July 17, 2008 5:32 PM
ReLogic hopes to re-shape real estate industry
Dan Verdi and his wife, Abby McQueeneyPenamonte, are both 26 years old.
They moved to Denver from Syracuse, decided now is a great time to be buying their first home in Denver.
Still, coming from upstate New York, where homes prices are low and show little appreciation, they were hit by sticker shot.
"We're looking for a home in the $250,000 to $300,000 range," Verdi said. "In Syracuse, a $300,000 home would get me in the area where the president of Kodak lives."
They met with a RE/MAX agent, but hadn't yet signed a contract to hire the broker, when they stumbled into a home being listed by ReLogic. They walked into the home and decided to give it a shot.
As I describe in an article in Friday's Rocky Mountain News, ReLogic charges fees, but no commissions.
The typical buyer should save about $10,000, on a transaction, Vic Mithcell, who heads the company told me. Mitchell also is a state representative serving southern Douglas County, although he is not running for re-election.
Verdi said that he had already narrowed his area of house hunting interst to LoDo and Highland.
Although this is their first home, he and his wife are savvy when it comes to Web-based searching, as you would expect for some their age.
They've narrowed their search to a $299,000 loft in LoDo, and a $274,000 home in Highland.
With ReLogic, they get 20 hours of the agents time.
They were surpirsed that Adam Cox, the broker, has shown them about 35 homes.
"And we still didn't use up the entire 20 hours," he said. "He arranged showings very efficiently. In Highland, the homes were often within a block or two of each other, so we could walk from one to another. And we knew what we were looking for, so we didn't need to spend much time going through most homes. And Adam would tell us things like the home was on 38th or too close to Federal, so we probably woudln't be interested in it."
According to the National Association of Realtors, 87 percent of all home buyers start their search for a home on the Internet, noted Ken O'Donnell, managing broker for ReLogic.
Other companies, most notably Redfin, founded by Paul Allen, the co-founder of Microsoft with Bill Gates, also is capitalizing on this trend.
"While 90 percent or 95 percent of Redfin agents are buyer brokers, surprisingly, we're finding that 60% of our brokers are representing buyers and 40 percent are listings," he said.
But O'Donnell said ultimately, the biggest value probably will be to the buyers, because listing agents already are slashing their commissions in this tough market.
"That's sort of counter-intuitive," he said. "We were all taught you list to live. The way to get rich in real estate is to have lots of listings. You could be on Fiji and someone could sell your listing for you and you would get the commission."
But now, "the buyers are gold," he said.
O'Donnell also said that ReLogic isn't a discount broker/
"What those Help U Sell or assist to sell do is give you a lock box and a manual on how to write up a contract," he said. "We give you Help U Sell pricing with traditional brokerage service."
The basic salary is $36,000 a year, with small commissions on each clsilng.
That doesn't sound much, when you consider some top brokers in Denver pull in norht of $1 million.
But O'Donnell said that the typical broker in the Denver area grosses $77,000 a year, but with expenses, they net $20,000 to $30,00.
"Sure, they can write off those expenses, but the net amount they bring home is not very much," he said. "They have to pay for gas, split commissions, pay desk fees, an so on. And they nave no benefits."
At ReLogic, they receive benefits, including a profit sharing plan.
A "great analogy," with real estate brokers is travel agents, who found their role diminished when people began booking trips on the Internet, he said.The company, with five licensed brokers, has about another 10 waiting to join. And if the Denver model is successful, they hope to open in two or three Southwestern cities next year, and eventually go nationwide.
Vic Mitchell, who funded the company with more than $3 million, including money from the iSherpa venture capital firm in Greenwood Village, said he thinks his firm will re-shape the industry, much in the same way RE/MAX paved the way for the 100 percent commission concept more than 30 years ago, when Dave Liniger founded it in the Tech Center.
"Buyers have been conditioned by brokers to believe that buying a home is no cost to them, because the seller pays the buyer brokers commission," Mitchell said.
"That is hogwash," Mithcell said. "Tends of thousands of dollars in a typical transaction are used to pay those brokers. That has to change."
And homebuyer Verdi said he doesn't think ReLogic is for everyone. He said that it is best suited for someone comfortable for searching for a home on the Internet.
That is a number that is growing, O'Donnell said.
"A lot of people think it is really fun," he said. "And people find homes that way brokers will never find for them. We have to go on what they tell us. They might tell their broker they need a house with three bathrooms, and then find a two-bathroom home with a great den, and fall in love with it. But we would never even present that home to them."
July 17, 2008
8:51 PM
Keith Dudley writes:
It is unfortunate that John has misrepresented Help-U-Sell. In fact Help-U-Sell is a FULL SERVICE Licensed Real Estate Broker and member of the Board of Realtors, while saving Buyers and Sellers Thousands. To imply they do nothing more than stick you into the MLS and provide a manual to do it yourself is irresponsible and unprofessional at best. A consumer should check out the TRUE FACTS about any broker and not base it on some uneducated opinion. In Colorado Help-U-Sell is ranked in the top 15 brokerages in the Denver Metro Area for the second year in a row. A Help-U-Sell achieves this level of success by providing the highest level of service a real estate professional can offer, by superior marketing and local market expertise.
July 18, 2008
6:35 AM
John writes:
Are you mad because you are getting out DISCOUNTED? Both ReLogic, Help-U-Sell and Assist-2-Sell do not provide the service levels seen from Kentwood and Re/Max. The discounters are good if you price your house BELOW market or if you have found the home you want to purchase and just need an agent to do the contract. Those clients needing expert advice and guidance on a home purchase are better served by a traditional full service Realtor.
