In a slowing national market, buyers and sellers will be paying closer attention to commission structures, according to the co-founders of Yoreevo, a fast-growing New York City brokerage that offers rebates to buyers and sellers.
“With affordability going down, buyers and sellers will both look to save as much money as possible to offset interest rate pressure on the buy-side and price pressure on the sell-side,” says James McGrath, a former financial analyst who co-founded the company in 2017. “We’re also going to see buyers and sellers pause long enough to understand the market and think about their transaction costs.”
By leveraging technology to acquire low-cost leads, Yoreevo offers buyers up to 2% savings through commission rebates and low listing fees for sellers. “We provide a more efficient and personalized experience than traditional brokerage firms for approximately one-third of the cost, streamlining everything from the initial home search to the closing table,” says McGrath.
In 2021, the brokerage says it completed $200 million in transaction value and closed on more than 150 homes with a team of five agents – a 150% increase from the prior year. Since its inception, Yoreevo leaders say they have closed more than $500 million in transaction value and distributed over $8 million in commission rebates to more than 400 customers.
Leveraging technology
Like other brokerage models like Flyhomes and Houwzer, both founded after their leaders bought homes and found it painful, McGrath and Leon Goldfeld launched Yoreevo after going through the traditional home-buying experience themselves. “I knew there was an easier and more affordable way to purchase an apartment in the city,” says Goldfeld, whose prior experience included consulting and finance. “We felt we could do it better and put more money back into the hands of our clients.”
Yoreevo’s leaders have invested in proprietary tools that they say help its agents be more productive, including a lead generation solution that produces low-cost qualified leads. “Most brokers use technology to solve problems that aren’t, in fact, problems,” says McGrath. “Average agents doing five to 10 deals per year, don’t need an hour shaved off each deal — they need more deals. Only when you hit 20, 30 or even 40 deals a year do you start running out of time and need to use technology to automate and streamline the process.”
By prioritizing the client experience and providing leads, Yoreevo’s agents can spend more time with buyers and sellers, taking a fully hands-on approach throughout the transactions, says McGrath. He adds that Yoreevo’s low-commission, full-service model is the only offering. “There is no compromise on service so there is no lower-priced option.”
Impact on agents
McGrath says Yoreevo’s model has definitely helped with recruiting. “There are many agents who are excellent with clients and either not great at finding them or skeptical of that sales portion of the job,” he says. “We also provide a base salary and benefits so agents don’t have to worry about every deal or hiccup in the market. But if you want to be on ‘Million Dollar Listing’ and earn $500,000 for a single deal, this isn’t the job for you.”
Eliminating agents’ customer acquisition costs allows them to spend their time with customers on revenue-generating activities, adds McGrath. This allows brokerage to operate at lower commission rates, attract more clients and continue to drive down acquisition costs.
“Through technology and an updated brokerage model, we’ve reinvented the home-buying process by offering a customer-centric, technology-driven approach that matches modern times,” says McGrath.
Looking ahead, McGrath encourages more brokers to invest in agent technology tools. “There are so many parts of the job done manually that can be automated to increase efficiency and productivity,” he says. “Brokers should be asking their agents what they do every day, and help them free up time to work with more clients.’
Although its been a point of discussion for many years, McGrath also believes that commission compression is coming soon — driven in part by the dramatic increase in information transparency in recent years.
While an unpopular opinion among agents and brokers who say that their services haven’t changed despite tech platforms, McGrath insists, “Agents are paid the same commission fees but are doing significantly less work with the influx of platforms like Zillow and StreetEasy,” he adds.
“Agents need to look at their current offering and make a decision. They either need to specialize in a niche where they can justify higher prices or transition to lower commission rates.”
