Robert Freedman is the director of multimedia communications at NAR. He can be contacted at email@example.com.
Thinking Like a Salesperson
A brokerage with a 100-percent-commission model has grown by allowing salespeople to customize their services.
January 1, 2009
Four years ago, at the height of the housing boom, Scott DeNeve thought real estate brokerages were making it unnecessarily hard for sales associates to tailor their services to the needs of each client. Held hostage by high overhead costs, brokerages were reining in their associates' flexibility to take steps to win clients.
"Associates can't gain a competitive advantage when their company mandates what they can charge," says DeNeve, who started in real estate in 2002.
To offer an alternative, DeNeve launched Platinum Realty, a 100 percent commission company. The brokerage maintains a hands-off approach, letting sales associates tailor their relationships with clients in whatever way they think is most effective.
"Our associates are more successful here because they're calling all their own shots and keeping all their commissions," he says. About 60 percent of his salespeople are full-time, and most have been closing at least one transaction a month. Some are closing about 30 a year. The part-timers close an average of five transactions a year.
Associates pay the brokerage a flat $250 fee for each transaction, so the company's fortunes rises or falls on the number of transaction sides closed, not on the dollar volume. For 2008, DeNeve expects his 140 associates to close 800 transactions, twice as many as in 2007 when he had about 90 associates.
To keep his costs down, his office is small relative to the number of associates, with 12 workstations and three conference rooms. But it's designed not to come across as economical. It commands sweeping views from the top floor of an office tower in Overland Park, Kan., and it's decorated in warm woods.
"Our associates work mostly out of their home anyway, but when they do come in, they get a lot of bang for the buck. The computers are fast and wireless, and clients find the decor inviting," he says. A second office is in the works for later this year.
His associates' ability to close sales has also been helped by the mortgage brokerage DeNeve launched with a partner in early 2008. "As an associate I always hated it when a loan officer wouldn't disclose all the closing costs or wouldn't let me know the exact cost on the loan. We give associates not just a good faith estimate but all the information up front so they know all the costs when they go in with an offer."
To gather leads, the company requires consumers to register before accessing the listings on its IDX site. About 700 consumers a month sign up. "We require registration so we can see how consumers are doing or whether they have any questions. We can also make sure we follow up with them, and we continue to monitor the lead until the transaction closes," he says. Once the consumer is ready to buy, the company turns over leads to sales associates for a 25 percent referral fee.
Even though many companies maintain an intranet with the forms and resources associates need to work remotely, DeNeve says many of them inadvertently take away associates' independence by offering them services and technology that become a "crutch." "By contrast, we provide those resources but treat associates like the independent contractors they are," he says.
The result, DeNeve says, is a brokerage that's grown despite the slowdown.
For more on Platinum Realty, visit http://www.platinumrealtykc.com.