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Home arrow Real Estate News arrow General News arrow Advance Realty aims consumers at lower prices

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Advance Realty aims consumers at lower prices
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Friday, 08 September 2006

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Consumers in today’s economy are rapidly becoming a more cost-conscious lot, a fact that is clearly reflected in the current housing market. Price appreciation is stabilizing while listing time increases. While there is still plenty of activity, the real estate boom has cooled down.

Founded in 2001, Advance began franchising offices throughout the state last year and currently has eight franchises throughout Maryland with a ninth on the way. Advance will soon debut locations in Pennsylvania and Florida and has aggressive plans to expand throughout the nation. According to Advance’s Director of Franchise Development, Adam Schechtman, the company’s timing and unique business model has lead to a 300% growth over the last 18 months.

“The discounting trend is prevalent in many industries already and commissions have been on the decline for nearly two decades,” says Schechtman. “We’ve just taken a leadership position in this type of offering to the real estate sector. It’s no secret that the consumer is demanding more for less. As the industry’s ‘Full Service Discount Experts,’ Advance is not a bargain or menu-driven discount company; we offer full service all the time. We maintain a quality image, deliver full service full time and instill consumer confidence that they’re not sacrificing anything just because they’re saving money. We’re not the only discount company out there, but we do things quite differently. For example, Advance is the only full-service discount franchise with a ‘mentor-centric’ revenue sharing program for agents.”

This model, says Schechtman, makes his company both agent driven and consumer driven—a rarity in the real estate business. In the Advance Realty system, agents are attracted to many membership-based benefits, such as the revenue-sharing element and consumers are attracted to the idea of full service and paying lower commissions—a simple win-win for all, including the brokers.

Good for Consumers, Good for Agents
According to Schechtman, the popularity of the Advance Realty model with consumers has paved the way for steady profitability. Advance Realty franchisees attest to this fact.
“The low commission rate was attractive to me,” says Terry Berkeridge, owner of an Advance Realty office in Bel Air, Maryland. “It’s an easy sell to consumers.”

With Advance for three years, Berkeridge describes the company as a full-service discount model. “That means you can save consumers money with a listing fee of only 1.75 percent, which is our side of the transaction. If you’re talking about a $300,000 home, you’re looking at a $4,000 savings by utilizing our services…and we provide the exact same services as the traditional real estate company.”

This is a significant savings considering the price of today’s homes and the more cautious eye being applied toward consumer spending.

“You have to educate the consumer on how it works,” says Berkeridge. “They’re familiar with the traditional 6-7 percent commission fees and when you can put a piece of paper in front of them that says, this is what you pay at 6 percent and this is what you pay at 4 percent, they see that they can save thousands of dollars—it’s really a no-brainer.”

Berkeridge emphasizes the fact that the company’s point of differentiation lies in its full-service approach. “There are a lot of discounters out there that have an a la carte menu,” he explains. “Some 1.75 percent companies won’t multiple list the property without additional fees—they’ll just put a sign in the yard and it’s for sale. With Advance, you get the open houses, the MLS listings, the advertisements in publications, etc. It’s the exact same service, if not more than, a traditional firm.”

Despite the significant savings to home buyers and the reduced commission rate, Berkeridge attests to the profitability of the business model. In short, it’s a question of volume.

“The theory is, the more you list the more you sell,” he explains. “If somebody calls and wants to sell their home, that means they’re moving to another home. We take them from the home they’re selling into their next home and we get that higher commission on that end of the transaction.”

Vicky Hupfeld has been an agent with Advance Realty for five years and just opened her own franchise office about six months ago in Middle River, Maryland. “I got into the business with Advance almost from the beginning because the model allows you to stay competitive, yet saves the seller money,” she says.

Hupfeld too, doesn’t view the company as a traditional discounter. “We’re full service but we also save people money. Advance’s model gives me the flexibility of working for myself, yet has all the right systems in place to succeed. I really believe in this business model.”

Marty Saunders, in the real estate business for over 25 years, also became involved with Advance Realty after working under various other systems. “When the opportunity arose to buy a franchise, I thought this would be a good opportunity to get into something I knew would be successful,” he explains. Already operating one franchised location, Saunders will also open an Advance Realty office in the Baltimore suburb of Canton, with intentions of having Advance’s ninth Maryland franchise open by year’s end.

Like his colleagues, Saunders believes that Advance stands apart from the other firms in its field. “Other companies try to do discount but they don’t do it professionally,” he believes. “Advance does everything professionally—they don’t spare a dime.”

Berkeridge utilizes a full promotional campaign to promote his Advance Realty franchise including billboards, radio advertising, ads in publications and local papers. The number-one thing that makes the phone ring, however, is yard signs, he admits. “We encourage every listing to put up a yard sign. We also do quite a bit through our Web site—www.AdvanceRealtyUSA.com.”

According to Berkeridge, Advance’s reputation is drawing many agents who are choosing to transfer from larger, traditional real estate companies. “They see what the future of real estate is,” he explains. “They know that commissions are going to be discounted and as much as we don’t want to hear it, discounting is here to stay.” Advance Realty seems to be positioning itself as the “go-to” discounter for service-conscious consumers.

The current market climate will only help to better position Advance in the marketplace, says Saunders. “Even though the market is slowing down,” he explains, “people still have to sell their homes. A lot of people bought houses at more expensive prices and now that the market has adjusted, they’re having a hard time getting the money back on their investment, even to break even. With our discount, it helps them get a little more back.”

Bottom line, according to Berkeridge: “The consumer is always looking for the best deal and if you can show the consumer that you can provide the exact same service for less, then why wouldn’t they come to us?”


Edwina Baniqued

 
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