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A new business model for an ‘old’ real estate brand

Something old, something new. Lifestyles Realty Web (www.lifestylesrealtyweb.com), a locally owned company, has both: An “old” established name, and a new business model that has allowed it to grow, despite the oddsHIGH RES-JPEG_LS_REALTY small in the current real estate market in Florida.

“Lifestyles originally came to Jacksonville in 2001,” said partner Kris Pedersen, who had been a vice president with the old firm. “It was owned by Michael Bugg. In 2003, real estate started picking up and the company grew at a fast pace. Within two years there were 400 agents in nine main offices and 72 branch offices in five states.”

When the bottom fell out of the real estate market, Lifestyles Realty closed its doors and Bugg returned to Atlanta. “I left in 2006 and went into development,” said Pedersen. “But I kept my eye on the market. I saw Dan McCarthy and his partner Ryan Fitzgerald grow their Florida Realty Web agency and saw an opportunity to resurrect the Lifestyles brand, which people recognize.” Pedersen joined McCarthy and Fitzgerald, and Florida Realty Web changed its name to Lifestyles Realty Web.

The “something new” that has contributed to Lifestyles’ success, according to McCarthy, is the tools it gives its agents, including a novel fee structure, which he says represents a new business model for real estate. He says Lifestyles has taken the best of two worlds—Internet real estate and traditional real estate—and combined them to help their agents succeed.

“We are trying to give our agents the chance to make as much as they can,” said McCarthy. “We know the agent has to do a lot more work than they used to. The most important thing is to get the top agents, and the top agents want to be rewarded.”

Those rewards come essentially in two ways: the ability to negotiate the seller’s fee and a 100% commission structure.

Under the buyer’s co-op plan, many sellers who list with Lifestyles pay a flat fee for a listing that appears in the Jacksonville-area multiple listings service (MLS) as well as on Realtor.com—two key real estate marketing tools. The seller may choose to do most (or all) of the work in showing the house and closing the deal and pay no additional fees. But if a seller wants full support and wants to be represented by an agent, a Lifestyles agent is able to negotiate the seller’s fee, down to 2%. “We give our agents the tools to negotiate with homeowners to do the best possible things for them,” said McCarthy.

Lifestyles agents who bring buyers to the flat-fee listing’s seller also have the power to be rewarded with the co-op commission (generally 3%) that is available to all licensed Realtors.

Many Lifestyles agents work under an 80%-20% commission split. Recently, however, the agency initiated a new pay structure—a 100% commission option for top agents. “The 80-20 agents get leads,” says McCarthy. “With our Internet presence we bring in a lot of leads. Some agents don’t need those leads; they are well established. We give them 100% commission.”

To make money, the agency charges a flat $395 transaction fee, no matter the selling price of the property. The agents also pay a $195 monthly desk fee, or a one-time annual fee of $1,800. “We had an experienced agent who was considering leaving real estate because of the market come on board,” said McCarthy. “In the first six months, he’s made an extra $15,600. For experienced agents, [the 100% structure] is a ‘no brainer.’”

Lifestyles Realty Web is located in Jacksonville Beach. Its resurrection, combined with the changes in how the agency operates, is working. It was grown from three agents to 23 within 18 months. The partners are also opening an office on the Southside, and are considering opening one in the fall in either Orange Park or Mandarin.


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