Posted: June 01, 2014
Real estate roundup: Denver brokerage touts money-saving flat fee
"It's your equity -- you deserve it."Mike Taylor
Joshua Hunt intends to shake up the real estate industry with a flat-fee structure designed to save home sellers thousands of dollars compared to the standard 5.8 percent commission.
Denver-based TRELORA – derived from the letters in “Realtor” – charges clients $1,700 to list a home and allows them to choose a flat fee co-op, commonly $3,000, for the buyer’s agent. Thus, on a $450,000 sale in that scenario, a TRELORA client would pay a total of $4,700, whereas the tab on a 5.8 percent commission would come to $25,200.
The flat-fee concept is not new to real estate, but Hunt, 37, says he’s offering something better by combining the flat fee with full services that include a team of trained and licensed professionals handling every aspect of the transaction, from pricing to staging to marketing to closing.
Hunt, a former standout agent with RE/MAX and later a recruiter and trainer for Keller Williams, launched TRELORA in 2011. All 24 team members in his initial office – including 14 licensed agents – are employees, not independent contractors as agents are with most brokerages.
“Our number one attractor is we pay a base salary – a pretty substantial one,” says Hunt, a self-proclaimed high school dropout who entered real estate sales at age 20. Salaries at TRELORA range from $28,000 a year to $75,000, and the full team receives bonuses for each closing, ranging from $3 to $300. The company also provides health insurance, a 401(k), and a branded company car for employees in the field.
Hunt says he expects scorn and ridicule from the real estate establishment for seeking to upend the traditional model of agent compensation. And he openly tells sellers to expect a 30 percent to 40 percent decrease in traffic from buyer agents who refuse to show their clients a house with a substandard flat-fee co-op; that’s why TRELORA leaves that amount up to clients.
He is also used to countering arguments that his system will only work in a hot market. “When the market turns down, my model is actually better because every penny counts in a down market,” he says. “And I don’t have people chasing around, trying to make $6,000 to $12,000 a transaction competing against each other trying to cut each other’s throats.”
It’s worth noting Denver was the birthplace of another real estate upstart that was roundly ridiculed at the outset. In 1973, RE/MAX founders Dave and Gail Liniger paired maximum commissions for agents with premium brokerage services, and the company went on to become a global leader. And now-ubiquitous Keller Williams Realty was decried as multi-level marketing for its profit-sharing plan when Gary Keller and Joe Williams introduced it in the 1980s.
“Anything that’s different, people fight,” Hunt says. “Barnes & Noble fought Jeff Bezos and the Kindle and Amazon. All the record labels -- Garth Brooks and Metallica -- fought Steve Jobs when he rolled out 99-cent songs. It’s not going to be an easy challenge. I’m going to be the laughing stock; agents are going to despise me, just like they did Liniger, Gary Keller, Steve Jobs and Jeff Bezos.”
Flat-fee detractors only further Hunt’s conviction. “It’s your equity,” he says. “You deserve it, not us.”
Mike Taylor is the managing editor of ColoradoBiz. He writes about small-business money issues and how startups are launched. Email him at firstname.lastname@example.org.