Low-Priced Brokerage Aims To Shake Up Real Estate Industry In California

Low-Priced Brokerage Aims To Shake Up Real Estate Industry In California

Seventy-four-year-old Hal Ellis, a former originator of Grubb & Ellis Realty, is now bucking the established way of selling homes and openly mocking his rivals.

Ellis is the founder and CEO of CataList Homes, a well funded company that�s engaged in a sometimes caustic campaign to upend the traditional way homes are sold in California.

His strategy: charge home sellers half of what most commission-based brokerages do�3% of the sales price, instead of 6%�without scrimping on service.

Ellis further bucks the established brokerage system by paying his agents as full-time employees, instead of independent contractors, and using the CataList web site as a consumer-friendly portal for all local housing-price data. Such information until recently had been for brokers� eyes only.

According to Ellis, CataList is no different from Charles Schwab & Co. and Southwest Airlines�companies that have attacked entrenched commission-based business models to become low-cost leaders.

While lower-priced real estate brokerages are nothing new (consider Help-U-Sell, Assist2Sell, ForSaleByOwner.com, and ZipRealty), CataList�s model is designed to bridge the gap between low fees and full service.

To survive in the long run, Ellis has corralled a stable of top-flight private investors. Real estate investment firm Marcus & Millichap has an 8% share, strategic consultant Bain & Co. has taken an equity stake in lieu of fees, and two other Silicon Valley venture funds have also chipped in.