Why We Charge a Flat Fee to Buy but a Percentage to Sell | Disclosures with Nick & Dave

Episode summary

If you loved the flat fee on the buy side, you might expect us to do the same thing to sell your home. We don't — and this episode is the case for why that isn't a contradiction, it's the same principle pointed in the opposite direction.

The whole Tartan Team ethos is aligned incentives. On the buy side, a percentage is broken: your agent gets paid more when you spend more, even though you hired them to spend less. On the sell side, the incentive flips and finally works for you — if we get you an extra fifty or a hundred grand, we make a little more too, and you're not complaining. A flat fee to sell would do the opposite: it would reward a fast, cheap close over fighting for your last dollar, turning representation into a volume game.

Dave and I walk through exactly how our listing model works: full-service representation at 3% on the first $600,000 and 1.5% above it (and why that breakpoint isn't arbitrary — it's our median price, and marketing costs don't scale linearly past it), a flat 1.5% limited-service tier that keeps 100% of our judgment and legal representation but hands you the marketing and open houses, and hourly non-agency consulting for true FSBOs. We get into what it actually costs to market a home right ($4–5k before it ever hits the market), the FSBO trap of talking yourself out of leverage at your own open house, and an honest take on the flat-fee listing platforms (HomeCoin, List With Freedom) — why we respect them, and why we won't try to become a tech company to compete with them. Plus a teaser on the Zillow / MRED / Compass MLS fight we're watching. The takeaway even if you'll never work with us: commission is 100% negotiable, so get creative with your listing agent.

Hosted by Nick Aufenkamp and Dave Miller of The Tartan Team, brokered by Real Broker, LLC. Serving Clark County and Southwest Washington.

In this episode

[01:41] Quick teaser: the Zillow / MRED / Compass MLS fight (more next week)
[03:35] The plot twist — flat fee to buy, but percentage to sell
[05:37] Why a percentage actually aligns incentives on the sell side
[08:02] Why a flat fee to sell would just reward a fast, cheap close
[09:24] Full-service pricing: 3% on the first $600k, 1.5% above
[10:24] What it really costs to market a home — $4–5k before it hits the market
[12:52] Who full service is for
[14:51] Limited service: a flat 1.5%, and where the trade-offs are
[18:24] The big difference — no open houses, and why that matters
[19:41] The FSBO trap: talking yourself out of leverage at your own open house
[22:08] Who limited service is really for
[26:08] The calculators: compare full, limited, and traditional
[26:57] HomeCoin, List With Freedom, and why we don't compete on $100 listings
[30:21] What "representation" actually means to us
[35:04] The pushback we've gotten — and the takeaway if you'll never work with us

Links from this episode

Episode 3 — Why We Charge a Retainer to Help You Buy a House — the buy-side flat-fee and retainer model
thetartanteam.com/sell and thetartanteam.com/pricing — side-by-side calculators comparing full service, limited service, and a traditional agent
Book a free consultation

Transcript

Lightly edited for readability.

Nick (00:00): Hey, welcome back to Disclosures with Nick and Dave. I'm Nick, and joining me is my wonderful co-host, Dave Miller. Good to be with you — what's going on, dude?

Dave (00:05): It's been a good weekend. Pouring down rain, though. I was thinking Saturday was nice — I know you were out on a soccer pitch getting rained on, getting soggy. I was inside sipping chai and playing cribbage, so my weekend was pretty good. A wonderful October day at the end of June — which is why we all love the Pacific Northwest. That's why everyone wants to live here.

Nick (00:34): Hey, it's up and coming. The classic retort is, "Well, it keeps it green." That's true. And I actually had such a dad moment — I promise, listeners, we'll get on with the show — but it's been a very rainy week, and it's going to rain a ton leading up to the Fourth of July. The kids were bumming about it, and I said, "You know, of all the weeks of the year to get a bunch of rain, this is the best one, because it means a lower chance of forest fires during fireworks season."

Dave (01:14): You should get on the Smokey Bear commercial. That's the next stage in the career — from realtor to forest-fire-awareness guy. I mean, you've got the stepping stone: you're headed off to write about the Zillow lawsuit.

