Somehow, real estate commissions have survived the wave of digital disruption that has hit travel agents, stockbrokers and taxi drivers.
Even as companies such as Zillow have changed the way people search for homes, and various firms have tried flat- or low-fee models, most home sellers still pay a standard commission of 5 or 6 percent.
A year-old startup in St. Louis is the latest to try to change that. Clever Real Estate uses online marketing tools to generate leads for agents who agree to charge just $3,000 per transaction, or 1 percent for houses worth more than $350,000.
Founder Ben Mizes, 24, says Clever has done transactions with more than 800 agents in all 50 states. You won’t see any Clever yard signs, though: The full-service agents operate under their own brands, and presumably charge full price to sellers they find through traditional channels.
Mizes’ goal is to eventually generate so many leads that Clever becomes a marketing arm for agents, freeing them to stage, show and sell more houses. Even if it falls short of that disruptive vision, he says, the firm is already profitable and can grow a lot by providing agents an incremental flow of web-savvy buyers and sellers.
“We’re building a product that agents choose to use,” Mizes said. “They’re usually skeptical until three or four people close deals, and it’s business they didn’t have.”
Chris Long, a partner in brokerage and property-management firm Radius Realty, joined Clever as chief financial officer after seeing it generate business for his firm. “My agents love the Clever model,” he said. “They’re looking for more leads, and it comes down to volume.”
To bring more agents on board, Clever is adding three people to its seven-person sales team. It also has raised $500,000 from investors.