A Scrappy Real Estate Broker Stakes Her Business on Flat Fees

Colleen DeBaise By Colleen DeBaise

Ati Okelo Williams, the owner of DC Home Buzz, a real estate agency in Washington, D.C., says she is not used to feeling fearful.

Most of her life, the 35-year-old entrepreneur has made bold moves, usually without thinking twice. As a teenager, she left her native Kenya to attend college in Canada. With little money to her name, she moved to the United States after school to intern for a nonprofit. She bought her first home in the D.C. area at age 22, not sure if her $1,000 deposit check would clear — it did, and she made a $30,000 profit when she sold the house six months later.

In 2009, Williams – by then a licensed real-estate agent – left the safety of a big firm, Keller Williams, to start her own firm. At the time, the housing market was in a freefall. “I didn’t think that hard about it,” she said. “Even though the market was collapsing, there was still business.”

But Williams said she did feel “analysis paralysis” a year ago when she grappled with a new fee structure for DC Home Buzz. Despite the encroachment of online players like Trulia, Zillow and Redfin, the real estate industry remains staunchly traditional. When brokers sell a home, they typically collect a commission of 3 percent of the purchase price. (Another 3 percent of the price goes to the buyer’s broker.) Brokers like this model, but consumers increasingly want lower fees, Williams realized, particularly as the Internet has changed the way people market homes.

After consulting with lawyers and mentors, and in a bid to boost her listing volume, she decided to switch to a flat-fee model last April. Rather than taking the traditional 3-percent commission, she now charges sellers $9,900 to list and market their home. “I was not fearless,” Williams said. “I felt like I had a lot to lose.” No longer a solo entrepreneur, she had four agents at the time — including her husband, Rob Williams — and two employees who depended on her business’s success for their livelihood.

While other real estate agencies have tried offering flat-fee commissions, they tend to be discount brokers who offer minimal service. Full-service agents, on the other hand, say they offer expertise and a range of services — including staging a home for visual appeal – that justifies the 3-percent commission. Few agencies have tried marketing themselves as both flat-fee and full-service, which is what Williams’ company is doing now.

She said she is able to offer full service while charging a flat fee because she’s spent five years building a bootstrapped firm with lean systems in place. “We’re small and efficient,” she said. She uses a variety of low-cost marketing tactics — home buyer’s workshops, community events and happy hours with wine and cheese – to get the word out about her listings. Also, most of her listings are priced in the $400,000 range, so her flat fee isn’t far from what a 3-percent commission would pay.

Since she introduced the new fee structure, Williams said her listings have tripled. In 2013, acting as the selling agent, DC Home Buzz closed on 22 homes, up from 7 in 2012. Her firm handled 74 transactions last year for buyers and sellers, compared with 39 transactions the previous year. (When DC Home Buzz represents buyers, it still collects 2.5%-3% commission.) The total volume of homes sold in 2013 was slightly more than $31 million, up from $18 million in 2012, and her goal is $50 million for this year. Williams wouldn’t disclose annual revenue but said her firm was profitable.

“So far what we’ve got is really positive,” said Williams, who believes more brokers will switch to a flat fee as consumers demand it. “At some point, the industry is going to shift. So we are ahead.”

Still, Williams acknowledged that only time will tell if her business will be able to sustain the flat-fee/full-service model. Most seller’s brokers don’t want to give up the 3-percent commission, which becomes more lucrative, of course, as the price of the home rises. (For instance, if Williams sells a $1 million home, she receives $9,900 while an agent working on commission would be paid $30,000.) The cost of staging – which Williams must cover with $9,900 – also increases with the size and scale of the house. Few, if any, of her full-service real-estate competitors in the Washington area have switched to the flat-fee model.

Williams hopes to make up for any shortfall in profit with more listings. “We are relying on doing volume,” she said. Still, with her employee’s careers on the line, “when people ask me what keeps me up at night,” she said, “that’s what keeps me up at night.”