Nick (01:28): Yeah, exactly — see who I can rub shoulders with in court who might give me the right introduction to Smokey himself. But more on the Zillow/MRED thing — let's pin that and talk about it next week. Zillow's flying me out to sit in on this hearing in the massive battle between Zillow, MRED, and Compass. For most of our listeners, that's like, "Okay..." The quick teaser on why it's important: MRED is the local MLS in Chicago, in Illinois, and there's a lawsuit about which listings can be private and which have to be public-facing — a dispute between Zillow and the local MLS there. It has implications for our local MLS, for setting precedent in the nation at large. That's why we're interested in what's going to happen.

Dave (02:44): The devil's always in the details, and most people don't pay attention to the details until it looks like the devil.

Nick (02:50): Well said. We'll do a follow-up — make sure you subscribe to the show so you don't miss it. But that's not the topic du jour for this episode.

Dave (03:05): Not at all. What are we talking about today? Considering last week we spent so much time on buyer agency — what The Tartan Team is doing on the buyer-agency front, the retainer model, flat fee, all of that — it makes sense to talk about the listing side, and whether there's anything unique we do there.

Nick (03:27): If you heard last week's episode, you might think we're about to tell you that we do flat fee with a retainer on the listing side too.

Dave (03:35): That would be so simple, right? But we've never been accused of keeping it stupid simple.

Nick (03:44): So if you loved the flat fee on the buy side — just wait until you click that sell-side tab, because it's back to percentages. And people are probably wondering why.

Dave (04:00): Great question. Hence today's podcast. Let's dive into listings and representing sellers, because it's still different from what most agents here in Clark County / Southwest Washington do — but it looks more traditional than our buy side, for sure. We still offer multiple tiers. We have full-service representation, and what we call limited-service representation. Honestly, we need to work on the name for that, because "limited service" is an actual term in the real estate industry that carries slightly different connotations — our limited service is more full-service than most limited-service agents. And then we still have non-agency consultation: if you want to sell your home on your own, FSBO, but you just need a few hours of our time to talk through some things and help with negotiations, we can do that with a non-agency agreement.

Nick (05:18): No matter the tier — well, the consulting is hourly, but between full service and limited service, we're doing percentages. And why? Back to our mantra.

Dave (05:37): Alignment of incentives.

Nick (05:41): It's a good mantra. So the reason — and we'll dive into the specifics of some of the negatives around what you think of as flat-fee, limited representation, and some of those products and services from other brokers — is that the representation is often poor. You pay them a price to list your home, and they just kind of throw it up on the MLS, do a really basic marketing package if anything, bottom-dollar photographs, and see what happens. It's a low amount of time for the agent and pretty low risk — sort of a "get what you pay for" situation.

Dave (06:26): And back to the ethos of The Tartan Team, incentives always need to be aligned. So, the opposite of the buy side: if your house sells for more, yes, we make slightly more money — but we're also incentivized to get you more money.

Nick (06:51): This is why salespeople have pretty much always been on commission — why it's been such a popular compensation model. Think about the folks selling cars, or selling windows, or whatever it may be: they work for the company that's doing the selling, and the higher the price they get for their employer, the more they get paid, because in that case both the employer and the salesperson win. So commission makes sense. On the buy side — we talked about it in the last episode, and if you're curious, go listen to that — that incentive structure breaks down, because as a buyer you're trying to get the best possible deal and terms on a home. So if your agent gets paid when you spend more, that's kind of messed up. But on the sell side, if your agent is able to get you an extra fifty or a hundred grand for your house, you're probably not complaining if your agent also makes an extra couple thousand dollars by getting you all that extra cash.

Dave (07:57): It's a good incentive. And going back to the negative side we talked about last week: sometimes, if agents are busy, they'll cut a sale short. If you had no incentive to push harder to get your seller every last dollar you could get them for their property, you might not push as hard in negotiation, because you just want the sale to close — you don't want the house to fall out of contract over an extra fifty grand. So if you were, hypothetically, flat fee on listing, you don't have any incentive to push hard. Your incentive is to close the deal as quickly as possible, before your ninety-day or six-month listing contract expires.

