I just heard of this new company that is planning to launch in mid-2009, called Aybaf.  It is a new virtual brokerage model with the following pertinent points:

There were some other details, but the above are the main points.

The most amazing thing about this is that every agent will be on a 100% split, and because Aybaf is a purely virtual brokerage (except in states where they must have a physical office, in which case it will be the smallest possible “storefront” with a single desk, or even just a PO Box), the “desk fees” are only $19.95 a month.

Aybaf’s business model is premised upon making money upon delivery of actionable leads (they haven’t figured out the precise rate, but thinks it’ll be in the 10-15% of GCI, and only if it leads to an actual closed side for the agent), and taking a piece of any premium services the agent purchases.

What do you think?  Could this work in real estate?

-rsh

UPDATE: You might want to read this, the followup to this post.

33 Responses

  1. Interesting, but it scares me. Not, scares me.. .like, how will I make money in the new economy? But more, what happened to brokers actually accepting risk for their agents.
    Brokerage is not about being cheap, or about providing web leads, it is about oversight and policy.
    Sure, agents want freedom, and I’m not saying that brokers should be micromanaging their agents, but if you are making $240 from an agent each year, there is no way you are accurately pricing risk.
    Every agent needs a different type of broker, but you could not convince me to be a principal broker at Aybaf for any price.

  2. Interesting, but it scares me. Not, scares me.. .like, how will I make money in the new economy? But more, what happened to brokers actually accepting risk for their agents.
    Brokerage is not about being cheap, or about providing web leads, it is about oversight and policy.
    Sure, agents want freedom, and I’m not saying that brokers should be micromanaging their agents, but if you are making $240 from an agent each year, there is no way you are accurately pricing risk.
    Every agent needs a different type of broker, but you could not convince me to be a principal broker at Aybaf for any price.

  3. So they are going to make $240/year/agent. How many agents will they have to hire to break even (much less make a profit)?

    No (or little) brick & mortar will certainly reduce their overhead, but the systems they are building and supplying can’t be cheap.

    Seems they would need to hire a significant number of agents to be profitable.

    Who will vet these agents, or will they hire anyone with a license and a pulse keeping them and their monthly checks while an algorithm distributes leads to “productive” agents? (Call me old fashioned, but I prefer to assign a brokerage generated lead to the right agent for that client. You know, by hand — matching the clients needs with the agents skill set and personality.)

    I hope they have a substantial E&O policy in place. As Keith correctly points out in the comment above, there’s no way they could be providing the proper oversight to the number of agents they will need to have at the prices they are charging.

    But wait. I see now that they are going to make 10 – 15% on every lead they provide that closes. Doesn’t really sound like “100% commission” to me, that sounds like a 85 – 90% split.

    Of course brokerages that charge $1500/month “desk fees” claim “100% commission” too.

    I give my agents almost complete autonomy to run their business as they see fit — within legal and ethical bounds of course. But I make damn sure they are compliant with all rules, regs and policies. Who will be doing that for Aybaf’s agents that are spread across the country?

    Can it work. Sure. Sounds like some cool tools. I do share Keith’s concern about oversight. And while I love and embrace technology, some things (like assigning leads) are best lest to personal and professional judgment.

  4. So they are going to make $240/year/agent. How many agents will they have to hire to break even (much less make a profit)?

    No (or little) brick & mortar will certainly reduce their overhead, but the systems they are building and supplying can’t be cheap.

    Seems they would need to hire a significant number of agents to be profitable.

    Who will vet these agents, or will they hire anyone with a license and a pulse keeping them and their monthly checks while an algorithm distributes leads to “productive” agents? (Call me old fashioned, but I prefer to assign a brokerage generated lead to the right agent for that client. You know, by hand — matching the clients needs with the agents skill set and personality.)

    I hope they have a substantial E&O policy in place. As Keith correctly points out in the comment above, there’s no way they could be providing the proper oversight to the number of agents they will need to have at the prices they are charging.

    But wait. I see now that they are going to make 10 – 15% on every lead they provide that closes. Doesn’t really sound like “100% commission” to me, that sounds like a 85 – 90% split.

    Of course brokerages that charge $1500/month “desk fees” claim “100% commission” too.

    I give my agents almost complete autonomy to run their business as they see fit — within legal and ethical bounds of course. But I make damn sure they are compliant with all rules, regs and policies. Who will be doing that for Aybaf’s agents that are spread across the country?

    Can it work. Sure. Sounds like some cool tools. I do share Keith’s concern about oversight. And while I love and embrace technology, some things (like assigning leads) are best lest to personal and professional judgment.

  5. @Jay

    Interesting and valid concerns, Jay.

    I do think, however, that 10-15% on lead provided is hardly 85-90 split, since true 85-90 split is on leads that the agent farms himself. I believe companies like Weichert and others have this model, where if it’s a “house lead”, then they charge an extra %, and the agents seem to think that’s fair, as long as they keep 100% of leads they’ve brought in themselves.

    Insurance is actually one of the biggest line items; apparently, that isn’t a major concern for them because of scale. Plus, indemnity provisions and the like can probably provide them more security as well.

    Finally, I’m going to find out, but their model is similar to Sperry Van Ness in Commercial from a recruiting standpoint. They want to tempt the experienced, top producing agents, who have a proven track record. As Kris Berg mentions in her latest post, it doesn’t seem that experienced agents need anything from the broker.

