I did something last week that I never thought I would do. I left Keller Williams after almost 8 years of hard work, closings, friendships, failures and successes. In other words, it was a great learning experience. I built my business from the ground up, begining in 2001. I was in class getting my license when the terrorists hit on 9-11. I built a great team, served several terms on the Agent Leadership Council, led the Technology Committee and served on the Financial Planning Committee. About a year and a half ago, I brought on a partner, Jennifer Semler, to help run the business while I focused on special projects.
During my tenure at KW, I was lucky enough to work in the same office as Joe Williams. For those who don't know Joe, he's the KW co-founder, the Williams in Keller Williams if you will. Joe is a great guy and he and I became close personal friends. We've dined together, played racquetball together, hunted together and spent many hours just talking. My personal relationship with Joe is one reason I never pictured myself in anything other than Keller Williams red. Obviously Joe is a very successful businessman. He can appreciate the underlying thought and contemplation that goes into a decision such as this.
In the last few months as my special project came to an end, I re-engaged myself with the business on a more regular basis. As I did so, I began to get an itch that I was having trouble scratching. More about that in a moment, but let me give you a little bit of history. Prior to Keller Williams, real estate was essentially a "broker centric" model. Agents worked for brokers who tended to dictate how things were done, and then took a 50% cut of the agents' commissions. That's a huge chunk of money! Whatever you earn, you only get half. Once you pay your expenses, the tax man, etc., you're left with very little to show for all of your hard work.
When KW came along, they started with the same broker centric model and were growing and having some success with it, but they weren't satisfied. After looking at the way the business was run, consulting with their top agents, and crunching some numbers, KW decided to change the way real estate was done by moving to an "agent centric" model. In the new model, agents would get to keep 70% of their commissions and what they paid to the company would be capped at 18,000 per year. After KW got your 18k, you got to keep 100% of what you earned. This was a monumental shift! They also developed a profit sharing model that allowed agents to benefit when they recruited other agents to KW. Profit sharing has made a lot of people very wealthy within the KW family, particularly those that got with the program early and helped grow the company. By focusing on the agent rather than the broker, letting agents keep more of the money they earned, KW grew like wildfire. It was a revolutionary concept when it was developed back in the 80s. But like all things from the 80s, new ideas and technologies have emerged that are better. Here is where i get back to the itch mentioned above.
Like almost anyone who has been in real estate a while, I started getting the urge to "do my own thing". I wanted my own company with my rules, and most importantly My Profits. As I started doing the initial research of setting up my own company under the Austin A Plus Homes banner, I was consulting with a fellow agent about the idea. He loved the plan and he also started to do his own research. After speaking with yet another agent, he mentioned a company called Private Label Realty. Private Label, I was told, would allow me to set up and run Austin A Plus Homes as it's own business and pay Private Label nothing up front and no commission split and no monthly fees. The only thing they are charging is a $295 transaction fee, including Errors and Ommissions insurance! On top of that they were promising stock options to agents and a plan for an IPO in 5 years. How could this be possible? You simply can't run a profitable brokerage with such minimal fees. I had to find out more. I couldn't set up my own brokerage for so little money.
I'm here to tell you, the bar has been raised again. Just as KW reinvented the business from a broker centric to an agent centric model; Private Label has moved to a "client centric" model that benefits not only the client, but the agent as well.
Here is how it works, with the client's permission, PL offers bundled services at a discount. Title insurance and closing duties, mortgage loans, property insurance, and home warranty policies are offered as a one stop shopping experience. In much the same way that telephone, cable, and internet service are sold now, PL has moved that business model to real estate transactions. The brokerage business exists only to facilitate transactions for the other related services. The affiliated businesses, title and mortgage, are owned by the parent company of the brokerage which is also the company granting stock options to agents. So as an agent, you have a financial interest making sure the parent company is profitable, thereby incenting you to encourage your clients (with full disclosure of course) to use the discounted bundled services. My big question was how does this sit with RESPA? Answer: Approved. Texas Department of Insurance?: Approved.
So, as you can tell, I'm pretty excited by the new business opportunity and the possibilities it brings. I'm going to miss my old friends from Keller Williams, but I imagine that will be short lived. Not because I don't care about them, but when they learn about Private Label and what it can do for them, they'll be right here with me.
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