Real estate company uses flat fee to save millions for homeowners AND grow business

NASHVILLE, TN — Several unexpected events disrupted the real estate industry in Nashville this year including tornadoes and COVID-19 but the growing trend of flat fee realtor services is disrupting the way people sell their homes forever.

A year ago, Jonathan Harris, founder of Scout Realty, began working with an elderly couple who needed to sell their property and recoup as much equity as possible. He tested an idea of charging a flat fee for his real estate services instead of charging the standard 6% commission. This would help the couple keep more of the equity they built up themselves over the years. Harris did not change his service model, just what he was charging for it. The idea worked well, so he offered a flat fee to more clients and business volume increased as a result. This May, Scout Realty launched the flat fee model as a standard for the company and is working toward expanding regionally.

 “We have a vision that by the end of 2025 we will have served 10,000 families and saved them $100 million in equity.”  

Jonathan Harris, Scout Realty Founder

“It is a disruption inside the real estate industry,” Harris said of the flat fee. “It threatens how real estate agents have traditionally made their money. But it gives homeowners the opportunity to benefit more from the sweat equity they have put into their homes.”

“This is needed in our community now more than ever,” he added. “Homeowners need to keep more of their equity and get more of their own money out of their homes.”

The idea is not new, Harris said. It is commonplace in developed countries outside of the U.S. But inside the U.S., the model is not popular with real estate agents because it runs against the traditional commission formula which generally charges homeowners 6% of their total home sale. Using a fee model (Scout charges a basic fee of $5,000) Harris estimates he has saved clients $2.8 million in commission charges since the beginning of 2020.

“What gives meaning to this way of doing business for us is the stories we are hearing from our clients,” Harris said. “One homeowner saved more than $18,000 using our fee system instead of a traditional 6% commission and used the money to pay for his daughter’s wedding. Another client told us they used the money to make their last tuition payment to the University of Tennessee and another paid off their minivan.”

The Suggs family worked with Scout and saved $64,412 using the flat fee model instead of a 6% commission. “That pays for a lifetime of travel baseball for our kids,” the family said.

Harris said he sees the fee model as the future of real estate because it more evenly distributes the equity in a home. But he has gotten pushback on the idea from other agencies and realtors. Yet, his team of agents have seen their book of business steadily increase and that is proving his point.

“It’s given us a renewed sense of purpose and made a tangible difference in our business,” he said. “We’ve made up the monetary difference (when calculating revenue that would have been generated under the commission model) and a whole lot more. We are winning new clients every day.”

“For me, it is an act of fiduciary responsibility. At Scout, our focus is people over profits,” Harris said, adding that Scout Realty is currently working with several interested parties throughout the United States to replicate the model.

“Clients felt like their hard-earned equity was eroded away during a sale and I started to see a better way to do business,” he said. “You have to be willing to go down to go up. So, in the short term, as an agent, you make less, but we’ve come out on the other side of that and it’s a good side.”