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ben mizes Startup hopes to disrupt real estate by cooperating with agents instead of competing

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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.

One investor, former Pulaski Bank Chief Executive Bill Donius, thinks Clever has disruptive potential. “The company is really well-named,” he said. “They indeed have a clever approach to doing real estate differently than it’s been done.”

Donius thinks the low-fee model will appeal to young people and sellers who haven’t built up a lot of equity. “Six percent is a lot of money to spend,” he said. “It wipes out any sort of gain people may have had if they owned for two, three or four years.

Capital Innovators, an accelerator fund based in St. Louis, invested in Clever last year. Trevor Tune, the fund’s operations director, notes that the number of days it takes to sell a house has fallen by a third since 2010, which makes this a good time to pursue a high-volume, low-fee strategy.

“Agents are starting to focus on the quantity of business they can do,” Tune said. “Before, they were always focused on finding new business and that took a tremendous chunk of their time.”

Mizes has a technology background, having raised money for an Indiana-based text-messaging startup that folded in 2016. He later began buying and rehabbing houses, which made him curious about why transaction costs were so high.

The average commission nationally remains above 5 percent. The largest discount firm, 12-year-old Redfin, charges commissions of 1 to 1.5 percent and has captured between 1 percent and 2 percent of the U.S. market.

That modest degree of success has some people convinced that real estate commissions are immune to disruption. By cooperating rather than competing with traditional agents, Clever hopes to prove them wrong.