Progressive Homesellers, a Seattle-based flat-fee real estate referral network, stirred up the local real estate market with its unlicensed emergence last year.

Complaints prompted the state’s licensing agency to issue a subpoena to Progressive Homesellers that asked for the names of agents in the network, and Progressive Homesellers offered up the name of Michael Patrick Luckett, who was then working as an agent at Coldwell Banker Danforth & Associates.

Luckett later left that brokerage to serve as a real estate broker for Progressive Homesellers, which reopened as a licensed real estate company in January.

Since then, the company reported that it was threatened with a lawsuit by Coldwell Banker Bain – a large brokerage company with several offices in Washington – over its marketing tactics.

Progressive Homesellers issued a public announcement on March 23 on the topic: “Coldwell Banker Bain, one of Washington state’s largest residential real estate brokerages, has threatened to sue discount brokerage Progressive Homesellers, complaining that the Seattle startup is unfairly competing for business by contacting its customers directly with a flat-fee commission offer.”

Michael Grady, a broker for Coldwell Banker Bain, said the brokerage had specifically asked Progressive Homesellers to cease and desist its use of the company’s trademarked brand name in any correspondence with the public, “which they have agreed to do.” Grady said he did not wish to comment about Progressive Homesellers’ direct-mail marketing campaign that targeted home sellers who were already under contract with real estate agents.

His brokerage has no plans to respond directly to the public announcement issued last month by Progressive Homesellers, Grady added.

It’s an issue that has played out in other parts of the country, too: Traditional real estate companies protest the business practices of new and alternative real estate companies, and those alternative companies use the complaints to highlight the industry’s traditional commission practices and call for a new way of doing business.

Luckett had distributed a direct-mail advertisement to home sellers that estimated how much commission the sellers would pay based on a traditional real estate commission rate, and then calculated how much the sellers could potentially save by working for a flat fee with an agent in the Progressive Homesellers network.

Jeremy Stamper, chairman and CEO for Progressive Homesellers, said officials at Coldwell Banker Bain also complained about the use of the Coldwell Banker name in marketing materials. “Agents at brokerages like Coldwell Banker, Century 21 and Prudential” are a part of the flat-fee referral network, according to a company announcement last month.

“Their demands were: Remove the name ‘Coldwell Banker’ from the Web site,” Stamper said, adding that the company has complied while it reviews the trademark complaint.

Coldwell Banker Bain also claimed that Progressive Homesellers was interfering with existing listings contracts by distributing the ad, though the marketing materials do not specifically suggest that sellers cancel their existing contracts for real estate services, Stamper said. “All we’re saying is we have a better deal.”

The company no longer solicits business from sellers who are actively working with agents, he added, because the practice is prohibited by the Northwest Multiple Listing Service, which Progressive Homesellers has recently joined. And Progressive Homesellers intends to join the National Association of Realtors, he said — a trade group that requires members to subscribe to a code of ethics.

If it wasn’t for the MLS membership, Stamper said he would have “no problem” with continuing to send out the direct-mail advertisements.

Originally launched as a referral network for sellers to list their properties for flat-fee real estate services, Progressive Homesellers has also launched a discount program for buyers. Sellers can pay $2,500 for listing services from a company-referred agent. Stamper said there are now six agents in the network.

“Progressive affiliated agents keep their expenses low by conducting all business remotely. In fact, chances are you will never meet your agent in person; all communication is done by phone, fax and e-mail, which lets them focus on doing their job: getting your home sold for the best price in the shortest amount of time,” according to a Web site description.

Buyers who agree to work with the company agree to pay $2,500 for the services of their agent and will receive a rebate for that agent’s “entire percentage-based commission … at closing,” the Web site also states.

Traditional real estate companies typically charge a percentage-based commission of 5 percent to 6 percent as payment for their services, and offer up roughly half of this commission amount to another agent who represents a buyer in a transaction.

Progressive Homesellers takes a referral fee for every qualified lead it delivers to agents in its network.

Stamper once worked as a real estate agent at Prudential MacPherson’s Real Estate in Seattle, though he said it was a “fairly unsuccessful” experience. “I actually only sold one house.” He also has worked as director of promotional marketing for a commercial airline and is founder and CEO of The Delaware Co., a business that offers online business incorporation services.

Wendy Lister, an agent for Coldwell Banker Bain, said she is familiar with Progressive Homesellers. “I believe there is something for everyone out there,” she said. “To me, there are ethics in a business and if you don’t abide by the ethics it just doesn’t work.” She said Progressive Homesellers did contact a person who she knows, though that person was not interested in the company’s services. “It wasn’t a cordial conversation,” she said.

Phyllis Danforth, broker for Coldwell Banker Danforth & Associates, said she did have some concerns about the Progressive Homesellers business model until the company joined the MLS. “I don’t have any concerns about them now,” she said.

The state licensing agency reviewed complaints about Progressive Homesellers’ business practices in February and March, though it was determined that the company committed no violations, said agency staff.

Stamper said he hopes to expand Progressive Homesellers as a national business model, and he has plans for the company to obtain real estate licenses in 38 states.

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