Nick (08:48): It purely becomes a volume game at that point — the more transactions you can close, the more money you can make. And again, representation kind of goes out the window. So let's talk about what our full-service tier looks like, and how it might differ from most agents a home seller would meet with across Clark County.

Dave (09:24): Our structure for full service is: we charge three percent on the first $600,000 of the sale price of the home, and then one and a half percent on any money above $600,000. You want to explain the reasoning for that?

Nick (09:46): As we look through our business, our median price point is right around $600,000, so it's not purely an arbitrary number — that's just sort of where the median is. The second piece is that the cost to market and present a home really doesn't scale linearly after that $600,000 point. Whatever costs we're going to incur for full service — which are significant — we spend over a thousand dollars any time we're doing media. Oftentimes we'll do full staging, which generally runs two to three thousand dollars. We've got a ton of print materials, which — I think you were giving me the side-eye a couple of weeks ago when you saw the bill.

Dave (10:46): It's surprisingly expensive to really market a home. And there are different strategies for what works given the circumstance — that's a big part of the discussion with our clients. But to sum up what Nick's getting at: there is serious cost to the agent to market a home properly, at least for the way we do it. Not every agent is going to spend that kind of money, or they're not going to take it all on — they might make the client pay for staging.

Nick (11:15): But with our full-service model, because we care about it being done to our standards, being done right, we want to take on the responsibility for those things. It does mean we're often out four or five thousand dollars before the home ever hits the market. So we recognize that in that first up-to-$600,000 price point, three percent is sort of the minimum we're going to need for the business to make sense — to recoup at least those costs and have some compensation for our time. But the one and a half percent for everything over $600,000 is in recognition that, hey, if we're helping you list your $1.2 million home, yes, there are going to be some additional costs related to the marketing, the photography, the staging — those things might be a bit more expensive, but only marginally so. They're not going to be twice as expensive as what it costs for us to get media and staging for a $600,000 home. So, in having transparent and aligned incentives, we wanted a fee structure that acknowledges that and doesn't penalize somebody just because they've got a more expensive home.

Dave (12:50): Now the question is — who would you say full-service representation is for?

Nick (12:52): Full-service representation is going to be for people who are busy, who might not have experience selling their homes, people who maybe don't have nice furniture — well, hopefully you have nice furniture — or maybe you have very specific taste. Maybe you're out of state, or you've got a quick sell that you're trying to leave, and you want top dollar for your home. Or you're just a busy professional. It's everything you would expect from any top-of-the-line realtor in Clark County.

Dave (13:36): And as with the buy side, just because we're somewhat cheaper for certain sellers doesn't mean we're fundamentally competing on price. Our fee structure is designed to reflect the actual cost of the work and the time it takes to do it — not necessarily just to capitalize on a larger commission because the cost of the house is higher. I'd probably put any of our full-service listings up against any other luxury top agent in Clark County and would not be concerned.

Nick (14:15): Our listings show unbelievably well.

Dave (14:32): I'd agree. Who would you add into the pool of people full service is for?

Nick (14:42): I'd say it's most people. And that's really figured out in conversation — what you're looking for, what your circumstances are. But as we move into limited service and who that's for, the question really comes down to math: there are other options we want to present you with, and limited service does make sense for some people — but is the difference in fee between what you'd pay for limited service (or even for-sale-by-owner with some consulting) versus full service worth it? That's calculated by whether we help you get a greater return by being fully in charge of the marketing and putting everything we have behind the listing. Based on the price point and positioning of your home, we figure that out together, so it's never really a mystery about what makes the most sense for you.

Dave (15:52): For the majority of people who list with us, it makes sense to go full service. So maybe a better way to flesh that out is to explain what limited service is in more detail, so people listening can think, "Yeah, I can overcome these potential pitfalls, the downsides of having less support, in order to save."

