The Edmonton real estate market has been the topic of discussion and amazement across the country since the fall of 2005. As the economy heated up and more people moved into the province, the market became more competitive, inventory dropped and prices rose, doubling in two years. Things started to cool off in July 2007. According to the Realtor’s Association of Edmonton, the market has been flooded with inventory and prices have remained fairly stable in the past few months. It’s a great time to buy. But, is it a good time to sell? This month’s profile explores a new company in the Edmonton real estate market: 2% Realty owned by Roy Almog.
Born in Israel, Almog moved to Edmonton in 1989 at the age of 10. Favouring the idea of getting right down to work after graduating from Ross Sheppard in 1997, he spent time in retail, and as a dealer in the telecom industry, first with TELUS Mobility then with Bell Canada. All the while, he dabbled in real estate investment.
Almog learned the ins and outs of real estate investment from the trenches—buying, renovating and renting in the Edmonton area. When it came time to sell, he was lured by the potential for commission savings offered by ComFree, but found there “was no traction.” He ended up hiring a realtor and paying commission anyway. This sparked the idea for getting the exposure offered on the Multiple Listing Service (MLS) without paying tens of thousands of dollars in commission fees. 2% Realty began in earnest in May 2007.
Other companies offer to list your home on the MLS system for a fee rather than a commission, but the seller is responsible for showings, photos and all the paper work. In contrast, “2% Realty is a full service realty company. We just do it all for two percent.” Almog explains, “The idea is simple: 2% Realty charges two percent on the total selling price of the home without any extra or hidden fees.” At the time of this interview, 2% Realty had five realtors with plans to hire three more in the next few months. I had to ask: Why would realtors want to work for two percent commission when the average commission rates are seven percent on the first $100,000 and three percent on each additional $100,000? “This business is based on volume and it is tough for new realtors to get started,” says Almog. “With a two-percent commission, it’s easier to get listings and more experience.”
INNOVATIVE MARKETING INITIATIVES
2% Realty’s current marketing focuses on signage and attracting website traffic.
Lawn signs are generally consistent and nothing unusual for a realty company. What is different is Almog’s choice of lime green, as opposed to the traditional red, blue and yellow. His signs stand out, but buyers may not be on the look out for or identify with fluorescent green for sale signs. Almog’s website (www.twopercentrealty.ca) is easy to navigate and has enough information to get a buyer/seller’s attention. Nothing out of the ordinary—except for a cashback program: 2% Realty will give back one percent of its commission to all buyers on any MLS listing regardless of who the realtor is or which company holds the listing. An interesting promotion that will inevitably get people talking. The marketing also focuses on “keeping more of your investment.” In my mind, this speaks specifically to investors in rental properties or house flipping, but it may exclude those who have lived in the same house most of their lives. Even though any real estate purchase is an investment, the language could have greater appeal to investors—thus reinforcing Almog’s theory on a volume based business.
Almog also faces a challenge within the industry. He’ll have to build relationships with other realtors who might be reluctant to show his listings because of the comparatively low commission.
To his credit, Almog has engaged a public relations firm to spread the word through business, real estate and consumer publications. Building a reputation and sharing information through trusted sources is a good strategy. Most of us try to do business with people we like and trust. For a volume-based industry that deals with something as important as one’s investments and as emotional as a home, trust is a keystone to healthy sales and a profitable business.
Top Three Ways to Enhance Trust
Speaking of trust, I’m reading an amazing book called The Speed of Trust by Stephen M.R. Covey, son of Stephen Covey who authored The 7 Habits of Highly Effective People. The Speed of Trust makes a compelling case for how trust affects business in terms of speed and profitablilty. According to the junior Covey, increased trust equals increased speed of service/production and decreased costs; whereas decreased trust in an organization or between suppliers equals decreased speed and increased cost.
Here are Covey’s top three ways to build and increase trust:
- See – Changing the way you see trust will directly affect what you do and the results you get.
- Speak – There is a specific language that enables you to speak about trust and articulate the underlying issues that cause a breakdown or lack of trust.
- Behave – Integrity is fundamental to building a culture of trust—both personally and within a business—and consequently affects how employees and employers as well as customers and suppliers react to one another.