Changing his business model
Lake Oswego residential brokerage company Change Realty is basing business on a 1 percent listing fee for those selling homes
Principal Broker Bill Gaffney wants homeowners to keep more equity in the home when they go to sell. So, instead of charging sellers the standard 2.5 or 3 percent listing fee, the Realtor charges 1 percent for what he calls 'the same service.'
And he wants to share his new business model.
Gaffney recently started a company, Change Realty, based around this 1 percent program - which doesn't affect the buyer's agents' earnings from the transaction.
Change Realty, located at 14511 Westlake Drive, #225 in Lake Oswego, is a full-service, residential brokerage firm serving the Portland Metro area - and with a focus on homes in the Lake Oswego, NE Irvington and Bethany areas, Gaffney said.
'In this economy, people should be able to retain as much as they can in the equity of their home,' Gaffney said. 'It's hard to justify brokers taking six percent.'
Gaffney refers to the typical six percent commission - split between the buyers' and sellers' agent during a real estate transaction and paid for by the seller.
'For example, assume a house sells with a traditional broker commission of six percent. The sale price of the home was $500,000. Six percent commission would be $30,000, split equally between the listing and buyer's broker,' Gaffney outlined on his website www.changerealtynow.com. 'Using the pricing offered by Change Realty, the commission would only be 3.5 percent (1 percent listing fee and 2.5 percent to the buyer's broker) or $17,500 - a savings of $12,500.'
Gaffney explained that this pricing is a 'deal between Change Realty and the seller.'
'On the buyer's side (of the transaction), they get their full commission,' Gaffney explained. 'We've had great experiences and great transactions with other brokers.'
Gaffney - licensed since 2004 - has also converted several apartment buildings to condominiums in the Northwest 23rd area of Portland in the past few years. He also manages a family portfolio of apartment buildings in downtown Portland, according to his website.
Prior to managing his own construction and development company, Investment Properties of Oregon, LLC, Gaffney was involved with Internet sales, providing electronic research data to attorneys and members of the commercial real estate community with LexisNexis and The Costar Group, his website states.
And it's these technological interests - in addition to the 1 percent listing fee - that caught the attention of Heidi Doucette when Gaffney sold her home in the Cedar Mills area.
'You could go by (our house) and instead of getting a rained-out flyer or no flyers, he had a posterboard and all the information listed,' Doucette said, '(for) people to text themselves information about our home. He's super clever.'
And client Allen Greene said Gaffney's business model is also clever. But what impressed him the most when selling his home in the Irvington neighborhood of Portland?
'Our experience,' Greene said. 'I would challenge any full-priced broker to deliver the kind of service that he gave us, honestly. … It seemed like we should be paying him more.'
Gaffney said he couldn't take credit for the 1 percent concept, saying that he spoke to brokers in Canada and Texas using this 1 percent listing fee model. Other real estate firms in Oregon have also tried this model.
'I'm not looking to franchise and take over the nation, it's just something for this area,' Gaffney said. 'It's not new. It's just new to this area.'
And he's used to the question, 'So, how do you make money?'
'The funny thing is that people think the commission is so high that the cost must be incredibly high to justify it,' Gaffney said. 'But that's not the case.'
He continued, 'I've also been the person paying the commissions and I always wondered where that money went. We started researching in 2009 if the concept would work.'
Gaffney said that using his pricing model, sellers pocket more money with the savings in commission and can price their home more aggressively to, hopefully, 'have a shorter time on the market.'
'Some people, they get it. They're on board,' he said. 'Other people wonder how they're going to make money. 'Why would I do it for less?,' they ask. But they have to understand the Dominoes effect to buy into this concept.'
And he hopes his team of three brokers can continue to 'get listings that the other brokers wouldn't have gotten,' he said.
But what happens if Gaffney assists the buyer and seller on a transaction? Gaffney said he charges 3.5 percent, his typical 1 percent listing fee and 2.5 percent buyer's fee.
While Gaffney's company offers the 1 percent listing fee for sellers, buyers with Change Realty receive a $750 Visa gift card, he said.
'It's a thank you for using us - a welcome home gift,' he said.
'People get it. It's our norm. Our business model is 1 percent. If we sell a $500,000 house we get $5,000,' Gaffney said, not $15,000. 'It benefits homeowners to know about this option. … We've created a middle ground.'
For more information about Change Realty, visit www.changerealtynow.com or call 503-622-8202.