Nick (16:21): Save the one and a half percent on that first $600,000. So with limited service, the fee is just one and a half percent — flat, whatever the price point of the home is, it's one and a half percent. And really what it is: you're getting our judgment, you're getting access to us for every step of the home-selling process. We're dialed in; it is true legal representation. But there's not nearly as much of the in-person help, nor as much of the marketing dollars. There's more you're taking on with the limited-service tier. When we talk about photos or staging, those are costs you're going to take on yourself. We'll make recommendations and help you get connected with photographers and stagers, but essentially it's a trade-off: you're willing to take on some of that risk, and you're leaning on us for the judgment layer, the legal protection, the negotiations. There's really not much need for us to even be in person that much on the limited-service tier. And that's where limited service mirrors what we're doing on the buyer-agency side, where it's more like virtual representation.

Dave (17:51): How would you—

Nick (17:58): That was a good overview. I'd say the main distinction, as you said, is that we're not going to be in person. In my opinion, for photos, staging consults, walking the house — that becomes a marginal difference.

Dave (18:24): I'd say, especially given some law changes, the big difference is we're not going to throw you any open houses with limited service. Some agents don't really believe in open houses anyway, and in some circumstances they don't make a huge difference, but I think we're aligned on the idea that open houses are a good thing. They're very effective at bringing foot traffic to the property and getting eyes on it. There are a lot of notifications that get sent out from Zillow and Redfin and the other websites when you schedule an open house with the MLS. So that's the main difference — the thing you'd miss that could really move the needle.

Nick (19:18): And that's to say — we're fine if you hold an open house yourself. We'd encourage it. But this is where we start to flesh out who this is really for. If you're throwing your own open house, you're going to be talking to a lot of potential buyers for your home, and if you're not a salesperson, if you don't have experience in sales, this is where the protection of having somebody insulate you from your buyers really starts to become important.

Dave (20:08): I'm sure you could tell as many stories as I could. I was at an open house last weekend, and a neighbor came over and asked what I thought we could do for selling his house — and he volunteered a ton of information. He talked to me for almost an hour. That was all fine; he knew I was an agent. But now, just think hypothetically: if I had a buyer for the property he wants to sell, I now have a lot of information about his price, terms, and motivation — and those become really useful as leverage in negotiating. So if you're a seller holding your own open house, that's the big takeaway: you need to be confident that you're not going to volunteer information that hurts you or works against you with your potential buyers.

Nick (21:08): And that's a thing we've seen so many times — and no shade on for-sale-by-owner folks, but it's the trouble they often get themselves into. The two things FSBOs get made fun of for: posting photos they took off their iPhone, and then, in interactions with buyers and their agents, being really aloof or saying too much — talking about the rager the neighbors were throwing the night before, and hurting the value of their home in the neighborhood. Of course, we're all about disclosure — that's the name of the podcast — but there's a difference between what you have to disclose and how you frame it.

Dave (21:38): The ragers your neighbors are throwing every night, that are ultimately what's driving you to move — we might approach that with a different strategy. So with limited service, we recognize there are a lot of folks — it's amazing how big the real estate industry is — who either had their license once, or worked in sales, or are mortgage professionals, and it's like, "Yeah, I'd like to have an agent representing me. I like the legal cover of E&O insurance, of having a deal run through a brokerage. I like to have one step of intermediary, so that when I get offers, or when I'm handling negotiations, I've got Nick and Dave to be my voice and my advocate, and it's not just coming directly from me."

Nick (22:38): And that's something I think we're really, really good at — hearing what your concerns are, hearing your position in negotiations, and then representing you in the very best possible light, while being able to dial back any potential emotion. Because it doesn't help — even if the buyer's being an a-hole — for you to fire off a quick email saying, "Stop being an a-hole." We can be that buffer, so that you can communicate "this is unreasonable" in a way that still hopefully moves the deal forward and gets things done.

