By STEVE BERGSMAN
Many people who buy or sell a home end up choosing a real estate agent based on references from friends or jotting down names found on for-sale signs in their neighborhood, which can be a haphazard and unscientific way of bringing an adviser into one of the most important investment decisions of your life.
A couple of entrepreneurs in Indianapolis decided there was a better way and in May 2008 unleashed to Indiana residents DoorFly.com, a Web site that connects homebuyers with real estate agents and allows those agents to bid for services by rebating commissions.
Tatum Hindman and Jon Coulter, co-founders of Performance First Inc., met when they both were buying their first homes. Some friends in the real estate industry happened to mention they were offering rebates and Hindman and Coulter wondered how others who were looking to buy homes could find out this kind of important information. They decided to create DoorFly.com. Last month, Performance First went national with the DoorFly.com Web site.
After a year in operation in Indiana, the company signed up 260 agents, Coulter said, and a month after going national 300 more real estate agents from around the country joined the site’s network.
"We have agents in almost every state now," Hindman notes.
Although Hindman sees several potential revenue paths for the site, the original and still-current model is to have agents pay a subscription fee to join the program. As of March 2009, the pricing structure was a $20 fee for a month or $100 for a year. For homebuyers and sellers, the site is free.
"Instead of walking down the street and looking at real estate agent signs and writing down names," says Hindman, "with DoorFly.com you can compare different agent’s qualifications all in one place."
So agents can compete based on their qualifications, but they can also compete economically by offering rebates on commissions, which is done, not unlike eBay.com, on an auction basis.
The concept is also similar to Realty Baron, launched in 2004 (see Inman News), which also allows consumers to negotiate a rebate amount via an auction-based system.
Steve Hose, a real estate agent with Your Castle Real Estate in Littleton, Colo., was one of the first two agents in his state to sign up with DoorFly.com after it went national. …CONTINUED
"The concept is great, because as an agent we are all fighting for a smaller piece of the cheese, while looking for a way to get in touch with buyers and sellers," Hose said. "DoorFly.com allows agents to sign and rebate part of their commission to the buyer or seller for the opportunity to do business."
When Hose signed up, there was already an auction in process for a buyer looking for property in Colorado. Hose jumped in immediately and found himself in a contest with one other real estate agent for the business.
When Inman News caught up with Hose, the closing date for the auction was imminent.
"It’s getting close and we are starting to see more activity," Hose said. "My last bid was $1,500, and someone came back and put in a bid of $1,510. But, we are getting closer to the bid deadline and I want this guy’s business so I made an aggressive move today, upping my bid to a $2,500 rebate. My opponent bid $2,510. Let the games begin."
It’s important to note, the buyer or seller doesn’t have to accept the person who proposes the highest rebate. This was the case with Dave and JoDee Thompson of Fishers, Ind., who went on DoorFly.com to find an agent for a home they were seeking in the $350,000 to $400,000 price range.
In the auction process, almost 40 agents made offers. "The best rebate was from someone who offered a $6,000 rebate (to handle the purchase of the new house and sale of the old), which shocked us," says Dave Thompson. "But, we chose someone with a lower bid at $3,500."
Since the Thompsons were looking to buy in the same area as their previous house, they opted to use the services of a real estate agent who had a history of doing business in what Dave Thompson called the "Northeast side" of the Indianapolis metro.
While the Thompsons have the agent of their choosing, they still haven’t found the house or the deal they want.
DoorFly.com does not track what happens after an agent and prospective homebuyer hook up — Hindman said, "We feel we’re winners once we make the connection and pass the information to the different parties."
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