We have seen different real estate business models come and go over the years.
Some business models work better in certain geographical locations than others.
Companies like Zillow, Trulia and Homes.com came on the virtual scene in 2006 and after. Google attempted to do Google Real Estate and had a map with a lot of the istings called Google Base. They closed it down a while ago.
Discount brokers and reduced fee agents and buyer rebate agents started promoting their services online followed by Redfin who has a discount model that includes paying a salary to their agents.
In our market none of these companies have made a foothold. Zip Realty opened up an office here and closed it down not long after they opened.
Flat fee companies have started here but after a few months we don't hear from them again.
Then there is that Craig Proctor marketing strategy of buying the listing if it does not sell in 90 days. That model won't work well in high end markets.
Have you ever thought about paying sellers for their listings?
There is a real estate broker in our market who has started this new business model. What he is doing is offering to pay the sellers for their listings. He pays for the listing on a sliding scale based on the value of the house. The payments go from $300 to over $10,000. Even if the property does not sell, the seller gets to keep the money.
The listings do need to meet with his business model framework, I would think that he has stipulations like motivation to sell and the house can't be a huge mess and smell like garbage or pets or smoke.
If the house does not sell, they seller gets to keep the money that the broker paid to him. There are no strings attached.
The sellers do have to sign a 6 month listing agreement to qualify for the payment and they also must agree to a commission % he has specified upon selling the property.
He is financially stable enough to be able to carry this model for a few years because he knows it will take a while to return a profit from his model. I am thinking you would need at least $1 Million to work with to make this model work.
He has let the real estate commission know about his business model. He has requested them to give him a declaratory statement which they have not done yet. They also have not said he can not do it. His attorney will have to keep working with the commission on this part of the business plan.
What say you?
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