A mortgage company in Houston offers free brokerage assistance to home sellers in exchange for access to potential buyers.

Paragon Residential has participated in about a dozen real estate transactions under this new program, called For Sale By Partnership, said Brett A. Cenkus, founder, chairman and president at Paragon, and the company plans to formally launch the program in January at a new Web site: www.fsbopartnership.com.

The program is an example of a business model that blurs the line between mortgage companies and real estate brokerage companies. While some mortgage companies offer real estate brokerage services to help drum up new mortgage business, some real estate brokerages similarly work to drive business to mortgage partners or subsidiaries.

Cenkus formerly served as chief operating officer at Urban Realtors, a full-service residential real estate company based in Houston.

A Web site description states that home sellers who sign up for the program will receive 50 property brochures, entry in the local multiple listing service, preferred lender financing for prospective buyers, contract negotiation and closing coordination from a licensed lawyer and real estate broker, and access to call-capture technology that gathers information on prospective buyers.

Paragon also supplies a for-sale-by-owner sign to home sellers that lists a 1-800 number, and the company uses technology to capture contact information for prospective buyers who call that number. Information about prospective buyers is passed along to home sellers, Cenkus said.

“It allows us to see the name and phone number of the caller – we deliver those right to the seller. We want the seller to have full access to those,” Cenkus said.

Though the state of Texas on Sept. 1 enacted a new real estate law that requires real estate brokers in the state to provide a specific minimum level of service for clients, Cenkus said the law hasn’t affected the company’s program. In an announcement earlier this month, the company stated that the program will be offered through Paragon’s real estate division “regardless of any minimum service laws enacted.”

The state law, Senate Bill 810, provides that all brokers in the state who list real estate for sale under an exclusive agency agreement must: “inform the party if the broker receives material information related to a transaction to list, buy, sell or lease the party’s real estate, including the receipt of an offer by the broker,” and must “at a minimum, answer the party’s questions and present any offer to or from the party.”

Texas is one of several states that approved such a measure – these so-called minimum service laws have drawn sharp criticism from the U.S. Federal Trade Commission, U.S. Justice Department, real estate discounters and consumer groups because they have the potential to limit consumer choice and drive up the cost that consumers pay for real estate services.

In the case of the For Sale By Partnership program, Paragon employees handle the real estate brokerage services themselves, and on occasion the company works with Joshua David Properties, an unaffiliated real estate brokerage that operates out of the same office, Cenkus said. “It’s not a super-unique concept. (Other) mortgage companies have done this for awhile because sellers do need some help pre-qualifying these buyers,” he added.

In January, when the For Sale By Partnership program formally launches, Paragon will consider charging a flat fee for entering property listings into the MLS, for example. So far, sellers who have entered into the program typically choose to negotiate with buyers directly, Cenkus said, and Paragon recommends that sellers of properties advertised in the MLS offer a 3 percent commission to agents who represent prospective buyers.

“If they don’t want MLS access, (entering the program) it’s as easy as calling us and saying, ‘I want to be a part of it.’ We’re going to help market the property in return for having access to buyers. If they’d like MLS access it requires a written listings agreement,” he said, and listing agreements are typically for six months.

In about half of the cases so far, Paragon has handled the loans for the buyers, Cenkus also said. The program is available in the greater Houston area, and Cenkus said there are no plans at this time to expand that area.

The new Web site promoting the program will feature property listings of sellers who enrolled in the For Sale By Partnership program. “We’re going to market that to the end buyer,” Cenkus said.

While home sellers sometimes react with “incredulity” when they hear about the program, Cenkus said he explains to them, “We’ve got something you want and you’ve got something we want. We will help you sell and avoid a real estate commission. At the same time, we want to monetize a traffic flow through your property.”

Typically, homeowners in the For Sale By Partnership Program choose to handle negotiations on their own, said Cenkus. “We’re involved, but to the extent they want us involved.”

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