Online Real Estate Brokerage Magnifies Discounts
By Elizabeth Razzi
Maybe the world doesn’t need yet another real estate Web site promising to revolutionize the way we buy homes. But the launches keep coming anyway, and the Washington area just got a new one, Sawbuckrealty.com, earlier this month.
Sawbuck, a real estate brokerage that exists only on the Web, makes all the usual promises: cool and easy home searches, referrals to real estate agents, and the chance for buyers to save thousands of dollars on each deal. It sounds wearingly familiar, but Sawbuck looks as if it could be smarter than the average URL.
It allows you to search all the homes listed on the local multiple-listing service, Metropolitan Regional Information Systems, and includes price data that used to be available only to real estate agents. It’s likely to be the site I use most often to search listings and gather price information.
Sawbuck is the baby of Steve Barnes and Guy Wolcott, who run a District mortgage lender, Flex Funding. Its launch includes only Washington-area homes, at least for now.
Sawbuck’s business model addresses some long-standing problems in how real estate deals are handled on the Web and in the physical world.
One of those problems is that too many sales tools, from low-tech yard signs to high-tech Web sites, direct buyers to the agent who listed the home, even though the listing agent already represents the seller. Smart buyers find their own agent who can negotiate for a lower price and better terms.
Another problem is that too many brokerages promote their own mortgage and title services to buyers without offering substantial discounts for keeping all that extra business under one roof.
That’s not the way it should work. When you buy the burger, fries and Coke, McDonald’s gives you a cheaper price than if you buy the pieces separately. It’s the same thing with homeowners and auto insurance; if you buy them together you get a discount. But real estate brokers rarely offer a substantial price break when you buy their combo package.
Sawbuck tackles both issues. The system does not funnel buyers to the listing agent. Instead it offers to match buyers with an experienced local agent who can represent them. And it promises significant discounts if you use it for brokerage, mortgage and title services.
I’ll get to the details on those discounts shortly. First let’s look at the fun part of the site, the search function. All worthwhile real estate Web sites offer a good search function; it’s the carrot that lures potential buyers.
Sawbuck is not the first Web site to offer full multiple listing service access in the area. Redfin.com, for one, offers it. But Sawbuck makes the information easier to find and provides more price data for recently sold homes.
Redfin recently boosted its price-comparison content, but its pages are statistic-heavy and harder to interpret than Sawbuck’s. The latter’s approach is easier: Click on the map, look at the house picture, and see the sellers’ original asking price and their current price. You can click from house to house and get the history of recent sales through the whole neighborhood.
Map-based searches, such as the one on Sawbuck and other sites, are a fun, efficient way to explore neighborhoods. Sawbuck’s version offers more information than most. Click on a for-sale house to get the full addresses, original listing price, subsequent price markdowns and the length of time on market. That’s critical information for estimating how much a property is worth.
Sawbuck makes it easy to track where you’ve visited already. You can rank each home on a scale of one to four stars. On repeat visits, just skip those you’ve already given a low rank. (Rankings are just a memory aid and are not published on the site.)
Unlike other sites, Sawbuck allows you to use the same map flyover method to gather price information for recently sold homes. It includes the original list price and the actual sales price, which can help you figure out the direction in which prices are trending.
After you’ve finished searching, should you stick with Sawbuck for the purchase? It’s at least worth getting a referral to one of its participating agents. Interview the agent and ask for references before you commit to working with him.
When I’ve tested other Web sites, I have all too often been referred to an inexperienced agent who knows nothing about the specific neighborhoods in which I’m interested.
Wolcott said the company plans to refer buyers only to screened real estate agents who have significant experience working with buyers. I was able to speak with two longtime, top-selling agents, one in Virginia and one in the District, who confirmed that they are working with Sawbuck, although both asked not to be named for fear of undermining their traditional brokerage business.
We can hope agents will take the paper bags off their heads once the Web site becomes more established.
In exchange for referring buyers to agents, Sawbuck earns a referral fee of about 30 percent of that agent’s share of the commission. Wolcott said the company uses part of that fee to buy down the buyer’s mortgage interest rate with its participating lender. That lender also agrees not to charge prepaid interest — in other words, points — or other fees related to the mortgage, not even for the appraisal or credit report.
Like the incognito real estate agents, that lender doesn’t want to publicize its involvement with Sawbuck so other customers don’t push for similar discounts.
The title company doing business with Sawbuck, District-based Federal Title & Escrow, will waive fees amounting to about $300 for Sawbuck customers. Title companies earn most of their income from hefty commissions on the title insurance they sell. For example, Todd Ewing, president of Federal Title, said his company retains 85 percent of the premium as its commission. That’s how a title company can afford to discount or eliminate its other fees.
If you use a Sawbuck real estate agent, you are not required to also use its mortgage or title partner. But to get the discounts, you must use the Sawbuck agent.
I hope the Sawbuck system develops as promised. So far it looks like a good, low-risk deal that puts more power in the mouse-clicking hands of buyers. At a minimum, it’s already a great search tool.