Billions of people place bids for goods on eBay each year, and now a software developer in Texas is bringing the auction concept to real estate sales commissions. Realty Baron is still in its infancy, but the online lead service hopes to grow into a valuable resource for real estate agents and home sellers.
Realty Baron attracts home sellers by offering them more control over the commission they’ll pay a real estate agent, and the level of services and agent they choose to use.
“The goal is to have a very open marketplace for matching sellers and agents,” Realty Baron creator Marc Dugger said. “The sellers themselves are posting the property information…they’re able to specify the starting and reserve commission.” A reserve commission is an amount the seller considers acceptable.
Realty Baron’s business model contains two key components: a unique AgentRank system Dugger designed himself, and the commission-bidding system, which gives home sellers a platform to negotiate sales commissions with agents.
The commission-bidding system uses a reverse-auction format in which agents can determine how much commission they’d charge for a listing by looking at the property information the seller loads on the Web site. Agents place bids much like eBay’s auction format, and can see what their competitors are bidding for the listing.
In addition, sellers can choose the level of service they’re looking for. For example, the seller may only want someone to help them negotiate offers or to help them market the home.
Realty Baron releases the seller’s contact information only to the agent who submits the most competitive bid. If no acceptable bids are received, the contact information is withheld.
During the bidding process, agents can view photos, property description, ZIP code, a basic snapshot of the property’s value and additional details relevant to the sale such as when the seller expects to list the house, or whether there is a strict deadline to sell.
A listing auction stays open for three, five, seven or 10 days, Dugger said, and bids are accepted until a listing auction closes.
As expected, many agents initially react negatively to the idea of bidding for commission rates on listings.
“They don’t make it past the wording and immediately think it’s low-man wins,” Dugger said. “It’s a natural knee-jerk reaction.” But agents who’ve investigated the model and understand how it works in conjunction with the AgentRank system in many cases end up joining.
AgentRank is a proprietary algorithm created by Realty Baron that assigns agents a value from 0 to 10 based on their ability to deliver results for clients. Agents must have an AgentRank to participate in a listing auction. The idea is that sellers will be guaranteed a certain level of service, depending on which ranking of agents they want to work with. For agents, AgentRank is a way for them to justify their commissions.
“It separates it from just being a low-man or low-woman wins,” Dugger said. “The incentive of maintaining a high agent rank will in turn return a higher commission.”
The algorithm considers the agent’s profile, as well as seller feedback, which is another aspect to the Web site that’s still being developed. As more sellers use the service, the database of agent information will grow to include more feedback and statistics on past sales using Realty Baron.
“This is not artificial intelligence,” Dugger said. There will be some manual tweaking in the algorithm as he starts to identify what agents’ individual sales attributes are.
“I’m bringing in all these elements that a seller normally does–I’ve just automated the process to make it a no-brainer,” he said.
Dugger is collecting information from each transaction to add to the AgentRank technology. Things like days on the market, asking price versus sales price in past transactions and Realtor designations eventually will incorporate into the ranking system.
Realty Baron charges agents a percentage of their commission only when a deal closes.
Karen Dwyer, a Realtor with Southern Exposure Realtors in Austin, noted the value for agents in having the ranking system. Some consumers may be willing to pay more for full services as opposed to discounted services and the system will show them how “you get what you pay for,” she said.
Dwyer also thinks the seller leads coming through Realty Baron may be more valuable than other online lead generators because only serious sellers will bother going through the process of uploading their property information to the Web site.
“The chance you’ll get someone who’s motivated to sell is very high,” she said.
Dugger said he’s had an easier time finding agents to sign up for the service than he’s had finding home sellers. “Sellers are still very sought after and I don’t know if they’ve hit the Web as much as buyers,” he said.
He’s been building relationships with online content providers and affiliate marketers to capture more home seller attention.
Dugger’s professional background is in technology and software development, and he’s worked with real estate clients over the past two years.
“I feel like an outsider status has helped me to bring a fresh perspective to what’s already being done,” he said. “At my core, I’m a problem solver…I’ve set out to identify the weaknesses in current systems.”
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