July 18, 2008
9:25 AM
Keith writes:
John, I am not mad, I just want you to represent the facts truthfully. I am sorry but you are wrong about Help-U-Sell. I am the Regional Director for Help-U-Sell and I can assure you not only do our brokers provide a level of service equal to the brokers at Kentwood or RE/MAX they have on average more years of experience then most brokers in the business, they close more transactions a year than most brokers, and are dedicated to be the experts in their specific market areas. I personally have been an agent/broker since 1978. In fact, many of our brokers came from RE/MAX including myself. RE/MAX and Kentwood are excellent brokerages and their brokers are some of the best, as are the brokers in Help-U-Sell. We simply have a different philosophy in how we charge the consumer for our service. They charge a percentage of the sales price of the home, we charge a set fee? That in no way diminishes the level of service a seller or buyer receives. Also to imply that a consumer gets less for their home because they hire a Help-U-Sell broker is not truthful. As all REALTORS strive to do, when we represent the seller we strive to get the highest and best price for our clients. Bottom line, the market dictates value.
Discounting is not a dirty word. Do you pay your CPA to prepare your taxes based on you annual income or do you pay a set fee? Imagine if you make $500,000 a year and the CPA charged you 5% of your income to prepare your taxes or $25,000 you would think that was outrageous.
John, all I ask is that you represent the truth, as far as Help-U-Sell is concerned, yes we don’t charge high commissions to sell a home, call us a discount broker or a set fee broker, it doesn’t matter, but we are Full Service Licensed Real Estate Brokers and REALTORS®. Thank you,
July 18, 2008
12:24 PM
swimmey writes:
I didn't see any difference in the service level provided by ReLogic in this story. Why do you assume that? ReLogic are full service, the only difference lies in what they charge, not what they do for customers.
Real estate companies are running scared -- not the Realtors, but their companies that they pay desk fees and expenses to, even when they're not selling many houses. They are the ONLY ones making money in the traditional commission system. Buyers and sellers pay too much and Realtors push them into unadvisable deals because they want to eat next month too.
It's about time things changed.
July 18, 2008
1:43 PM
Michael O'Toole writes:
I am the Managing Broker of Assist-2-Sell Best Move Realty, with offices in Littleton and the Denver Tech Centre.
I also have to say that the comments in this column about Assist-2-Sell are a load of hogwash. Like Help-U-Sell, our agents are fully-licensed, many with advanced education, and all are Realtors (members of NAR). We provide levels of service that are equal to most, if not all, of the full-priced brokerages, and in many cases, we provide much greater levels of service. We have the references and testimonials to prove it.
This article reeks like an advertorial. It is obvious to me that the writer did not conduct any investigations, but simply took the quote of another agent without researching its validity.
John, if you are a true writer/reporter that believes in the truth, publish a follow up article with some in-depth research. Interview Keith and me, speak to our clients, and then publish the truth.
July 18, 2008
2:28 PM
Bill Donovan writes:
I think in the old days if an agent made statements like those found in that article, they could face mandatory ethics training, fines and complaints registered with the Real Estae Commission.
Perhaps if Mr Rebchook would take the time to watch one of our lisitng presentations, or talk with a few of our clients past or present, he would see and hear that our level of service, internet marketing and expertise probably exceeds most traditional brokers.
I also could give him the names of a couple of closers that would rave about our professionalism.
July 19, 2008
9:05 AM
Seattle area reader writes:
Redfin founded by Paul Allen? Where'd you get that one?
July 19, 2008
9:21 AM
Keith writes:
Reader in Seattle. Glenn Kelman, President & CEO
is the Founder of REDFIN. Vulcan Capital of which Paul Allen is the Founder, has an investment in REDFIN. You can go to http://capital.vulcan.com/Template.aspx?contentId=7 to see the Portfolio Companies of Vulcan Capital and note that REDFIN is listed.
July 19, 2008
9:46 AM
alisa hagner writes:
Have you seen their billboard on Colo Blvd.?
"Realtors loathe us."
Really? Aren't their brokers Realtors, too? Sure they are members of the Denver Board of Realtors(R).
I don't loathe them, and I have been a Realtor for 18 years. I don't know any Realtor who does.
Isn't advertising misinformation against the Code of Ethics?
July 19, 2008
10:27 AM
Keith writes:
Alisa, who is advertising on the billboard on Colorado Blvd?
To your last point, I believe Bill Donovan was correct as you are that Advertising misinformation or false statements are grounds for a complaint on Ethics Violations and possibly more with both the Board of Realtors and the Real Estate Commission.
That being said, I for one welcome competition as long as the competitor does not misrepresent the facts or slanders their competitors. I believe the consumer, buyers and/or sellers, are intelligent enough to interview and compare the offerings of brokers (REALTORS®), decide if they provide the expertise and experience they need, compare the marketing offered to get the job done and negotiate fees with whom they choose.
July 22, 2008
1:12 AM
Anon writes:
David Eraker founded Redfin, along with a couple of other guys. After the VC's got involved, Glen Kelman was hired to run it. Redfin had been around for years before Kelman came on the scene. Neither he nor Paul Allen had anything to do with founding the company
December 20, 2009
10:07 AM
Web Marketing Network writes:
I would not wish to develop this theme.
January 14, 2010
10:48 PM
Nathan Scott writes:
Thanks. some great infomation here keep up the good work . I cannot really leave a more constructive comment as i'm abit out of my depth, but i will be checking back here for further updates.