To hear some brokers tell it, high agent commission splits are putting them out of business. Meanwhile agents complain that they do all the work. Is there a better way to run a business? An even better question – is there a better way to serve the residential real estate consumer?

Those were among the questions that swirled around the brains of Harold (Hal) Ellis, founder of Grubb and Ellis (G&E,) and Mike Davin, former G&E VP of industrial brokerage service, when they decided to create a new kind of residential real estate firm that would “revolutionize the industry.”

Their idea, according to Catalist President Robert Kirkpatrick, also a Grubb and Ellis alum, is to “provide superior service to the customer.”

While the concept of excellence sounds tired – doesn’t everyone want to be known for excellence in service? – the execution of excellence is the challenge for most brokers. Due to the independent nature the industry and its emphasis on hiring independent contractors, excellence boils down to the actions of individuals, not companies.

Think about the cost to the listing client when the broker can’t afford to pitch in on the marketing of the home because she says agent splits are too high. How well is the client served when the agent has to divide her time between self-promotion and getting the listings sold? How cost-effective is it for agents to spend time and resources competing against agents in their own offices? The fact is, most agents, according to low average gross incomes and high marketing expenditures as reported by the NAR, can’t handle competing and marketing at the same time.

Catalist Homes, Inc says it is different because it has alternative solutions to those problems that allow the entire company to focus on the consumer’s needs rather than the self-promotion of its agents.

And, if the concept proves itself, it just might change the real estate industry.

Says Kirkpatrick, “It is not unlike the concept of Charles Schwab. Our salespeople and management work for the homeseller, and our motivation is to find a buyer and use our management expertise to help the salesperson and client find a buyer.”

Single agency brokerage

The supply side of single agency today is in buyer’s agency, but Catalist Homes, Inc is one of the only single agency brokerages in the nation that practices on the listing side.

With a nobody-loses playbook, Catalist Homes has a plan to please clients, salespeople, and its competitors.

Catalist Homes hedges its bets with two commission tiers – three percent that is split 50/50 with a co-broker representing a buyer, two and a half percent if the company represents the buyer and the seller. If a buyer wants to purchase a home listed by another broker, Catalist Homes will refer the agent with no referral fee to a buyer’s agent.

”When we have a buyer call as a result of marketing done on listings, if that buyer isn’t interested in the listing they called about, we will tell them about other Catalist listings. We do not take the buyer and show them other brokers’ properties. We will refer the buyer call to another broker, and we don’t charge a referral fee.”

Referral fees seem to be a way many brokers are offsetting lower commissions. How can Catalist give referrals away without charging fees?

”Our business is to cooperate with the outside brokerage community,” replies Kirkpatrick. “We will refer it to a broker in our community who is a good buyer’s agent. There are times when we do request a referral fee, when we list the home and sell it, and the client seller is very pleased with our salespeople the seller wants us to retain them to represent them when they buy another property, we refer them to a buyers agent in that instance, and we do a referral fee.”

Salaried agents, team bonuses

To get the entire brokerage behind the sellers, Catalist Homes employs salespeople who work as a team to get the sellers' homes sold.

“We employ our home marketing specialists (HMSs) on a salary and bonus program that is a pooled team bonus. At the end of the month, the commissions that come in, a percentage is split among the HMSs. We believe that we foster the teamwork approach to the sale of residential property that is second to none, and the big advantage is that 100 percent of marketing dollars are paid for by the corporation so the HMS isn’t responsible for signs, brochures, TV spots, billboards, and the service level to the client is guaranteed.

Kirkpatrick says the company markets extensively, and guarantees homes will be advertised in at least two print publications such as the L.A.Times, on a weekly basis until the home is sold. The listings are also advertised on Realtor.com, and there are virtual tours on 100 percent of the listings.

So far, despite deeply discounted commissions, Kirkpatrick says that the brokerage community has been cooperative. Key to its success could well lay in the company’s treatment of outside brokers and agents.

”We have on our Web site a buyer’s agent hall of fame,” says Kirkpatrick. “We list the best buyer’s agents out there. It’s free advertising for buyer’s agents. You realize we have tremendous cooperation from the brokerage community. We are at an 88 percent coop rate on selling our listings, we will serve as dual agent in about 12 percent of transactions.”

Published: November 6, 2002

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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.