FOUNDERS COMMENTARY

I have many years experience in helping clients sell their property. In 1978 a friend and I started a business which helped home owners sell "By Owner" for a flat fee. The concept was that the seller would show their property, and we would do the advertising, negotiate with interested buyers, and handle all of the paperwork through the close of escrow. In my first month of the business I listed 26 houses. By the end of the first year we helped people sell approximately 120 houses.

In 1980 we franchised the business. The business was sold after approximately 150 franchises were operating, and it since has grown to hundreds of franchises throughout the United States.

For years I operated my own franchise in Orange County, and helped refine the concept of selling "By Owner". I found that through advertising and placing a sign on the property, holding "Open Houses" and passing out flyers, I could easily get prospects to look at properties. I found that properties sold if priced reasonably. I do not remember a single property that we did not sell, that later sold through a multiple listing agent at a price as high as we were asking.

Since owners showed their own properties and held their own open houses, successful sales depended on their efforts and sales capabilities. Some owners were not comfortable as salesmen and/or did not like the inconveniences of having  to hold their own open houses and show their property. It became evident that for some clients listing a property on a multiple listing service made more sense. We decided to offer clients the option of listing their properties on a multiple listing service at a reduced fee.

My partner and I started Net Real Estate with the idea of using my knowledge and experience to help sellers sell "By Owner" in the South Bay. There is a demand for homes in this area, and selling without using a multiple listing service is relatively easy if the property price is realistic. Since I live in West Torrance and my partner lives in Palos Verdes Estates, it is easy for us to service clients.

From my previous experience I discovered that most seller were not happy holding open houses. Many were not good at it and became frustrated. My partner and I committed from the start to holding open houses for our clients. We are loan brokers and we figured we could drum up a few loans at the open houses to help justify this time consuming activity. To our surprise many buyers coming to our open houses liked what we were doing. They liked the idea of discount real estate.  If the house was not to their liking they might ask us for help in finding one.  We began printing up lists of houses in the area where we were holding open houses and giving them to buyers not interested in house we were showing.  We told them to drive by these houses and if they wanted to see inside any of them to give us a call.  And if they buy a house from us we would take 1% of the purchase price out of our commission and help them pay their closing costs.  Thus, was born our 1% Buyers Program.     

We charge a 2% fee to help owners sell By Owner". Recently we started calling this program our Single Agent Program since "By Owner" indicated that the seller would have to do much of the work.  To the contrary we do all of the work including holding open houses. There are some clients who like to help us hold open houses and show the property, however, this is not a requirement. Essentially we do all of the work that a multiple listing broker does except we do not put the property on a multiple listing service.  For those clients who feel they need the added exposure of a multiple listing service, we will list the property for a 4% fee (with 2 1/2% going to the selling agent). You may change programs at any time. We encourage sellers to put their property on the market without using our single agent program for at least three to four weeks before listing on a multiple listing service. Sometimes a quick sale can be made to a friend, friend or relative of a neighbor or just to someone driving through the area looking for a home.

Since starting our business in 1995 we have sold tens of millions of dollars worth of property and have saved our clients millions of dollars in commissions.  When we first started our business commissions in the South Bay were usually 6% with an occasional agent charging 5%.  Today almost all commissions are 5%.  This is a South Bay phenomena.  We believe our competition helped drive down commissions allowing South Bay sellers to save millions of dollars.  W

Today we face our own competition.  Some companies are offering reduce fees when listing a property on the Multiple Listing Service.    The question that must be asked of these companies is how much are they offering the cooperating agent who brings in the buyer.  It is commonplace for buyer agents to avoid properties unless they are assured of at least a 2-1/2 percent commission.  Thus if an agent lists the property for 4% and offers to split the commission, as is common when the commissions are 5% and 6%, selling agents will most likely avoid these properties.  In fact some of  the reduce fee companies compound the problem by only offering the selling agent 1-1/2% commission while they take 2-1/2% for themselves.   We solve this dilemma by always giving the selling agent 2-1/2% while we take 1-1/2 %.  If a company is not going to offer at least 2-1/2% to the selling agent thus eliminating agents that won't show a property for the lower commission, why not use our Single Agent Program and pay only a 2% commission.

Our Company has made a profit every month since its inception.  We have had to run a tight ship and keep our overhead low in order to offer our reduced fees.  To do this we have set up a unique organization for a real estate company.  Our organization is set up much like a law firm.  Each agent earns a percentage of the total company profits and can work himself or herself into a partnership position.  This helps our customers in that theoretically every agent work for every clients.  If one agent is out of town another is always available.  A client  may have different agents with different approaches holding open houses.  The secret in this type of organization is to hire hard working smart people.  We recently brought on board new broker.  He is a practicing California attorney.  

Give us a call.  I think you will like what we have to offer.  Save some money with us and better yet have a good buying or selling experience.

Carlos Gonzales, Broker