Traditional real estate is about to experience yet another depth charge. A new company, Homebytes.com, is pioneering a nationally scaled online- only, fee-for-service business model which assures wired consumers that they can sell their homes using the same tools as real estate professionals.

Offering the customer another option is what the company is all about, says Homebytes' CEO David Clark." Our real focus is the for-sale-by-owner," says Clark. "When I became involved, I thought real estate on the Internet is huge and no one is focused on the seller, everyone is focused on the buyer."

Clark and his company may indeed be flying under the market radar with its simple, low-risk, low-overhead business model. First, the company is positioned to be the first high-profile single agency in the U.S. since it plans to offer limited assistance to sellers only. Second, the company is forging a new selling niche for consumers, wedged comfortably between doing it themselves and getting full service from a Realtor, a category it could own, if it makes all the right moves. That makes the company the first fee-for-service company with a national presence, too. With two ground-breaking points of difference, one can only wonder at the caution the company is displaying by opening in four test markets, with plans to be in every state by the fall. Why not blindside traditional agency the way e-Trade, et al, did the securities industry?

Explains Clark, "e-Trade didn't replace the traditional securities brokers. They just gave the consumer another option. That's what we do."

Niche-building aside, it may also be a matter of capitalization. The company has received a venture capital boost of $12 million, hardly enough to impact a nation, but by watching its pennies, the company could be avoiding the overcapitalized losses and chameleon revenue plans of some other seller-focused dot coms. A greater risk may be that one of those chameleons may be ramped up to cross the finish line first with an identical single-agency, fee-for-service business model.

The company has a clear target in the FSBO, which is estimated to be growing. Although there are no current, non-partisan statistics on the number of people who are marketing their own homes, it's wise not to underestimate the prevalence or the determination of the FSBO.

Homebytes puts the FSBO market at about 30% of homesellers, ten percent more than the National Association of REALTORS allows in its most recent survey of home buyers, released in 1997. Julie Garton-Good, author and industry advocate of unbundled services (fee-for-service) estimates the near-future number of FSBOs as high as 40 percent in some markets, a figure she gets from the little publicized N.A.R. A.D.Little survey. In a recent article, Good explained that move-up sellers, particularly boomers, have bought and sold multiple times, so they know the drill. Other surveys show that first-time and first-time trade-up buyers are transacting homes at younger ages than in the past, and they mirror the profile of the Internet-enabled consumer who wants more control over their purchases and investments for correspondingly lower fees. Together, these two focus groups could impact traditional agency severely.

And Homebytes is ready to help them. "Everything you need to sell your home yourself" is the company's slogan. Find out how, in this exclusive interview of Homebytes.com CEO David Clark with Agent News editor, Blanche Evans.

B.E.: Who answers the phone - customer service representatives? Are they Realtors?

D.C.: Yes, they are licensed and cross licensed in different states.

B.E.: Is multi-licensing a requirement of employment?

D.C.: It helps our call center, the more broad they can be, the more help they can give.

B.E.: You are listing homes and providing customer support for a flat fee of $499. Is that all there is to it?

D.C.: People want us to be professional and they want us to tell them how to sell their home. "Tell me what I need."

B.E.: Why real estate, why online and why sellers-only?

D.C.: When you look at it, it makes sense. The total transaction (with related services) is 15 percent of the gross domestic product, 1.12 trillion dollars.

We dissected it, and about $32 billion is paid out in commissions. The buyer is the more direct route to affiliate-related services. Thirty-two billion is sizable - we looked at the traditional transaction. Sellers are predisposed to doing it themselves. Over the past 10 years, the average FSBO has been about 15 percent. Another 12 to 13 percent started off as FSBO and ended up with a traditional agent. A third of all people selling their homes want to save commissions, particularly in hot markets.

No one has done research, the majority is done by the N.A.R. It is not in their benefit to show the FSBO population is growing, but we believe about a third want to do it themselves.

B.E.: Where does that leave the agent?

