Like a fancy gym membership, the money agents pay to stay under a brokerage’s umbrella better go toward something they actually use. Otherwise, you might as well sign up for a free YouTube fitness channel — or go real estate rogue. So the $80,000 a year team leader Herlinda Sandoval-Ryan was shelling out in brokerage fees and splits eventually stopped making sense.

  • Agents are wary of the 100-percent commission promise because it sounds too good to be true, according to the co-founders of one such model.
  • San Diego indie brokerage Big Block Realty aims to provide the full Realtor commission without compromising service.

Like a fancy gym membership, the money agents pay to stay under a brokerage’s umbrella better go toward something they actually use. Otherwise, you might as well sign up for a free YouTube fitness channel — or go real estate rogue.

So the $80,000 each year that team leader Herlinda Sandoval-Ryan was shelling out in brokerage fees and splits eventually stopped making sense.

Factor in that everyone on her team of 10 had a decade to 15 years of experience under their belt (while she had 24), and the math didn’t work for her.

“We were paying a lot of money and not getting the value,” said the former Keller Williams team leader. “We were all independent; we weren’t using the tools, to say the least. I started looking around for a pay raise, plus an innovative company.”

As she searched, she wasn’t inspired by what she perceived as the usual “old names.” Then she had a meeting with Sam Khorramian, the co-founder of San Diego-based 100-percent Realtor commission brokerage, Big Block Realty (Big Block).

Big Block launched in January 2012 and is run by three partners: Khorramian, Oliver Graf and broker/attorney Spencer Lugash.

According to the founders, the indie brokerage’s full-commission, full agent concierge model aims to address the skepticism many agents feel about the 100/0 split: Will my broker be there when I need support?

Investing in agent productivity systems like Big Block has — such as lead gen, branding and technology — is unusual for a 100-percent commission model, according to a recent survey by Contactually. Because these firms primarily make money through agent fees, their main point of focus is typically recruiting.

So far, however, the indie firm’s unconventional formula has been a success.

Expanding by 7,613 percent over three years and reporting sales volume of nearly $700 million in 2015, Big Block came in at No. 26 on the 2016 Inc. 500 as the second-fastest growing private real estate company (and the highest-ranked brokerage) on the list.

Herlinda Sandoval-Ryan and team.

Herlinda Sandoval-Ryan (center) and team.

Sandoval-Ryan, who’s been a real estate agent since the age of 18, is the type of professional that Big Block typically attracts: She’s experienced, seasoned — in need of some expertise at times — but not a rookie by any stretch of the imagination.

She joined the firm in May of this year. “I was thoroughly impressed by his knowledge in real estate and in marketing, so I went ahead and talked to my team, and they got excited and we moved,” she said.

What’s been the difference so far? Khorramian has encouraged her to give her database more attention since she arrived. She is investing in this with her new savings.

“I’m spending on my database and past clients, so I’ve hired a marketing company, and what they are doing is really taking care of my database.”

Brokerage needed for independent agents

Khorramian and Graf were in the same fraternity at California State University San Marcos and have been agents since 2007. Lugash maintains his own law practice.

When Khorramian and Graf began looking around in 2010 for another type of brokerage, they struggled.

“We were independent, entrepreneurial agents,” Graf said. “We knew what we were doing. We wanted to be left alone do our thing but still get support when we needed it or training.”

They knew what they didn’t want to be like. Graf explained: “When we first getting started looking, we found other 100-percent brokerages which felt like ‘rent-a-broker.’ They had a ‘don’t call us, we’ll call you’ attitude.”

Big Block Realty co-founders. From left to right: Sam Khorramian, Spencer Lugash and Oliver Graf.

Big Block Realty co-founders. From left to right: Sam Khorramian, Spencer Lugash and Oliver Graf.

From idea to reality

For their own startup, they had a fresh vision — one that didn’t compromise on agent support.

“When they call Big Block’s agent concierge, the answer is always ‘yes,'” said Khorramian. “Big Block is in the agent service business. As a new business that was starting from scratch, we knew we had to go heavy on service and support.”

The current agent count is 543, and the company is aiming for a total of 1,000 in the next 12 months. (To accomplish this, it will likely break into south Orange County, then move up the coast.)

