Paul Takahashi of the Houston Business Writes About Leslie Lerner Properties: Houston Realtor doubles sales with unconventional fee structure
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Houston’s real estate industry is often seen as staunchly traditional, despite the advent of online competitors like Redfin, Trulia and Zillow.
Local Realtors have long followed a commission-based fee structure, where a 6 percent commission is split between the buyer’s and seller’s brokers. Brokers like the model, but in a digital era where prospective homebuyers can unearth a wealth of information about homes from websites and sellers can market their own homes online, customers are increasingly asking for lower broker fees.
“I kept having people ask me for discounts,” said Leslie Lerner of Leslie Lerner Properties, a full-service brokerage firm based in Houston. ” Technology has changed our market so much. I figured I needed to adapt.”
Lerner spent two decades following the traditional commission model, but switched to a flat fee and rebated commission model when she launched her own brokerage in 2013.
Instead of charging a 3 percent commission for selling a client’s home, Lerner charges a flat fee of $4,500 for a home valued at $300,000 to $799,999, and $12,000 for a home valued $800,000 and higher. Typically, the commission comes out to 1.5 percent of the home value or less, Lerner said.
And instead of charging a 3 percent commission per home closing, Lerner charges prospective homebuyers based on the number of homes she shows. If Lerner shows only one to three homes before her client decides to purchase, clients can get a rebate of 1.5 percent. If Lerner shows four to six homes, clients are eligible for a 1 percent rebate at closing.
In spite of these discounts, Lerner says she offers a full plate of real estate services, like a traditional brokerage firm.
For clients selling a home, Lerner provides a comparative market analysis, takes interior and exterior photos and lists the property on HAR.com. For clients buying a home, Lerner allows them to narrow their home search online before showing them particular homes and walks them through the complicated closing process. Agents representing the other side are always paid the traditional 3 percent.
“I have never had anyone say anything negative about my kind of program,” Lerner said. “When people work with me, they know what they’re going to get. It’s the same service I’ve always had for my clients.”
Lerner makes up for the lower flat fees and rebates by selling more homes. Having the lower fees helps Lerner attract more clients and therefore more sales, she said.
While some agents doubted her unconventional fee structure, Lerner said she’s seen success with flat fees and rebates. Last year, Lerner said she closed on 58 transactions valued at more than $36 million, doubling her sales from 2013.
“I have never done better with this fee structure, and I’ve been in this business for 22 years,” Lerner said. “It’s been wonderful.”
Paul Takahashi covers residential and multifamily commercial real estate for the Houston Business Journal. Follow him on Twitter for more.
