|
Low-Priced Brokerage Mocks Real Estate Industry |
|
|
|
CataList Homes Inc., a real estate veteran, openly mocks its industry
rival by providing a new way of selling homes. Hal Ellis, a 74-year old
founder and chief executive of CataList, have been engaged in a
well-funded campaign to change the traditional way of selling homes in
California.
Ellis has three strategies. First is to charge home
sellers half of what commission-based brokerages give. He offers a full
service while giving 3 percent of the sales price instead of the
average 6 percent.
Second, Ellis pays his agents as regular employees with monthly
salaries instead of independent contractors. Lastly, the CataList
website, which was originally used for brokers, is now a
consumer-friendly portal used by anyone that provides updated local
housing-price data.
According to Hal Ellis, their business model was expected to be
disruptive and will surely evoke response from the industry. His
ultimate goal is to make CataList, a Hermosa Beach-based company, the
leading low-priced, full-service real estate alternative in California.
Ellis is relying in pure basic economics. “As the housing market
slows down and values stop rising fast, home sellers could think twice
about giving large equities to real estate agents. As he performs his
conventional marketing strategies, Ellis is expecting the market to
force down the cost of residential home transactions.
With Ellis’ low-commission policy and high marketing costs, his
company would need larger numbers of sales to gain sufficient profit.
Since 2001, when CataList opened their first office, the company has
sold approximately 700 homes in Orange County and South Bay areas. Its
number is only a fraction of the 300,000 residential sales for each
year in Southern California.
However, CataList is planning to open up 10 new offices in Southland
and 40 in Northern California areas within the next two years.
According to Ellis, the company is spending US$2,500 for each
costumer – a number larger than average sums. This is to attract new
clients and promote its company through radio, newspapers and
brochures. The company’s goal is to shape the sum down to US$1,000 by
focusing on commission rates and access to local property listings.
CataList’s strategy is designed to provide a full, low-priced
service. The seller is given a detailed marketing strategy, including
all advertising tools. The CataList pays this high-profile promotional
campaign on the contrary to traditional brokerages that entail its
freelance realtors to pay for the marketing.
Although many nontraditional brokerages, such as CataList Homes
Inc., have been the talk of town, their collective market shares remain
nowhere near that of full-commission players. Dominant real estate
players such as Prudential Real Estate, ReMax and Cendant share more
than 50 percent of the total national real estate market.
These companies’ dominance remains a problem for CataList since the
local leaders dismiss the company as a “discount firm that is less than
full service.”
According to Michael Davin, chief executive marketing officer of
CataList, the company’s open disregard for traditional brokerage
business is part of their marketing strategies. Further criticisms
allow real estate practitioners to be lead into the company’s website.
Despite Elliss’ real estate expertise, he still considers himself as an
entrepreneur who welcomes risk-taking challenges. Ellis remains
optimistic by saying “There isn’t any rocket science in our model. It
can be copied. Our only advantage is being among the first."
By Paulene Calinawan
Jump2Top.Com
Search Engine Optimization Company
Miami Real Estate |
