Coldwell Banker’s Blue Edge Realty, a seller-side discount brokerage launched in 2001, is no longer operating as a separate company, but it is a continuing option that Coldwell Banker offers home sellers in the capital area of Illinois. Blue Edge services are also offered through the North Hills office of Coldwell Banker Pittsburgh in Pittsburgh, Pa.
Blue Edge offers services to sellers for a commission as low as 2 percent of the sales price. The business model is designed to afford sellers more responsibilities and control of the sale of their home while offering limited services for a low commission.
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“We’ve incorporated it into the office, instead of being a separate business model,” said Mike Buscher, general manager of Coldwell Banker Devonshire Realty‘s Springfield office. “It used to be set up as a separate company.”
The change, which took place in August, was an economic decision that allowed the Blue Edge services to continue without forcing the business model to survive independently, he added.
Buscher said sellers of mid-range to high-end homes tend to be the typical Blue Edge customers. The average sale price of a home in the area is about $115,000, while the typical Blue Edge customer’s home sells for about $150,000. The success rate of Blue Edge sellers is about 50 percent to 60 percent, he said, compared with about 20 percent or less of sellers who go it alone.
Sellers handle the majority of marketing expenses and arrange their own open houses, while Blue Edge staff assist with such tasks as document preparation.
“The types of customers we are getting are independent, do-it-yourself kind of people who want to have more control in the transaction. It’s not as much a money issue–it’s more a control issue,” Buscher said.
Blue Edge sellers who don’t succeed with that system can opt for the traditional services of Coldwell Banker Devonshire Realty.
“If they feel they can’t complete what they started (with Blue Edge), then we can roll them right into full service,” Buscher said.
Discount brokerages are entering the market in increasing numbers these days, and some traditional brokerages are also attempting to compete in this segment of the industry.
“There are a lot of direct competitors (to Blue Edge) and more coming into the marketplace everyday. It’s interesting to watch the developments. There are more and more companies considered traditional that are trying to compete on a cost basis,” he said.
Blue Edge perhaps has had an easier time in its competitive market because of its parent company.
“The name recognition gives us an awful lot of credibility,” Buscher said.
Coldwell Banker representatives did not comment on future plans for Blue Edge.
Some critics scoff at the Blue Edge and similar business models, questioning their overall cost advantages and relative effectiveness.
Derek Eisenberg of MLS2U.com said operations such as Blue Edge and Foxtons, a company that offers limited seller-side services for 2 percent commissions in Connecticut, New Jersey and New York, create a kind of dual agency situation and can reduce the market exposure of homes if sellers choose not to list their homes on an MLS.
“I think the model makes money, I just don’t think it’s in the best interest of the consumer,” Eisenberg said.
Blue Edge offers a “plus” service that includes MLS inclusion for an additional charge, which amounts to the cooperating broker’s commission. Foxtons representatives did not respond to questions about the company. Its Web site notes that 20,000 home sellers have been Foxtons customers.
Buscher said full-service and limited-service brokerages will likely survive and thrive, while “the middle will disappear” from the market.
There “will always be a market” for low-commission brokerage services, and the market for these services “is way too big to just flat ignore,” he said.
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