D.C.: In focus groups, we found the average FSBO receives 14 phone calls from agents. Two questions are asked - "Will you sell through me?" and "Will you pay me if I bring a qualified buyer?"

The greatest frustration was in listing. They (the focus groups) felt there was an incongruency of service for dollars paid. The same transition happened in the securities industry where I compare us - we are the e-Trade of the real estate industry. We are a viable alternative to the traditional model where the consumer wants to do a little more of the work to save more of their home's value. In the past they didn't have a choice, they could go FSBO or go with a professional and pay five to seven percent. There was no middle ground.

B.E.: Let's talk some more about the parallels.

D.C.: Securities was an extremely regulated industry, and the consumer wanted more control. You want to sell your home yourself? In today's shifting economy that is more of a reason to sell your own home. They want to understand it more. They don't want to just turn it over to someone else. The typical reasons for people to avoid going FSBO have changed from technology to the consumer mentality.

B.E.: Are agents just out of touch with what consumers want?

D.C.: What we have seen is the average real estate professional, 730,000 are members are N.A.R., is a 52-year-old woman with 13 years experience, making $42,000 a year. The average new home buyer is a 31-year-old male. The average second home buyer is a 41- year-old male. We believe that the wealth in today's economy favors the new home buyer and home re-buyer. It is inevitable that there will be some evolution of the traditional model.

B.E.: What is your relationship to consumers called?

D.C.: Limited representation - we become the listing agent. We educate the consumer through the fulfillment kit, and assist them with lock boxes, signs, etc. We have a technology center staffed with licensed real estate professionals and a call center for support. We are a licensed real estate firm.

B.E.: Have you had any resistance to your joining MLS organizations? What about protests from traditional agency firms?

D.C.: They are not happy but there is little they can do. There are 14 points by N.A.R. and they must avoid any pricing biases. We are complying. We have a six-person legal staff and outside counsel. We have taken a significant resources to go state by state to insure we are complying with the serpentine rules and regulations. We comply at a better rate than most traditional companies.

The only way an MLS could push on us is pricing. We aren't a threat to traditional real estate. We are enhancing the image because now people have a choice. We believe they want a professional, and a percentage want an alternative. Because that alternative exists they (consumers) are more tolerant because they have a choice and they know they made the choice they wanted.

B.E.: Do you offer flat fees to buyer's agents?

D.C.: The buyer's agent offers a tremendous amount of value, they do a substantial amount for the fee they are paid. They will be a significant portion of the transaction and it will always require hands-on personal assistance. S/he knows the schools, shopping centers, etc. that is stuff information technology can't replace. On the listing side, the function is pricing and educating the seller on their responsibilities in disclosures and other documents.

B.E.: How much on their own are the sellers?

D.C.: A seller works with an agent and the agent is there to assist. We have started a market test roll-out and have found that very few people are using the call center. The new listing customers are using the Web site and that is telling us that the actual process on the Web site is easy to navigate. We make sure they have the sample forms and contracts, and they are password protected. We also answer a lot of questions through email.

B.E.: Will you franchise?

D.C.: We aren't franchising. We're all corporate-owned.

B.E.: A lot of people couldn't turn away from serving both sides.

D.C.: We are laser-focused on the aspect of the business we have chosen. We aren't all things to all people. We specialize. We are finding our sellers become home buyers and we are trying to put in place a referral network because they have listed or sold their home.

B.E.: What about your agents?

D.C.: We are pro-employee. We offer a different career path within the real estate community. It is a great opportunity for a new Realtor. We are mixing call center people and training them as real estate professionals and taking Realtors to be call center individuals. It is a home seller assistance environment. We offer stock options, a health plan, I'm a strong believer in health plans, a 401 K.

B.E.: It all seems so simple...

D.C.: What nobody is locked on to is technology is going to drive us. We have some patents pending, our home pricing wizard. Our strategy is to hone the model, implement the model through legal and research, create the technologies, and roll out.

Published: April 13, 2000

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.