Get Real Oregon!: October 2011

A DIFFERENT WAY TO SELL REAL ESTATE

Small company finds success with a high-tech, low-cost model

The Register-Guard

Published: (Sunday, Oct 23, 2011 05:00AM) Today

Chris Pietsch/The Register-Guard

With daughter Zoelle, 9, (left) and son Beringer, 4, supervising, Bryan and Kelly Ranstad manage Hybrid Real Estate from home.

Hybrid Real Estate is not yet three years old but it’s growing quickly, despite the slowdown in the real estate market.

The Eugene residential real estate company launched by Bryan and Kelly Ranstad has attracted 60 real estate agents, claimed 4.7 percent of the local real estate sales volume — year to date — and is the first and only real estate firm to be recognized in the 24-year history of the Austin Family Business Program awards.

“Most people thought that we were not very smart starting a real estate company at the very beginning of a downturn,” said Kelly Randstad.

The Austin competition’s judges lauded Hybrid for leading an “entrepreneurial shift in real estate industry.”

The Ranstads’ model for operating a real estate company — high tech, low cost and geared to back up experienced and creative agents — was right for the times, those agents and even the firm’s competitors say.

“We realize we’re very, very fortunate to be in this position in this economy, especially being a startup business,” Kelly Ranstad said. “We’re very humbled by it.”

The Hybrid model — though unique in its particulars — is part of a third wave of management changes that have swept through the real estate industry over the past three decades, said Steve Murray of Real Trends, a Colorado-based industry newsletter.

“The guys in your market aren’t the first guys to do this or perfect it,” he said, “but it’s definitely a trend.

“It started in the bigger cities. And now it is in the mid-size cities — 300,000 to 1 million — we’re seeing these things pop up all over the place.”

The changes are internal. They’re about how the owners of real estate companies split the commission with agents — who are independent contractors — when a house is sold.

Thirty years ago, the agents shared most of their earnings with the company, which provided them with an office, training and management, Murray said.

“When I started real estate, everything was a 50-50 split,” said Mike Boyst, principal broker with Hybrid. “If you sold a house and got a $1,200 commission, the company took $600 and you got $600.” As the agents made more in commissions, the proportion going to the agency got smaller. The split became 60-40 or 80-20, Murray said.

The RE/MAX model in the late 1980s brought the first wave of change, Murray said. Agents kept all of their commissions but paid a high flat dollar amount to have a desk and reception area at a RE/MAX office, he said. The company went from a few thousand agents in the early 1980s to a peak of 90,000 in 2006, Murray said.

A second wave came when Keller Williams Realty rose to prominence in the 1990s. In the Keller Williams model, agents pay the broker money until the agent reaches a set amount, and then the agent is done for the rest of the year. The company quickly grew to 80,000 agents.

The third wave began about five to seven years ago, Murray said, when low-cost, technology reliant firms such as Hybrid arose in cities throughout the country. They’re attractive to agents, especially in a recession, because the agents retain more of their commissions, he said.

Each new wave has left a mark on the traditional real estate franchises, Murray said. The older firms were forced to reduce their share of the split, somewhat, to retain their agents.

The Hybrid Real Estate model got its start in late 2008.

Boyst, who had managed real estate offices for 20 years in Eugene, had just been laid off. He was having coffee with Bryan and Kelly, then in their early 30s, and batting around ideas for a new kind of real estate firm.

By the next day, the Ranstads had a written plan. “I was blown away with how fast they work,” Boyst said.

Boyst needed a job, and the Ranstads needed Boysts’ experience and reputation. “We were not well-known people in the industry,” Bryan Ranstand said. “We were small potatoes. He’s our silver-haired fox.”

The Ranstads financed the startup with money they made earlier as agents.

They endeavored to position themselves against larger national firms by emphasizing that they were “100 percent local.” “All the money stays in the area. That’s huge,” Bryan Ranstad said.

But their key decision was to keep costs as low as possible for agents. An agent is able to take home roughly $10,000 to $12,000 more a year than at traditional brokerages, according to the company’s commission schedule.

Hybrid saves money by limiting its brick and mortar outlay. They don’t have a big office with a receptionist.

Instead, they have two “customer care centers,” small offices with conference tables, where agents can meet with clients. Otherwise, agents work out of their home offices and their cars.

Instead of buildings, the company has an aggressive technology program. “One of the advantages of being an independent company,” Bryan Ranstad said, “is that technology is moving very fast. ... It’s really hard for a big, national machine to keep up with it because there’s too many branches out there, where you have to train.”

“Technology for us has to pass a certain test,” he said. “It has to be cheap or free. It has to help you sell your listings or it has to help you grow your business in some way — and if it doesn’t do those things, then it probably isn’t really going to help you.”

The Ranstads were early adopters of “e-property,” creating a Web page for each property, using virtual tours and other electronic methods to get buyers interested. Hybrid signed up as a beta tester for Real Lead, a program developed by a Eugene company that provides information to agents within minutes of visits to the Web page.

“Kelly’s very tech savvy and can offer a lot of expertise,” said David Leier, president of Prudential Real Estate Professionals. “She keeps current on all the new trends — how to do surveys — and how to promote and to push that way.”

Hybrid agents use Dropbox, a free service that allows them to upload and share documents. “We don’t have to keep all of these fat files all the time,” Hybrid agent Kathryn Sampson said. “Everything is in a safe cloud.” Not having to go into the office frees up time, she said.

Hybrid also controls costs in ways as simple as making its own real estate signs, for $12 a pop. And it hires experienced agents who don’t need basic training, who thrive working on their own, with support of the agency but no management.

The concept works, said Hybrid agent Tim O’Dell. “If you want support, it’s there,” he said. “If you want to pool your resources for advertising, that’s possible, too. It’s everybody runs their own show the way they like to run it.”

Hybrid real estate grew at a rapid clip: 38 agents signed on the first year, 51 came on the second and the third’s not over yet, and the count is 60. Five years from now, the couple hopes to have opened branches in nearby cities. In 10, they plan to conquer the Northwest.

“I would hope we really are a significant regional company,” Bryan Ranstad said.

“It’s everybody runs their own show the way they like to run it.”

— Tim O’Dell, HYBRID AGENT

WINNING FIRMS

The Austin Family Business Program at Oregon State University announced that three Eugene businesses placed in its 2011 excellence awards:

IB Roof Systems: First place in the medium-sized business category

Hybrid Real Estate: One of two finalists in the micro business category

GloryBee Foods: One of two finalists in the large business category

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