Flat-Fee Defies Traditional Brokerage

WINDSOR – The fallout from the subprime lending market, and the near-disastrous foreclosure epidemic that resulted, plus fears of a nationwide recession that has buyers playing waiting games, are causing residential brokers to improvise and innovate.

So, taking a page from a residential real estate business model developed in Seattle and a handful of other big, metropolitan markets, Windsor broker Jerry Taylor has applied his software development experience in a new flat-fee, Internet-based real estate venture called eRealtyCo, found on the Web at erealtyco.net.

Likewise, H. Craig Plantz, another Windsor agent who is the managing broker for Resident Realty, is operating OwnersRealty.com, an online residential clearing house that puts properties on the MLS, and offers other services, for a $99 fee.

With a typical 6 percent commission in the offing for most traditional brokerage sales, sellers of a mid-priced home in Northern Colorado could bear charges ranging from $12,000 to $18,000 – a pretty big bite of the selling price.

Taylor, who spent 20 years in the software development business before turning to real estate as a career, said his new service is geared toward “doing things in a leading edge way.” His $2,000 flat fee – although 20 times higher than his competitor’s – still undercuts the standard commissions by a goodly amount.

“When the market started going down, I began thinking of ways to innovate,” Taylor said. “The progression to the Internet is nothing new, but the flat fee is. I’m looking to help people out and save them a ton of money.”

I questioned some of the members of the Fort Collins Board of Realtors at their awards luncheon earlier this month about these new, online, flat-fee products, and their response was both predictable and reasonable. Service, they said. Service, service, service.

At least Taylor, whose eRealtyCo is based on the success of Seattle-based Redfin.com, is aware of the objections. After all, as he pointed out, the big brokerages in Seattle are in an all-out war to preserve their interests in the face of Redfin’s growing presence and reputation among home sellers and buyers there.

His defense against the criticism from other brokers is a simple one: Exposure on his site, MLS listing, contract preparation and brokerage services are no different than those provided by the mainstream real estate people.

“The only thing we don’t do is open houses,” he said.

Both of the flat-fee services differ from the numerous for-sale-by-owner, or FSBO, real estate services in that each provides access to the region’s multiple listing service, a crucial link to buyers and other brokers that FSBOs are barred from.

Prior to acquiring licenses to use Resident Realty’s systems and software programs, Plantz was president of Colorado Real Estate Online, a company he built then sold to E.W. Scripps Co.

His pitch to prospective clients is linked closely to his rock-bottom fee.

“If they try my service for a month and aren’t happy, they can quit and all it will cost them is $99,” he said. “This gives them an opportunity to judge for themselves.”

Editor Tom Hacker covers real estate for the Northern Colorado Business Report. He can be reached at 970-221-5400, ext. 223 or at thacker@ncbr.com.