When Matt Widdows founded HomeSmart in 2000, there were just two agents, a receptionist, and the dream of a new real estate brokerage model with low agent fees and efficient technology to drive what he calls “incredible customer service.” Today, HomeSmart is an international franchising company that continues to experience hyper-growth.
In the early ’70s, most brokerage models were traditional, charging agents high-split commissions. Suddenly, a new breed of real estate brokerage came along—the 100 percent commission model. As with anything new, the old guard promptly referred to the new model as “low service, discount brokerages” and attempted to discredit the evolution while diminishing the value that these companies offered their agents.
Fast forward to 2000 when HomeSmart emerges with its new disruptive model. And, just like in the ’70s, there was no shortage of naysayers trying to stop the progression of the industry and HomeSmart. But this time it’s different, and the industry as we know it is at stake.
‘The Traditional Model Is Dying—They Just Don’t Know It Yet’
What didn’t exist in the ’70s is the likes of Zillow, the proliferation of data available to buyers and sellers, and a more tech-savvy, informed consumer. This is putting more pressure on both the agent and brokerage to change. Brokers have to prove their value more than ever before, which includes finding ways to reduce fees to the agent. So, how does that translate to the death of the traditional brokerage model?
“Most traditional brokers have come to rely on high agent fees from heavy commission revenue to ensure operational success,” says Widdows, HomeSmart’s chief executive officer. “The high fees they charge their agents are causing agents to question the level of service and value they receive for those high fees, and that’s why we believe the traditional model is dying—they just don’t know it yet.”
Meanwhile, HomeSmart’s top agent across the company last year grossed more than $1 million in GCI while paying the company just over $12,000 in brokerage/franchise fees. It’s examples like this that are resulting in many top-producing agents making the move to HomeSmart.
“These top agents are finding HomeSmart’s customer service and technology alone are worth the move, and the money they now save is a bonus they can spend on retirement or that vacation they always wanted to take. High brokerage fees are dying,” says Widdows.
How HomeSmart Charges So Little and Offers So Much
Customer service was (and still is) mission critical at HomeSmart, and providing platforms that enable the company to offer that is key. More than 15 years ago, Widdows quickly realized there was very little in the way of transaction management software or other systems to manage a brokerage. What did exist was nothing more than glorified CRMs or accounting systems. He knew that he needed end-to-end technology and systems in order to achieve operational efficiency and customer service goals.
“The only way to offer high-touch customer service is through integrated technologies that create operational efficiency. I realized that few people in the industry had even begun to think about how proprietary, integrated technology would streamline the industry,” says Widdows. “As an agent, I saw a lot of room for improvement in the industry, and I knew that I could create technology systems that met the high bar in service and support that I had set while keeping transaction fees low for agents.”
Widdows set out to create his own proprietary system to solve efficiency problems for both brokers and agents alike. He had owned and sold a computer company in the early ’90s and wrote the first version of his transaction management software. The system would track each transaction for the brokerage, allow input on the brokerage side for document review, track documents received, and then display that information to the agent through a Web portal. This was the first platform to truly connect the brokerage and its agents via technology in the industry. It resulted in a huge reduction in phone calls from his agents because they had what they needed throughout the transaction. Widdows estimates that initial platform alone saved him a full-time employee, which meant 50 percent of his entire staff at that early point in the company’s history.
Soon after, Widdows hired software developers to take what he had already created and develop a full-blown brokerage management system based on his experience as both a broker and agent. The philosophy behind the software was to simply take the human tasks that staff or agents perform on a day-to-day basis and automate them. This was the first step in making real estate easy, which is the company’s motto. As a result of this initiative, every HomeSmart office has been 100 percent paperless since 2007, an incredible feat in and of itself.
The problems we face today in real estate technology are not the same problems we faced in the early 2000s. Back then, it was tough to find much in the way of technology for the real estate industry. Today, it’s almost as if there is an abundance of technology and much of it doesn’t “play nice” together.