Further ahead, Big Block envisions having 3,000 to 5,000 agents over the next three to five years.

Teams like Sandoval-Ryan’s have contributed to the company’s growth (around 20 percent of the Big Block agents are in a team).

“We attract a lot of teams,” Graf said. “We also work well with individual agents who do a handful of deals.

“Really, we’re good for anyone that wants to grow their business but doesn’t want to deal with all the auditing and liability issues on their own.

“They can plug into broker support, and we do all the heavy lifting.”

Big Block Realty’s business model

According to Khorramian, it costs $3,600 a year to hang a license with Big Block, and agents can pay for that in 12 monthly installments or one upfront payment of $3,000.

If they refer five agents who join (and stay) at the company, the annual fees are waived.

Retention hasn’t been a problem so far. “We generally only lose agents that are leaving the industry or moving out of state,” Khorramian said.

“This is the future of the business — the Netflix of the real estate space. It means we can give agents 100-percent commission and 100-percent support.”

The co-founders believe they are responding to the changing agent lifestyle.

Graf added: “As far as we see the future, we believe more people want to work from home; they don’t want to drive to work every day.”

The entrepreneurs have looked at the virtual or cloud brokerage concept. But agents still appreciate interaction with other agents and brokers, the founders believe, so they bring everyone together with monthly socials, training and other team meet-ups.

Big Block provides conference rooms, open work stations, Wi-Fi and printing for free to all agents. (Agents also get broker and legal support for free. They can choose to hire a transaction coordinator for $395.)

If agents want to rent a permanent office, those are available, too.

“A number of companies have gone into this virtual brokerage space,” Khorramian said. “I think what makes us a bit different is we have blended the best of both worlds.”

“We have structured the business so that you can come into the office every day — or work from the Caribbean on a yacht.”

The right recruits

Big Block Realty is probably not the best brokerage for new agents — or under-performers.

“We have a lot of great, motivated agents who love working,” said Graf. “They are not the type to sit at home and eat Cheetos and wait for a deal to come to them.”

When they interview agents, the co-founders ask them what they are looking for in a broker.

Khorramian added: “Some agents are looking for a raise, while others want better training or support. When we find out what’s important for them, we show them the systems we have in place to support them.

“We tend to be a good fit for most agents who know how to successfully work their way through a transaction.”

The founders have discovered that agents are wary of the 100-percent commission model. It seems too good to be true.

“They’re concerned that they won’t get the support they need,” said Khorramian. “That’s why, at Big Block, we believe our job is to deliver a ‘wow’ experience for every agent, alongside the 100-percent commission.”

Delivering that helps with the hiring process. Khorramian says that the company snags talent when agents come to Big Block — and later “bring all their friends.”

Don’t forget the basics

Meanwhile, the partners are keeping their eye on the details. If an agent gets a bad review on Yelp, co-founder Spencer Lugash is immediately on the case in his role as chief counsel.

“Spencer is fanatical about making sure that we are taking care of the consumer-facing side of compliance,” said Khorramian. “It’s unfortunate; agents will drop the ball, but the buck stops with us.

“Whenever we see anything happening where the consumer is not happy, it’s easy to say it’s the agent’s fault, but that agent is representing our brand, and the right thing to do is to make the situation better.”

The brokerage approves every piece of paper in a transaction, then with marketing and compliance it sets a standard of what the agent needs to do.

This keeps Big Block in the loop and makes sure nothing is slipping.

Tech support to propel growth

With a mission of “staying lean” to “scale fast,” the co-founders haven’t ruled out an IPO, but for now are focusing on keeping their integrity while they grow.

To do that, the company helps its agents leverage the power of technology to grow their businesses in the areas of brand building, lead generation and system automation.

Agents can choose to implement what they learn themselves or connect with a team that can help.

Khorramian and Graf also have a full-service internet marketing agency, LOUD Media Solutions, which helps clients with growing brand awareness, targeting prospects online, engaging their audience and converting prospects into clients.

Graf said: “We are passionate about…creating a culture where agents win and helping them feel empowered. When they win, we win, and because of that they promote us to their colleges and help us grow.

“We often have agents refer family members, moms, wives and brothers. That’s the ultimate compliment for us.”

Email Gill South

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