Call it a doorbuster deal for the home seller.
A Twin Cities entrepreneur is hopping on the Black Friday bandwagon with discounted commissions through what he says is the nation’s first virtual real estate brokerage. With his newly formed Empower Realty, Jim Lesinski aims to upend the way deals are done by letting buyers and sellers do the entire transaction online. For Black Friday, he’s offering to charge just 3.99 percent commission, a rate he hopes will raise his firm’s visibility with a tech-savvy demographic.
“Black Friday presents a unique opportunity for us to get a leg up on competing brokers for the coveted spring listing season,” said Lesinski, CEO and principal broker of Empower Realty. The offer is limited to the first 200 people who register on empowerrealty.com starting at 12:01 a.m. Friday.
Lesinski is launching the brokerage to attract buyers and sellers who would prefer to largely sidestep agents and do deals on their home computers. Most buyers already know what home they want, so it makes more sense to commence the transaction online and reduce commissions, he said. Lesinski says this bare-bones approach will save consumers about 30 percent; brokerages normally charge commissions of 6 to 7 percent.
“We think this plays into changing demographics, today’s first-time buyers have grown up doing virtually every transaction online,” Lesinski said. “With information so readily available on great search sites like Zillow, Trulia, and Realtor.com, many consumers know what they want to buy even before they contact an agent. As such, there is no reason consumers on either side of a deal need to pay as much as they do for a real estate transaction.”
Empower’s no-frills approach enables buyers and sellers to make an offer and negotiate the deal electronically and with the help of a broker, if necessary.
The company is built on software Lesinski developed several years ago for BuyerCurious.com, which enables consumers to make home offers online.
Using that platform, Empower Realty lets buyers identify a property and set up a showing using an agent who contracts with Empower.
If the house suits their needs, they can write an offer online that will be sent electronically to the Empower team of brokers for review.
Terms are discussed in a private chat room and all negotiations are done online. Empower, which considers itself a full-service brokerage, is able to tell the buyer the offer has been received, and counteroffers can be made in real-time via automated voice, text and e-mail.
Once an agreement is reached, all parties gain access to an online deal room where they’re able to coordinate activities and manage documents through closing.
Rather than a traditional comparative market analysis, Empower sellers set their list price by getting three independently performed value assessments from agents who are not affiliated with Empower Realty, but work in the market where the property is located.
“Our mission is to raise customer satisfaction to a level comparable to other reinvented industries,” said Lesinski. “Today’s consumers don’t want to watch their real estate transaction from the sidelines.”
The buyer can also receive a commission rebate from Empower Realty that can range from $1,000 to $10,000 depending on the final sales price.
Normal commission rates for Empower are about 4.75 percent.
But for sellers, this slimmed-down model means no agent-hosted open houses, no virtual tours and no full-color newspaper ads.
ReMax broker Marshall Saunders said he applauds Lesinski’s efforts to offer consumers an alternative to the traditional brokerage model, but he said he expects the company to capture only a small share of the market because most buyers and sellers will always want an agent to serve as a buffer between them.
“This is an industry that is ripe for change and that change will come through technology,” he said. “But real estate agents are a value-added portion of the transaction.”
Lesinski isn’t the first broker to try to minimize the role of agents.
When Redfin, a national brokerage based on the West Coast, was launched in 2002 by a software programmer, the company set out to revolutionize the market by limiting the role of agents.
But feedback from clients suggested that they wanted more support, not less, because real estate transactions are so unfamiliar.
“Even though most people are doing their own research, they still want to talk to someone who will be on their side, who knows their neighborhood and has been involved with the most-recent bidding war on that block,” said Rachel Musiker, a senior public relations specialist for Redfin.
The company shifted focus by getting agents more involved in the transaction, but the company still differentiates itself from others by paying its agents a salary rather than a commission. For Redfin agents, the incentive comes in the form of a bonus that is paid based on the results of a post-sale survey.
“People like Redfin because our agents aren’t waiting for their next sale to pay their mortgage,” Musiker said. “We felt that the commission structure of traditional brokerages stand in the way of true advocacy.”
Redfin now operating in 22 states, not including Minnesota, but that’s about to change. The company has posted a job on its website for a real estate market manager for the Minneapolis area with an unspecified start date.
Musiker said that the company won’t say when it plans to open shop until it has assembled a sales team.
Already, most Twin Cities brokerages are increasing their dependence on technology. ReMax Results, for example, recently launched several enhancements to its website, including a feature that enables buyers to search for a home by commute time vs. searching distance.
When Sal Masotto recently decided to buy a house, he was ready to get more involved than he had during previous purchases. After spending several hours perusing listings on the Web before identifying a house in Mound, he contacted Empower Realty to set up a showing. That experience confirmed that he wanted to move forward.
“From there, it was easy to make an offer electronically,” Masotto said. “It was cool. I was notified by text the moment the seller accessed our offer and again when the seller accepted it.”