    @Keith

    My understanding from speaking to numerous high quality agents (and see the Kris Berg link above) is that they really don’t need the broker for anything at all, especially ‘oversight and policy’. They routinely violate all kinds of brand ID guidelines in favor of building their own personal brand. Some agents, you would have to search long and hard to find out what brokerage/brand they are with from their business cards or websites.

    How is Aybaf different from those?

    -rsh

  6. @Jay

    Interesting and valid concerns, Jay.

    I do think, however, that 10-15% on lead provided is hardly 85-90 split, since true 85-90 split is on leads that the agent farms himself. I believe companies like Weichert and others have this model, where if it’s a “house lead”, then they charge an extra %, and the agents seem to think that’s fair, as long as they keep 100% of leads they’ve brought in themselves.

    Insurance is actually one of the biggest line items; apparently, that isn’t a major concern for them because of scale. Plus, indemnity provisions and the like can probably provide them more security as well.

    Finally, I’m going to find out, but their model is similar to Sperry Van Ness in Commercial from a recruiting standpoint. They want to tempt the experienced, top producing agents, who have a proven track record. As Kris Berg mentions in her latest post, it doesn’t seem that experienced agents need anything from the broker.

    @Keith

    My understanding from speaking to numerous high quality agents (and see the Kris Berg link above) is that they really don’t need the broker for anything at all, especially ‘oversight and policy’. They routinely violate all kinds of brand ID guidelines in favor of building their own personal brand. Some agents, you would have to search long and hard to find out what brokerage/brand they are with from their business cards or websites.

    How is Aybaf different from those?

    -rsh

  7. If their getting all these web hit every month how come I can’t find them on the internet. Our “cash flow for life” program for Realty Direct Boston beats this model all day long.

    There is no way they are getting that kind of web traffic.

  8. If their getting all these web hit every month how come I can’t find them on the internet. Our “cash flow for life” program for Realty Direct Boston beats this model all day long.

    There is no way they are getting that kind of web traffic.

  9. If you ask me, they are biting off more than they can chew. Whey start a national virtual real estate brokerage without testing their business model in one or two markets and then after a year or so of testing their model, launch on a national level.

    I am with Keith, there is no way I would want to be a broker with Aybaf (What does that mean)!

  10. If you ask me, they are biting off more than they can chew. Whey start a national virtual real estate brokerage without testing their business model in one or two markets and then after a year or so of testing their model, launch on a national level.

    I am with Keith, there is no way I would want to be a broker with Aybaf (What does that mean)!

  11. I think Wurzer is on the right trail in studying this as an acronym. Mid-2009; maybe the first of April as a launch date, perhaps? How about: Attention You Brokers, April Fools!?

  12. I think Wurzer is on the right trail in studying this as an acronym. Mid-2009; maybe the first of April as a launch date, perhaps? How about: Attention You Brokers, April Fools!?

  13. Gotta love the moxie. Smart, Imaginative people can easily sit down and paper napkin and blue print a time machine or a space shuttle.

    The key, execution, leadership, funding, patience, adaptability.

    Especially leadership, leadership to develop and crusade a culture. How can a tribe thrive without a culture? How can you create a culture when every man and woman can deliver any level of legal service?

    Also, there aren’t enough Kris Berg/Jay Thompson fireballs to support an unsupervised model. As they’ve done, they do it better themselves.

    The world turns – cheers.

  14. Gotta love the moxie. Smart, Imaginative people can easily sit down and paper napkin and blue print a time machine or a space shuttle.

    The key, execution, leadership, funding, patience, adaptability.

    Especially leadership, leadership to develop and crusade a culture. How can a tribe thrive without a culture? How can you create a culture when every man and woman can deliver any level of legal service?

    Also, there aren’t enough Kris Berg/Jay Thompson fireballs to support an unsupervised model. As they’ve done, they do it better themselves.

    The world turns – cheers.

  15. Hmmm… Looks to me like someone’s floating a trial balloon…

    This is only one of a myriad possible models that companies looking to capitalize on the new rules of the road for virtual brokerage might adopt.

    I’ve
    pointed out before
    that I think 100,000 broker and agent website will have virtual brokerage capabilities by the end of 2010. I’m more firmly committed to that view every day.

    If this hypothetical firm got off the ground, it would account for several hundred VOW sites all by itself.

  16. Hmmm… Looks to me like someone’s floating a trial balloon…

    This is only one of a myriad possible models that companies looking to capitalize on the new rules of the road for virtual brokerage might adopt.

    I’ve
    pointed out before
    that I think 100,000 broker and agent website will have virtual brokerage capabilities by the end of 2010. I’m more firmly committed to that view every day.

    If this hypothetical firm got off the ground, it would account for several hundred VOW sites all by itself.

  17. 2,000,000 visitors/month? It would have to be a site that we’ve heard of before that will just be adding brokerage services to it’s model. National, currently generating lots of leads…

    Zillow? Trulia? Roost? Does the traffic count match any of those sites?

  18. 2,000,000 visitors/month? It would have to be a site that we’ve heard of before that will just be adding brokerage services to it’s model. National, currently generating lots of leads…

    Zillow? Trulia? Roost? Does the traffic count match any of those sites?

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