Dave (23:31): We see it so often — even before things go to contract — people have an emotional attachment to their home. That's not to throw shade at anyone; it's understandable. It's a place where you spend a huge amount of your time and make hopefully wonderful memories with your family and friends. So, especially as things are turning in the market — becoming less of a seller's market — people sometimes have a tough time being objective about the price of their house. That's a huge part of what we bring, with both full and limited service: making sure you don't price your home too high and turn it into a stale listing that won't move, just racking up days on market.

Nick (24:27): For what limited service costs, in my opinion, you get a phenomenal deal.

Dave (24:44): There are a lot of people very interested in this with us. Have we done one yet? We've done a couple of hybrid deals — this is relatively new. Just because you tell everyone in your network you're rolling something out doesn't mean they're suddenly interested in moving. But we've done a couple of hybrids.

Nick (25:07): I've done two in the last year — one that's closed, one that's coming up. I mention that to say people are excited about this. People are excited to have another option. Like we said at the start, it's not for everyone, and we're not here to push you into one or the other — but we will make a recommendation. Whatever money you can potentially save going limited with us — whatever we end up renaming the middle tier — if we really think you're in a circumstance where it makes more sense to go full service, that difference in commission saved might be lost on the sale of the home. And we'll tell you if that's our opinion. Ultimately, though, it's your choice if you're choosing to work with us.

Dave (26:08): And on the website — thetartanteam.com/sell — we've built some calculators that help you really see it. You can also go to thetartanteam.com/pricing, and there's a side-by-side that lays it out: if your house sells for this price, what's the cost for full service versus limited service versus working with a more traditional agent? So even at a very high level, check that out — but these things are always best had in conversation. If you're really curious, just book a free meeting with us, and we'd love to chat through your situation.

Nick (26:27): What you were talking about raises an interesting question for me, because there are a lot of other companies that I honestly think very highly of — HomeCoin is a big one, List With Freedom is another — where, if you Google "flat-fee limited-service representation," they're the ones that own the SEO on this. So if you're looking for a cheap listing to just get your home on the MLS, there are platforms that exist for that. I've actually connected with the CEOs of both of those companies. I think they're great people, and they're building a product for a unique need. One question I've gotten is, "Hey, why don't you build something to compete in that space?" We touched on this somewhat earlier, but now would be a good time to double-click on why we don't just offer, "Pay us a hundred bucks and we'll put your home on the MLS, and everything else is on you."

Dave (27:44): We'll see what your answer to the question is, but ultimately I think it comes down to systems. You and I are active brokers in the state of Washington, helping people here in Clark County, and we only have so much capacity. The two companies — HomeCoin and List With Freedom — are, in a way, almost more tech companies than real estate brokers. Granted, they are brokerages, or they work within a brokerage — I'm actually not sure how each of them is set up — but they've put the money into their systems and online portals to process people who want to list their home with very little... no frills.

Nick (28:51): And that's not entirely true — there are a few services, but usually bolt-on. It starts at a hundred bucks, and then you add this service and that service and this one, and it can get up to two grand, twenty-five hundred. I think the fast answer is: you'd almost have to be a web developer, a tech company, to produce a product that would serve our clients as well as those services do. And neither of us has the time or the energy to compete with them at that level.

Dave (29:26): There's going to be twenty grand in coding — well, Claude does, but—

Nick (29:26): You don't have a background in coding. I mean, Claude does. But you didn't get into this to be a tech-company founder-operator. And a lot of these sites have either an AI assistant, or — before AI was as good — twenty-four-seven support, virtual assistants, people on staff who can get back to you. Hypothetically, if we did that, we could be inundated with an incredible amount of paperwork that would remove our ability to be the reasoning and guidance for our active customers, both full service and limited service. So — how's that for a rambling answer? It comes down to capacity and our ability to serve our customers.

Dave (30:21): I love it. And that ability to serve our customers, we define as truly representing you as a client. Agency, at its heart, is representation.

