Jon Hom, a Houston-based real estate agent, does a lot of business in Starbucks.
That’s because his brokerage doesn’t have an office. Which partly explains why he hasn’t met his broker in person.
“It’s like an episode of Cheers,” he said, referring to the American sitcom that was set in a Boston bar where locals gathered to socialize. When he’s camped out in the coffee shop, he fills out paperwork, consults with clients and explains his business to people who ask.
Jon Hom
When choosing which brokerage firm to join, Hom decided to become an agent at Real. Having raised $7.2 million in funding, the New York City-based brokerage is betting that offering agents favorable commission splits, a powerful mobile app and radical independence will more than make up for not providing workspace.
Operating in 12 states under licenses held by two brokers, Real has hoovered up more than 350 agents since launching about a year ago and expects to claim a force of 1,000 by the year’s end, according to CEO Tamir Poleg. Declining to provide a precise figure, Poleg said that Real agents have closed a “few hundred transactions” so far.
What’s the draw?
While Hom said his previous brokerage provided excellent technology, he often received what worked out to be less than a 50-percent commission split on many deals. He said he felt overshadowed by the brokerage’s brand, and he longed for more control over his business.
One of the biggest reasons Hom joined Real is because the brokerage offers an 85-15 commission split. But he also liked that the firm encouraged its agents to build personal brands that outshine its own.
Sample home page of the consumer version of Real’s app.
Another big draw, one touted prominently in media coverage of Real, is Real’s mobile app. It’s an evolving tool designed to help agents perform a wide array of business tasks and exchange advice with colleagues.
Real’s thesis is that traditional brokerages are not providing agents with enough value to justify asking for a 70-30 commission split, which Poleg said is the industry average.
That’s largely because mobile phones, email and other technologies have removed the need for business offices and spurred consumers to contact agents directly. Poleg argues that “consumers do not really care who the broker is.” They only really care who the agent is, he said.
The consumer version of Real’s app, which lets users search multiple listing service (MLS) listings and instant message with Real agents, reflects the brokerage’s focus on helping agents build personal brands. It “looks and feels like it’s an agent’s personal branded app,” Poleg said.
Hom sends a link to the app to leads and clients to provide value and open a channel of communication that can be used to share properties and coordinate showings.
Real’s listing search results page. The chat icon in the lower right-hand corner of listing photos lets agents and their clients or leads seamlessly share and discuss properties.
Is this new?
Some observers say Real isn’t really doing anything new. A number of brokerages without a brick-and-mortar presence, such as eXp Realty International Corp, have been around for years. Some traditional brokerages also offer agent-branded apps and digital work tools to agents. Others offer even better commission splits than Real.
Realty Executives, a franchisor with more than 8,000 agents working under its banner, introduced the “100 percent commission” model in 1965. Brokerages affiliated with Realty Executives today offer some tech tools to their agents. When Realty Executives debuted 100 percent commissions about 50 years ago, agents at its franchisees paid a monthly fee of $35, plus a “share of expenses.”
Realty Executives did not immediately respond when asked to provide updated information on the fees agents at its affiliated brokerages must pay today.
Screen shot showing the instant-messaging feature of Real’s app.
“For the few outliers who prefer working in solitude, Real could be for them,” Marc Davison, a partner at real estate consultancy 1000watt, said in an email. “But most agents, even if they choose to not go into the office that much, take comfort in knowing it’s there.”
He bases that assessment on what he says is a consistent finding of many surveys: that culture matters most to agents in choosing a brokerage.
But Hom says that agents at brokerages offering the best commission splits in the industry often must pay other costs, such as desk fees or Errors and Omissions (E&O) insurance. The result, he said, is that those agents end up forking over more cash to their broker than they probably would at Real.
The app
Hom also said he believes Real’s app will set the brokerage apart, in part by cultivating a tight-knit community and culture of sharing. He’s watched as the the app has matured over the last few months, and he says feedback from Real agents is directly driving its development.
The agent version of the app currently provides a customer relationship management system (CRM), calendar, MLS search, accounting and comparative market analysis (CMA) tools and the ability to swap advice with all of Real’s agents.
Real agents also receive around 10 free leads a month through the app. The brokerage generates those leads, which are not prequalified by Real, by paying for digital marketing, including brokerage-level advertisements on Zillow.
Real is working on incorporating a transaction management system into its app.
The app’s social platform provides a level of support that Real argues can compare to or even exceed what agents typically receive at traditional brokerages, where mentoring often takes place face-to-face.
Screen shot showing Real’s agent community chatroom.
Agents can use the app’s instant-messaging feature to get help from veteran agents with solving the many problems that can crop up during transactions. Hom said he’s used the platform to get help from his broker with phrasing an amendment to a sales contract.
“We think that people do not need to sit in the same office to feel close to each other,” Poleg said.
Simplifying the job
Poleg anticipates that Real may simplify the job of a real estate agent so much that it could inspire more people to enter the business.
“Wow, this is so easy to use that [the Real app] without too much experience,” he said, explaining the potential reasoning of prospective agents who might choose to join Real. “I’m able to get a real estate license, and with a little bit of mentoring using that tool — real estate is made easy.”
Real has “a lot of newbies” trying to join the firm, a large group of agents who have been in the business from two to 10 years, and a smaller group who have been at it even longer, Poleg said.
Hom acknowledged that “quality control might be an issue” for a brokerage that wants to give agents free reign.
But he’s confident that greenhorns will get the support and guidance that they need from Real’s agent community and brokers.
Editor’s note: This story has been updated to correct that agents at Realty Executives franchisees paid a monthly fee of $35 and a “share of expenses” when the franchisor introduced the 100 percent commission model in 1965.
The fees agents pay to hang their licenses with Realty Executives franchisees today are surely much higher. The franchisor did not immediately respond when asked what those fees are.
