Mays and Haddad
The real estate business has changed dramatically in recent years because of technological advances and changes in the marketplace. One aspect of the business that has largely gone unchanged, though, is the structure in which real estate agents and brokers split the commission on the sale of a property.
This is not the case at United Real Estate, an urban-centric real estate and franchise operation company that opened a Lexington office more than a year ago. The company uses a 100 percent commission model, also known as the Freedom Model, which allows agents to keep all of the commission on the sale of a property, minus a small flat fee paid to the broker.
“The agents are the ones that are doing all the work, so why shouldn’t they keep the commission?” said Bonnie Mays, managing broker of United Real Estate’s Lexington office. “People don’t walk into a broker’s office when they need to buy or sell a house at the rate they were 20 or 30 years ago. Typically they know somebody who is an agent, and it is that personal relationship that is crucial in today’s market.”
United Real Estate was launched in 2011 and has offices in major metropolitan centers such as Dallas, Houston, Chicago, Philadelphia and Washington, D.C. The company has a policy of opening offices only in areas with more than 50,000 people, and Lexington is by far its smallest market to date, Mays said.
Mays said under the traditional model, a broker would take anywhere from 10 percent to 40 percent of a commission on a property sale. Sales commission can vary widely depending on the price and appeal of the property, but it is typically about 5 percent to 6 percent of the selling price of the home.
Instead, agents with United Real Estate pay a flat fee of $495 per side when they make a sale. This means that if an agent represented both the buyer and seller of a particular home, he or she would pay $990 — $495 for the buyer side and $495 for the seller side.
Agents also pay a $65-per-month technology fee, which covers online and live training, use of facilities and other services provided by United.
United Real Estate is able to offer this discounted rate because of the company’s commitment to technology and the ability to strip away some of the more expensive aspects of traditional real estate offices, Mays said.
At United’s Lexington office, located at 2357 Huguenard Drive, there are no cubicles or individual offices for agents. The office features a coffee bar where agents can meet with each other or clients. Private conference rooms are available, but Mays said unless it is for a training seminar, the rooms are rarely used.
“We don’t have a lot of meetings,” Mays said. “Our view is that if you are in a meeting, you aren’t out there meeting with clients and doing what you need to be doing to be a successful real estate professional.”
Eli Haddad, an agent and director of operations for United’s Lexington office, said agents are most successful when they’re mobile rather than tied to an office.
“I’ve had more success with clients when I meet with them at a Starbucks or a Panera instead of an office. I think it just puts people at ease being in a relaxed environment like that,” Haddad said. “One of the things we concentrate heavily on [at United] is using technology to keep our agents mobile. There really isn’t much reason to come into the office when using our model.”
Haddad said United’s office is completely paperless. If an agent needs any forms, contracts or other information, all of the information is available on the company’s intranet. The company also provides training videos and webinars. These online training sources are also supplemented by some live training sessions at United’s office.
Haddad said the technological advantages at United Real Estate extended to marketing as well. While most brokers have websites that contain links to a page featuring individual agents, United assists its agents with building their own standalone websites.
“We think it allows people to bring their own individuality and branding when the site is theirs and not just a link on a broker’s page,” Haddad said. “A lot of brokers make agents hire a third-party to do a website like that, but with us, it’s all included.”
Sharon Handshoe, who began working as an agent in 2006, has been with United since it opened its Lexington office last year. Handshoe said a major reason she joined the firm — in addition to the 100 percent commission structure — was the company’s commitment to utilizing technology.
“I really love technology, and when I saw what United was doing with their marketing tools, that was enough for me,” Handshoe said. “It doesn’t really seem like other companies are as technologically driven as United is, and that can sometimes drive you crazy. I use technology in every aspect of my personal and business life, so United was perfect for me.”
Mays said since United opened its Lexington office last year it has grown from 20 Realtors to about 65. She said the office had a goal to execute 500 transactions in 2014, and so far about 350 have been executed, despite slow sales in January and February because of the extremely cold weather this year.
United Real Estate is in the process of opening an office in Louisville, which Mays hopes will garner additional exposure for her operation in Lexington. Mays said within two years she hopes to have 100 agents on staff in the Lexington office.
“We really think that this is going to be the real estate office of the future,” Mays said. “This model really puts agents in control of their own money and their own future.”