing broker, since the seller is free to sell (or otherwise transfer title to the real property) to any person procured by the seller (i.e. someone who is not represented by a "Buyer's Broker") without having to pay a brokerage commission or penalty. The net effect is to limit brokerage services provided, thereby giving the seller greater control and flexibility at significantly reduced costs.

 

In this instance, the flat fee that the seller pays replaces the much higher listing fee, usually 2.5% to 3.5% of the sales price, that is otherwise paid if the seller were using a full service listing broker in his/her local area. As a result, the seller will not pay the listing broker additional service fees that are typically based on the contract selling price. The seller will, however, be required to pay a cooperating brokerage fee, usually between 1.5 to 3.5 percent, stated as a percentage of the total purchase price. The title agent conducting the closing will be be instructed, pursuant to the purchase and sales agreement (or listing agreement), to disburse any fees due to the cooperating broker.

The listing fee for a “Flat fee MLS Listing” can range anywhere between $99-$699, depending on the area. Real estate brokers have traditionally charged sellers anywhere from 3% to 7% of the contract selling price, which is typically split between two brokers involved in the transaction or two agents/brokers from the same company. MLS Rules require that its members cooperate and offer compensation to other members.