By Gary Isom
Executive Director of the Arkansas Real Estate Commission
Flat Fee Brokers Owe More Than Advertising
So you decided to choose the less expensive route of paying a one-time flat fee upfront to list your property. This is an option that is certainly available to consumers. And while you may think all you get for the flat fee is advertising in a local Multiple Listing Service, what you should know is that the flat-fee broker owes you much more than mere advertising.
The very first thing you should know as a consumer is that an Arkansas real estate license is required to list property in Arkansas in expectation for compensation. Next, regardless of what is charged, a broker who lists your property for sale must treat your interest as he would his own. Real estate license law refers to this as an "obligation of absolute fidelity". And while the broker is allowed to have a seller waiver certain agency duties, there are some legal obligations of the broker that cannot be waived.
An example of a duty that can be waived by a seller is the presentation of offers to the seller. The flat-fee broker may instruct other brokers to present all offers directly to the seller. The flat-fee broker must have the written consent of the seller to waive this duty.
Some of the duties that the flat fee broker MUST legally provide to his seller/client are:
- Use reasonable efforts to further the interest of the client;
- Exercise reasonable skill and care in representing the client and carrying out the responsibilities of the agency relationship;
- Perform the terms of the written agency agreement;
- Demonstrate loyalty to the interests of his seller/client;
- Disclose to the seller/client material facts to the transaction that the broker is aware of or should be aware of in the exercise of reasonable skill and care to the seller/client; and
- Advise the seller/client to obtain expert advice concerning material matters when necessary or appropriate.
So, while flat-fee brokers may want sellers to think all they have to do is place their property in the Multiple Listing Service, as clients, sellers should not let their flat-fee broker off that easy. When real estate brokers choose to list property for a flat fee, they commit to represent the seller's best interest just as a broker who collects the traditional commission. It doesn't matter how much the rate is reduced.
If you think your broker who charged you a one-time flat fee to list your property has not fulfilled his obligations to you as a client, call the Real Estate Commission at (501) 683-8010 and ask to speak to an investigator.
House to House is distributed weekly by the Arkansas Realtors Association. For more information on homeownership in Arkansas, readers may visit www.ArkansasRealtors.com.