Given the travails in the current real estate market, this doesn’t seem like a great time to try out a new home-selling model.
Rob Buntz disagrees. “When an industry is in chaos, people look for ways to save money,” he says. “Some sellers have to sell, and if they end up accepting a lower price on a house, they can look to us and say that at least we’re saving some money.”
Buntz is cofounder and CEO of Webdigs, a Minneapolis-based real estate brokerage that uses the Internet to help people look for and sell homes. Webdigs, which launched in July 2007, allows buyers to search any home listed in the Northstar Multiple Listing Service (MLS) for Minnesota, western Wisconsin, eastern North and South Dakota, and northern Iowa. Its search engine prompts users to sort by city, zip code, or neighborhood, then narrows their search by other factors, such as number of bedrooms or bathrooms. In contrast to other realtors’ sites, Buntz says that the Webdigs search model focuses first on neighborhoods then on a house’s attributes, which is how he believes most house hunters search for their next home. This helps customers save time.
Webdigs offers listings on the standard MLS Web site and its own site, as well as instructions on how to advertise property on Craigslist and other independent listing services. Once buyers have chosen homes they’d like to see in person, a Webdigs agent or broker takes them on a tour of the homes they’ve identified. If a deal is struck, Webdigs handles negotiation and paperwork.
Webdigs charges sellers $3,000, plus the commission they pay the buyer’s broker. That can save sellers an average of $7,000, Buntz says. Buyers save, too, because Webdigs refunds to them two-thirds of its commission.
How can Webdigs sustain its business model? Webdigs brokers and agents are paid an annual salary that Buntz says is “significantly more” than the $40,000 average industry income, plus a bonus that’s based on customer satisfaction surveys. The emphasis is on customer service, not getting buyers into pricey homes. Agents get a steady income, and Webdigs holds onto more commission income.
In addition, Webdigs earns less than half its income from real estate sales. The rest comes from independent mortgage and insurance brokerage services. (It plans to add title services in the spring or early summer.) And while the firm is restricted to selling homes in states where the company is licensed (a list that’s steadily expanding), “we can and do write mortgages all over the place,” Buntz says.
