Tuesday, February 27, 2024

This franchise may be immune from the commission lawsuits

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It seems like every day a new lawsuit is launched, pulling NAR, numerous brokerages, and MLS groups into yet another courtroom battle. As countless copycat suits are filed nationwide, even smaller teams and boutique brokerages have started to become targets. But one real estate franchise might avoid these lawsuits and has seen franchise interest skyrocket in recent months. 

This brokerage was founded by Grant and Kelly Clayton in 2015 after having a bad experience with an agent themselves. The couple became agents in 2011 but found themselves pushed by their peers to do and say things that mimicked their bad experience. The founder and CEO, Grant Clayton, states, “We saw a lot of good people that were not big producers and a lot of top producers that were not really good people. The industry immediately rubbed us the wrong way.”

They struggled early on, and it wasn’t until they started pursuing builders and offering them a better deal to list their homes that their business grew. They received a lot of complaints from their peers, but instead of buckling under pressure, they expanded their value proposition to the general public. According to Grant, “We met a lot of people through our new home listings that needed to sell in order to buy, and before we knew it, we were listing homes all over the place, and the referrals started pouring in.” They continued to grow, but so did the backlash, so in 2015, they launched their brokerage to be even bolder.

They founded 1 Percent Lists in 2015 after being shunned by the industry. In 2020, they were named by Inc. 5000 as one of the fastest-growing companies in the nation and one of the 100 fastest veteran-owned companies in the nation in 2022. They have now opened dozens of franchise locations nationwide. Their story of growth and backlash from the industry is one example of why these lawsuits are happening. When explaining the thought process behind it all, Grant states, “I don’t understand why an agent would pay a 40 percent referral for a buyer lead but not charge less to get easier listing leads. A good agent can manage a lot of listings but only a handful of buyers. Being buyer-focused does not scale well. Having a lot of listings scales incredibly well.” 

Word spread quickly among the local agents, and no one seemed to like it. Grant says, “So many insults came our way. We were continually told we are bad for the industry, but we as agents are happier and more profitable, and our clients love it.” 

The founders of 1 Percent Lists believe that a better value proposition to list homes solves just about every problem in real estate. When asked to explain, Grant states, “Listing homes faster is the key to generating more revenue as an agent and having a bold, clear value proposition is the easiest way to do that. Higher volume makes an agent wiser and more knowledgeable. When you are providing an experienced and more affordable agent, deals tend to chase you.”

When asked why only 1 percent and not a higher fee, Grant states, “Agents spend too much time and money looking for business and not enough time doing business, listing three homes at 1 percent generates far more revenue than listing one home at 3 percent because it creates so many more opportunities. You have to consider the long-term value of a client that is incredibly loyal to you. A lot of those listings turn into buyers, which typically means a much higher fee.” Almost all of their clients offer a buyer’s agent a fee that is within the averages for their market, but their fee is always that same 1 percent. 

By 2020, the company had grown to produce nearly 1,000 transactions annually in the New Orleans area, and word began to spread. Others wanted to join in their success, so they started franchising their model. Their company has evolved over time, and their offering to agents has improved as well. 1 Percent Lists offers complimentary tools to all of its agents, such as KvCore, graphic design content creators, video content, training and more. When asked about the changes, Grant states, “Agents typically move to make more money. Many agents think the trick is a better split or cap but really, the best way to ensure higher GCI is to list more houses. Our agents make about 35 percent less per deal, but they do A LOT more deals, which more than makes up for it.”  

When asked about the lawsuits and how they affect his company, Grant is optimistic, stating, “We were born out of this industry problem. Every bit of content that we have created highlights those same industry problems. We are a company that is 100 percent consumer-focused and not at all focused on industry norms.”

With the viral spread of lawsuits nationwide and now the involvement of the Department of Justice, many changes are coming to the industry whether we want them or not, and a small number of companies are ahead of the changes that might be coming our way.

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