Read Full Transcript

Ati Williams — Founder, DC Home Buzz

Ati Williams (AW): I never really thought when I grow up, I want to be an entrepreneur or that I want to work in real estate. That never even crossed my mind. But I oopsed into it…and good thing I oopsed into it because I can’t imagine myself functioning in any other way.

CARD: Ati Okelo Williams, Founder – DC Home Buzz – Washington, DC, USA

AW: I’m really passionate about entrepreneurship because I feel like it’s given me a lot of opportunities. And one of the things that I have loved about America is there is no glass ceiling as an entrepreneur.

I was born in Nairobi, Kenya and I was the oldest of four siblings.

CARD: Ati’s mother owned a hair salon. Her father was a pilot with Kenya Airways.

AW: My father was a very strong believer in getting a good eduction and so, even though it was a challenge, my father opted to take us to private schools which meant struggling to come up with the tuition fees. So it was not unusual to get sent home because we had not paid the tuition that semester. And it’s embarrassing for a child and it’s traumatic.

CARD: After 12 years of all-girls Catholic school, Ati won a scholarship to York University in Toronto, Canada.

AW: In the midst of getting really excited about going to college and picking college courses, my father passed away. So I moved to a completely new country where I did not know anybody, still kind of reeling from my father’s death.

You know, I could hear my dad saying ‘get it together,’ and, you know, ‘you just have to get it done.’

CARD: Ati graduated with a business degree in 1999. She got a job with a nonprofit health organization in Washington, D.C.

AW: I decided that I wanted to lay roots in the United States and, I was like, what’s more American than achieving the American dream of home ownership? And so, I bought my first home. I didn’t have a big nest egg; I used a government program for a first-time home buyer. And so, I wrote my earner’s money deposit check for $1000 and I was like crossing my finger that it didn’t bounce.

CARD: Ati was just 22 years old. Six months later, after making minimal improvements, she sold her home at a profit.

AW: So, at that point, I was like, wait a minute- I’m making $31,000 at my job and I just made $30,000 off a paint and carpet in six months…there is something wrong here.

CARD: In 2004, Ati was laid off due to budget cuts.

AW: I just had that moment where I was like, now what?

And one of the things that crossed my mind was well, you know, I really enjoyed this real estate process. And so, I applied for a job as a real estate assistant; got the job, got my license. I really did not think through it – I just did it.

CARD: In 2009 she felt ready to start her own company, DC Home Buzz.

AW: I was terrified about making my first hire because the reality was, out of college, I had one job and I didn’t even have a management position. But necessity ended up trumping fear and that’s the reason why I was able to finally make that leap.

CARD: Her first hire was a paid intern. She now hires agents, consultants and office staff.

AW: You know, I like to call them my team of rivals. I want people who are really good at what they do to come and work with me.

CARD: In 2013 Ati launched a $9900 fat fee listing service, the first in the D.C. area.

AW: A lot of the real estate industry is commission-based so we are definitely disruptors in our industry by launching this service. I knew that it’s something that consumers wanted because it shouldn’t cost significantly more to market a $1 million property than it does a $500,000 property, especially in this day and age of technology.

It’s changed our business because we’ve been able to triple our listing volume.

CARD: Ati is currently aiming for $52 million in home sales.

AW: What advice would I give a woman who is starting her own business? Number one: Get started. Just do it. Don’t overthink it. In making decisions that are risky as a business owner, I am trying to channel that 23-year-old self who just decided to do it.

Nina Vaca Video Credits:

Producers – Victoria Wang and Sue Williams
Director – Sue Williams
Editor – Merril Stern
Director of New Media and Outreach – Colleen DeBaise
Director of Photography – Sam Shinn
Associate Producer – Nusha Balyan
Social Media Manager – Heather Mangal
Assistant Editor – Matt Strickland
Social Media Coordinator – Christina Wu
Music – Killer Tracks

Photos Courtesy of:
Kyler Randall
123rf

Posted: February 19, 2014

Colleen DeBaiseA Scrappy Real Estate Broker Stakes Her Business on Flat Fees