Gary Beasley explains how Roofstock avoided alienating real estate agents by offering them referral fees instead of cutting them out. Agents could register clients on the platform and earn commissions on purchases, or work as cooperating brokers for a modest fee. This turned potential competitors into partners.
Thanks for taking some time today. It's been super helpful. I just had a question around how are you initially managing getting over the hurdle of the real estate realtor market of actual realtors trying to maintain the relationship? I know you mentioned a little bit about dealing with these massive organizations and groups. How did you get over that hump of this, hey, transact through the platform as opposed to going to your neighborhood realtor?
Yeah. So we, from the very beginning, decided not to try to alienate agents and brokers, but figure out a way to make them become at least neutral to them or become a part, have them as a distribution partner. So one of the things we did was we went out to some influential agents and brokers and said, hey, If you register your clients on Roofstock, we'll give you a referral fee on anything they buy. So in the, in the, in the, you know, they're like, wow, okay, well, I've got all these relationships with people with money. I'm never going to sell the home in Atlanta or Florida or Arizona. I'm here in California. I could get a referral fee. Why not? And so we actually had agents signing up And uploading their customer lists to us that we could then, you know, market to. And if they would buy through the platform, these guys would get checks from us. So again, it was kind of a way to make what we could be this scary competitor that's going to replace agents. But for the most part, agents are, and I don't mean to be derogatory, but they're kind of lazy. and kind of greedy. And if, like many people in sales, and if you could do nothing and make some money, why not? And so I think where it's more challenging actually for groups like, say, Compass, who is asking agents to come and turn over their database of clients and have them become Compass clients to then sell them primary homes because that's their goal. They've spent decades cultivating those customers. And so what we were doing was kind of creating an additional way for them to monetize their customer relationship, but we weren't trying to take their— they're still their customers. It's just we're kind of partnering with them. And so that's, if there's a way you can do that in your own businesses, think about people who could potentially be either competitors or, you know, might be threatened by what you're doing, if there's a way to bring them into your ecosystem, they think that's helpful. We also do some— we allow people to use cooperating brokers. So sometimes when people would come to Rootstock, we developed a cadre of agents who would be available to represent buyers. Most people would buy directly through our site and there'd be no fees. But if someone said, you know what, I need a little help, because we're representing the sellers because we were taking the listings, we had this group of agents who said, hey, if you'd like to work with any of these people, you can do that. And they would charge like a point or something paid by the buyer. And it allowed agents to Actually do a lot more business without doing a lot of work. They could just get on a couple of phone calls with people. So those are just a couple of examples of figuring out how to, you know, not alienate them in such a way that from what we didn't want was a bunch of regulatory stuff coming down on us because agents were threatened.
And so we didn't want to threaten their livelihoods too directly.
