The time has come for you to buy a house, and you know to follow conventional wisdom and seek out a real estate professional you can trust. But when you go to round up referrals from friends, you find that everyone reports they wouldn’t actually recommend their previous agent.
Throughout the homebuying and selling process, there appears to be a disconnect between wanting to work with a professional who makes your transaction smooth and successful and finding that professional in real life.
Maybe the traditional real estate brokerage model – where you work with an individual agent (who contracts with a larger firm) from beginning to end – isn't the right process for you.
Fortunately, you have options.
As new technology facilitated the disruption of retail, travel and many other industries, it seems like real estate was left behind at some point. But at a growing rate, real estate brokerage firms are bucking the traditional platform and turning the process of buying and selling a home to one that makes sense for the modern consumer.
“It’s amazing how many people aren’t thinking that there are other options, and I think it’s because people just don’t know,” says David Walker, CEO of Triplemint, a full-service real estate brokerage based in New York City.
For the firms that are leading the change, the focus turns to making the consumer feel more confident and understood from the beginning to the end of a deal. Of course, that’s not to mention offering alternative pricing to the traditional commission model, providing transparency during negotiations and delivering greater efficiency with the ability to e-sign documents.
We’ve highlighted three firms of various size throughout the U.S. that have flipped the traditional brokerage model on its head. As with other disruptive brokerage firms, they resemble each other and differ in various aspects, but their work to change the traditional relationship between agent and consumer could help you find the right situation that leads you to your next home.
If you’ve paid any attention to residential real estate – or even taken note of “for sale” signs around your neighborhood – you’ve heard of Redfin. The national real estate platform deviates from the traditional brokerage where real estate agents are technically independent contractors, paying a portion of their income to the firm they work for.
Redfin employs its agents and pays them a salary, which leads to lower fees for consumers and the ability to base part of an agent’s income on whether consumers feel satisfied with a deal, rather than just if the deal occurred. The traditional commission model is around 6 percent, split between the brokers representing the buyer and seller. With Redfin, listing agents make 1 percent, lowering the total commission to 4.5 percent. Additionally, buyers who purchase with a Redfin agent receive an average refund of $3,500 from the commission made.
“The care is required to succeed,” says Jani Strand, senior vice president of communications for Redfin.
Part of Redfin’s success comes from marrying the customized client experience with developing tech options – beyond property searches and on to booking home tours, helping you set a budget, providing analytics on how your home performs on the market and walking you through the negotiation and closing process. There are virtual options for the steps you’ll want to take online – like signing a document – and in-person options for the times you want that face-to-face interaction – like a home tour.
“Technology should make things easier, faster and less expensive. And we’ve applied that to the real estate transaction,” Strand says.
In the Denver area, real estate firm Trelora began as a traditional brokerage. But over time, Trelora has transformed by employing its agents rather than hiring them as contractors and allowing those agents to specialize in more focused positions that highlight their skills in a transaction, such as marketing, transaction coordination and showings.
Trelora CEO Joshua Hunt notes the firm ultimately aims to provide a customer-focused service so the consumer has more power in a transaction, while being more cost-effective at the same time. “The challenge is [other brokerages] have lowered the fee but not raised the standard of experience,” he says.
By having its employees focus on their specialties, Trelora is able to continue growing without compromising the blanket adoption of new tech and still maintaining collaboration between team members, which Hunt notes directly benefits the client.
Maintaining internal communication and cooperation is also key to New York’s Triplemint firm. When a potential client contacts the brokerage, he or she first speaks with not an agent, but a person in charge of member experience. The member experience team is tasked with determining the client’s wants and needs and placing him or her with the right agent in the firm.
“The best agent, for each individual consumer, is probably someone different,” Walker says.
As with the other firms disrupting real estate brokerage, technology plays a role as Triplemint agents use market data to predict who’s most likely to sell. “We give buyers access to properties before they hit the market,” Walker says.
That same predictive data also helps sellers find a potential buyer before the property hits the market, which Walker says can reduce the risk inherent in the selling process. Combined with the additional care they're getting from the team, buyers and sellers feel empowered throughout the transaction and can ultimately "make smarter financial decisions about real estate," he says.
Think you're financially set because you own a house? Think again.
Breaking the Mold
Across the board, companies breaking away from the traditional brokerage model expect new tech innovations to continue to be a significant part of the homebuying and selling process.
However, as buyers demand more transparency and seek a greater level of control throughout the house hunting, negotiation and closing process, the traditional model may begin to feel more antiquated and less like the norm. Strand points out quick adoption of technology companywide largely “hinges on having this team of employees,” rather than having independent contractor agents.
Until then, the companies offering an alternative brokerage experience are continuing to grow. Redfin is undergoing vertical growth by beginning a mortgage platform, currently in its infancy in Texas. Local firms like Trelora and Triplemint are seeing success in their markets and have plans for future expansion. The greater variety of options can only be a positive as you look for the right company to represent you in your next real estate deal.
Corrected on Nov. 28, 2017: A previous version of this story incorrectly reported the commission and average savings from working with a Redfin agent.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at email@example.com.