“A lot of companies that focus on technology do so for the ‘wow’ factor or to eliminate human interaction,” says Ashley Bowers, HomeSmart International chief operating officer. “We create and implement technology to make everything in the real estate business simpler for people, not to remove the human element of this very relational business.”
As the first decade of HomeSmart came to a close, the question of franchising popped up more and more. Widdows had to make a final decision about whether to become a technology company that made an impact on the industry, or a franchised brand that changed it. He chose the latter.
HomeSmart International has taken a unique approach to franchising in that Widdows still owns three of the company’s highly successful brokerages in small, medium and large markets. And, all three brokerages operate at a profit without adding in affiliate partnerships and ancillary services, a rarity in the real estate brokerage business today. Because of this approach, coupled with the immense success of the HomeSmart franchise in Phoenix, Widdows and his team are able to guide HomeSmart International franchisees to design their own company infrastructures based on a scaled model of the flagship brokerage to help set them up for success following a tried-and-true method.
“During the economic downturn, agents began demanding lower fees and higher value out of their real estate brokerages,” says Bowers. “We believe that’s why we grew so much during that period of time. We offer high value at a low cost, which is what agents want. We also provide a landscape for brokers under the HomeSmart brand to succeed long-term, regardless of the economic conditions.”
This focus on brokers, agents and consumers is the driving factor for why Widdows has invested millions of dollars to develop integrated proprietary technology, designed to make the everyday life of a broker or agent much more seamless.
“Our technology platforms exist to make conducting the real estate business as easy as possible,” says Todd Sumney, HomeSmart International chief marketing officer. “It enables our franchisees to conduct a high volume of transactions with minimal staff overhead and exponential efficiencies to make for a highly scalable growth model.”
The Sky’s the Limit
Widdows, an avid pilot, approaches the world with a “sky’s the limit” attitude. He’s never satisfied and will continue to pursue all of life’s adventures to the fullest. This is a theme amongst the HomeSmart team, which often refers to this saying: “Set ridiculous expectations and find a way to make those expectations normal.” In this spirit, Widdows recently built a state-of-the-art, 38,000-square-foot World Headquarters for HomeSmart International. This will allow the team to continue to grow in order to best serve brokers, agents and consumers.
“We won’t succumb to becoming like every other real estate brand out there,” says Widdows. “From day one, I’ve wanted this company to approach things from a rebellious standpoint—and that’s exactly what we’re going to continue doing into the future because it’s who we are inherently.”
HomeSmart International has set a goal to help 100,000 agents get the raise they deserve. Based on the trends within the organization, the sky’s the limit for this innovative and revolutionary real estate brand.
Numbers that Back the Model
• 2015 REALTOR® Magazine Franchising List
• 2015 Entrepreneur Top Low Cost Franchises List
• 2015 Entrepreneur Franchise 500 List #376 (4th highest ranked real estate franchise)
• 2015 Inc. 5000 #2986 (a three-year growth of 120 percent)
• Net positive franchisor growth in agent count and office count since franchising began
• 89 percent of all inbound calls are answered without going to voicemail
Recent HomeSmart Franchisee Accomplishments:
A snapshot of milestones hit by some of the company’s franchisees.
• (HomeSmart Phoenix) 2015 RISMedia Power Broker Report – Sales Volume No. 15, Transaction Sides No. 12
• (HomeSmart Phoenix) 2015 Phoenix Business Journal Book of Lists – No. 1 Residential Real Estate Brokerage
• (HomeSmart Phoenix) 2015 Phoenix Business Journal Book of Lists – No. 1 Residential Real Estate Agent (Bobby Lieb)
• (HomeSmart Evergreen Realty in Irvine, Calif.) 2015 RISMedia Power Broker Report – Sales Volume No. 168, Transaction Sides No. 353
• (HomeSmart Professionals Real Estate in Providence, R.I.) – Year-over-year growth of more than 100 agents
• (HomeSmart Advisors in Spokane, Wash.) 2015 Inc. 5000 – No. 279, three year growth of 1661 percent
• (HomeSmart Professionals in Palm Springs, Calif.) Year-over-year growth of more than 25 percent