FOR BROKERS: Companies to Watch

BY ROBERT FREEDMAN

Selling choice

Menu lets consumers pay for only what they want.

In a year when real estate brokerages in southeastern Wisconsin are watching many buyers sit on the sidelines, Roy Scholtka’s five-year-old company was actually increasing its sales, closing 1,126 transactions by mid-September, up from 1,090 at the same time last year.

Meanwhile, volume among the area’s five largest companies had dropped between 3 percent and 25 percent in year-over-year figures in early September, according to data from the Greater Milwaukee Association of REALTORS®.

Some high-visibility marketing on cable TV and a fleet of Toyota Scions wrapped in Scholtka’s company logo have most likely helped the company’s performance. But Scholtka thinks one of HomeSale Realty’s principal strengths is its listing services menu.

For a premium commission rate, sellers can select a full-throttle listing program that includes two open houses and two display ads per month in selected publications, and a direct mail campaign, among other services. Or sellers can choose from three other listing plans, each with a reduced mix of services, and pay lower commission rates.

“We think of ourselves as the Southwest Airlines of real estate,” says Scholtka, who founded the company in 2001 with one office and one sales associate. He opened his eighth office this year. Some 240 associates now affiliate with the company, making it the sixth largest brokerage in his market.

The associates find out from consumers what they want and have the flexibility in their offerings to tailor a service-commission mix, says Scholtka. “Maybe customers want the base level of services with a marketing plan—MLS entry, a CMA, some ads. Maybe they want to offer a home warranty or pay a higher co-broke fee. We’re just embracing choice, and consumers are responding to that.”

The company offers one-stop shopping through an affiliation with Central States Mortgage Co. and Premier Title & Closing Services. The mortgage affiliate has been attracting 10 percent to 20 percent of HomeSale deals a year.

The affiliates receive no special treatment in getting company deals sent their way. “If they’re not competitive, they don’t get the business,” says Scholtka. “We just ask our associates to at least let customers know about them so that the affiliates can make a bid for the business.”

Commission splits to HomeSale associates range from 50–50 for rookies to 80–20 for veterans. Bonus splits can reach 90-10. Associates’ marketing and other costs are split with the company at the same rate as their commission split, so associates keeping 80 percent of commissions pay 80 percent of their costs. All associates, regardless of split, also pay a marketing and administrative fee to the brokerage that’s 7 percent of the gross commission on each deal.

Associates sit on an advisory board to help the brokerage decide how to spend the money generated from the 7 percent fee. Earlier this year, part of the money funded a cable ad campaign showcasing the company’s fleet of wrapped Scions.

No office launches are on the board for 2007, but Scholtka is exploring more expansion through either licensing or franchising the company business model inside and outside the state. “The sky’s the limit for a company that makes consumer choice central,” says Scholtka.