So…
After more than 18 months and 100 transactions in the brokerage business we have finally collected enough data and consumer feedback to make the next adjustment to our ‘non-traditional’ business model.
As many of you know, our company has had an extremely strong opinion and very public voice regarding real estate commissions in this new online real estate economy. Our belief structure and core principles are still the same, and we believe with the availability of public accessible real estate information, including easier access to MLS systems and public record information, has made the sales process more efficient for consumers engaged and interested in performing search, compare and valuation analysis online.
So where have we changed?
Two crucial data sets have led us to alter our buyers’ brokerage business model.
1. Top priorities for buyers during the purchase process:
After multiple online and offline surveys performed by our company, the single most important aspect to our clients was NOT our highly promoted “Cash Back” commission refund business model.
The #1 priority to our clients was agent expertise.
The #2 priority was our website.
The #3 priority was our transparent and our professional approach to real estate.
2. Time:
The second most important aspect that has led us to alter our business model is time. Whether it just be current market conditions or realities of this new real estate economy, the amount of time spent with our clients touring properties was nearly double than what was anticipated from our original business plan.
Our original plan had estimated that we would tour 4-8 properties on average before a client submitted an offer to purchase. Even though we have had both of the extremes from two clients whom we toured the property zero (0) times making the transaction extremely profitable for us, however, we have also had the opposite with touring more than 25 properties before submitting an offer. Currently we are averaging 14 property tours per client.
So what is the new business model?
Here at CondoDomain we are announcing a hybrid-model that some may call ‘a la carte’. We will now be offering two service levels, best described by our (1) Pizza or (2) Sushi comparison.
1. Full Service Buyers Brokerage (Pizza)
Those going for the Carb-load, this option is for you. Our full service buyers brokerage will be like it has always been. Personal service, unlimited property tours and every other goodie that our agents or the CondoDomain team & website delivers.
This option will include 20% commission refund for all buyers who purchase with us. On average, our $500,000 buyers will receive a cash refund at closing of $3,000. For most this will cover all of your closings costs of your new home!!! Through some analysis, we have come to the conclusion that today’s real estate purchase process is approximately 20% easier for real estate agents because of technology and publicly accessible information, therefore a 20% commission refund would make sense and allow us to compete on a very high level attracting the best real estate agents in the business which would allow us to accomplish our #1 goal of having top agent expertise. More details here.
2. Flat Fee Buyers Brokerage: (Sushi)
We are launching this service for our “true” do-it-yourselfers. For all of our viewers and clients who have a top priority of staying “lean” and saving money – the Flat Fee model is the way to go.
In every city we will offer to help broker a real estate transaction for a flat fee of $5,000 – no matter what the purchase price of the property is. We will engage you as a full service client without limitations EXCEPT with property tours (therefore reducing our Time/Cost differential). With this service, we will go on a maximum of 3 property tours with you. After the third property tour our relationship is automatically flipped into our full service program which will still net you a large cash back commission refund of 20%.
Why Flat Fee: Since our inception as a true buyers broker in January 2008, we have always promoted the flat fee buyers brokerage business model. We truly believe in it and think it makes sense for efficient and precise real state transactions. For consumer who are truly leveraging new technology and are heavily self-motivated and engaged in the real estate search and compare process, the flat fee model is ideal. It allows the client to engage an experienced professional to assist in the home-buying process while providing maximum savings to the consumer.
While both our full service buyers brokerage and flat fee business model saves clients thousands of dollars, the flat fee model starts to net significantly larger savings on purchases over $500,000. More details here.
What do we hope to accomplish:
As a company, we believe this structure is ideal for the consumer base that we engage. Providing a 20% cash back commission refund is a significant amount of money at any price point, therefore enticing a highly competitive advantage in the marketplace. This balance also allows us to attract top real estate professionals to provide our clients 3 top priorities: agent expertise, technology/better website and allow us to publish more transparent information on the marketplace.
CondoDomain aims to continue to be a leader in the urban real estate marketplace specializing in working with buyers, elevating the brokerage profession by providing excellent customer service and a go-to media site highlighting the latest and greatest in residential property downtown.
Related Posts: CondoDomain Year 1 Results: Whitepaper, Customers want transparency (Redfin), Other CondoDomain posts regarding the real estate commission stucture
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