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Brave Change
The real estate sales business model has changed little
over the years, maintaining an all-out focus on commissions.
A Gulf Coast entrepreneur is out for change.
Thomas Heimann isn't out to change the world, necessarily.
But he is out to change the long held real estate industry practice that calls for a 6% commission to be paid to the agents behind every home sale.
"The whole idea that every agent charges the same is ridiculous," says Heimann, founder of Bravo Brokers Realty, a Sarasota-based real estate brokerage.
Instead of a commission, Bravo charges a flat fee for sellers, normally $1,995 - a drop from the $2,995. For buyers, meanwhile, it will refund up to 75% of the commission of a sale. And at Bravo, a team of salaried employees works on all aspects of the sale of every home it lists, contrary to the standard industry practice of one person working each sale independently. Bravo employees earn an average of about $45,000 a year.
"The industry is agent centric, but the agent isn't our customer," says Heimann.
The approach, which a few other real estate firms have taken, is Heimann's big bet that the real estate industry business model is ripe for change. Indeed, Heimann, a German-born entrepreneur who previously co-founded a Gulf Coast-based technology company, has put $1 million of his own money into Bravo, which turns three years old this fall.
The investment hasn't paid off yet in terms of profitability, despite three straight years of small-scale revenue growth, from about $275,00 in 2006 to $450,000 in 2007 to a projected $800,000 this year. The company lost about $500,000 last year, Heimann says, and he expects it to lose another $150,000 or so this year.
But Heimann remains undaunted in the company's overall goal of rebooting the real estate business model. He's planning to open an office in Tampa early next year and he's seeking at least $500,000 in investment capital to assist with his eventual plan of growing the business model nationwide.
Landing investors in the current market has been an uphill battle, Heimann concedes. However: "People are still moving," he says. "And they aren't going to live in caves or tents."
The Bravo sales method is rooted in business models used at firms such as BuySide Realty or Redfin, national companies that also pay employees a non-commission salary to serve as home sales agents. Heimann, however, points out that Bravo's agents also do non-commission work, such as contract negotiations and closing assistance, on the buy-side of a sale.
Heimann initially used his entrepreneurial brand of stubborn optimism in the startup phase of XG Technologies, a Sarasota-based wireless communications company. Heimann is no longer associated in the day-to-day operations of XG, which is traded on a London stock exchange, but the money he reaped from that startup was essential in starting up Bravo.
After leaving XG in 2002 Heimann began selling homes for Re/Max. He was successful in that venture, the by-product of the market boom and his aggressive approach. He left Re/Max in 2005 to open Bravo.
Sticking to his technology roots, Heimann has created a late 1990s dot-com like working atmosphere at Bravo, which has about a dozen employees. And as the real estate market grows ever tougher for the traditional agent, Heimann is seeing an interest in at least one area of his business: From people who want to work for him. The company has been getting about 100 applications for every job opening, Heimann says.
-Mark Gordon
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