Nick (30:49): And that's my biggest concern — the thing I don't like about the typical limited-service flat-fee model is that it's generally not true representation, because it's such a volume game. Those companies have thousands of listings at any given time, so you're not getting a personal touch. Nobody actually knows the details of your property. When offers come through, you're the one stuck on your own to negotiate it — or maybe you can get hold of one of those virtual assistants who'll help in a very generic way, but they don't know you, they don't know your home, they don't know the neighborhood, and they haven't been in any conversation with the buyer or the buyer's agent. So they're just shooting from the hip with general principles. Maybe that helps, but we care so much about actually giving good strategic judgment and getting you to the outcomes you want, that in whatever tier of service you choose with us, that's never sacrificed. Whether full service or limited service, you're getting a hundred percent of our judgment and attention on your transaction. The only real difference is that with full service, we're taking on the upfront costs of marketing and doing it to our exact standards, versus limited service, where you're taking on a lot of those costs.

Dave (32:25): And then there's the physical presence. With full service, we'll be at your house holding open houses, meeting with unrepresented buyers, meeting with you in your home, walking through it — versus limited service, which is built in such a way that we can give you that judgment layer and negotiation assistance, but without nearly as much physical presence. No open houses; we don't need to walk the house with you, because we're able to get what we need through photography and all of that.

Dave (32:55): And for people who might still feel like, "Your middle tier, your limited service, is still too expensive" — we acknowledge that, and that's why we also offer the consulting. That's the closest thing to one of those services: there's no fiduciary duty, no actual agency. That option is for if you're a true FSBO, or if you're using one of those services to list.

Nick (33:25): You could get really creative here — do your hundred-dollar "get on the MLS" through HomeCoin, and then consult with us. But you hit the nail on the head: we're not interested in competing on the pure numbers-and-volume game.

Dave (34:03): I'd be so curious — maybe we'll do a follow-up on how effective those websites actually are. That could be its own whole little podcast.

Nick (34:05): Let's dig into the research, because I do think it'd be fascinating to see the data — what average days on market look like, list-to-closed price ratios, and how those stack up compared to more traditional full-service agency.

Dave (34:34): I'd really love that.

Nick (34:34): Any other thoughts? I feel like a broken record, but — in terms of conversation: of course, if you're thinking about selling, we'd love to talk about it. You can book a meeting on the website, or shoot us an email: nick@thetartanteam.com, dave@thetartanteam.com.

Dave (35:04): But I'd also really love to hear what pushback you have. It's fascinating — when we posted the flat-fee retainer model on the buyer-agency side, we got a few comments, a few people who reached out through LinkedIn. Some of them positive, and others with pushback — like, "Have you considered how flat fee might..." The main criticism was that flat fee incentivizes volume over anything else.

Nick (35:32): To which I say — haha, retainer model. No, it doesn't. But I digress. If you're hearing this and thinking, "No, there are actually still some pieces you guys haven't fully thought through, in the way that percentage on the listing side creates misalignments you didn't talk about here on the show" — man, that kind of feedback is super helpful.

Dave (35:51): So it's an evolving model. And the whole thing, back to the ethos, is aligned incentives — we want to be pulling in the same direction as our clients. These are the kinds of conversations that I think sharpen us, and make the real estate industry on the whole better. That's why we like going deep on these models and what we're offering and doing.

Nick (36:20): Hopefully that resonates, and if there are parts that stick out, let us know. And to broaden it out again — lest everything feel like an ad for The Tartan Team — if you're listening from outside Washington and you're never going to work with us, I'd say the takeaway is: get creative if you're negotiating your commission with your listing agent. It doesn't have to be our exact percentages or anything, but you can use the ideas we're fleshing out here to come up with an arrangement with your agent that really serves you both well.

Dave (36:56): And I bet you will—

Nick (36:56): Because most agents offer the standard fairly uncritically — it's just what the industry has always done. But if you come at it thoughtfully — "Here's an arrangement that I think makes more sense given our situation" — it'll probably provoke a good conversation. And we'd actually love to hear about that as well, how those conversations go, because all of that feedback is exciting for us to hear.

Dave (37:49): I think that's a wrap on this one. Be sure to subscribe, and check out the show notes for links to any of the things we discussed. And if you're interested in working with us, again, we'd love to chat about it — so book a meeting at thetartanteam.com/book, and we'll chat with you again soon.