Brokerage

United Real Estate out to disrupt real estate franchising

Founder says technology, royalty-free model, auction platform will appeal to agents

There’s a technology problem in real estate, says Dan Duffy, CEO and chairman of United Real Estate, which has grown to over 1,000 agents since launching in 2011.

“That problem is our opportunity,” Duffy said.

United Real Estate is an offshoot of United Country Real Estate, an established brand that Duffy and a team of investors bought in 2006.

The new brand, which launched a franchise wing last year, is building on the technology, experience and reputation of the 89-year-old, rural-focused United Country Real Estate — adding to the mix a royalty-free franchise model and a bet that auctions will play a much larger role in the future of residential real estate.

Kansas City, Missouri-based United Real Estate now has five company-owned offices — in Dallas, Houston, Chicago, Philadelphia and Washington, D.C. — and 11 franchisees in 21 U.S. territories including Orange County, Beverly Hills and Pasadena in California; Scottsdale, Arizona; Indianapolis; north and central New Jersey; Fort Worth, Texas; Lexington and Louisville in Kentucky; and Kansas City, Missouri.

Dan Duffy

Dan Duffy

By year’s end, Duffy expects to have 22 brokerages in its franchise network in more than 30 exclusive territories. Territories are defined by the area that can support the business goals of a franchisee, Duffy said. United currently has segmented out approximately 400 territories in the U.S.

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By leveraging the experience and technology of United Country Real Estate, which has approximately 4,000 agents in 475 offices in the U.S., Mexico, Costa Rica, Honduras, Panama and Belize, Duffy has plans to make United Real Estate a major brand in the U.S. and overseas.

Our customer is the agent."

“We bought a platform company (United Country Real Estate) we knew we could improve,” Duffy said.

Since acquiring United Country Real Estate, Duffy and his group have built out a platform he estimates is worth between $40 million and $50 million to provide brokers and agents with Internet Data Exchange (IDX) websites, search engine marketing, search engine optimization, a customer relationship management platform, live and online training, and lead-gen tools.

Before buying United Country Real Estate, Duffy worked for five years as president and CEO of the Dallas-based information technology firm ePartners. Other members of United’s leadership include Dan’s brother, Mike Duffy, who served as vice president of marketing for Coca-Cola from 1996 to 2002 and is now president of United Country Real Estate, and David Dickey, who worked with Dan Duffy at ePartners and is now United Country’s chief operating officer.

United has its own real estate marketing firm, Enhanced Marketing Solutions.

United has its own real estate marketing firm, Enhanced Marketing Solutions.

Four companies now operate under United Real Estate Group: United Real Estate, United Country Real Estate, Enhanced Marketing Solutions and United Country Real Estate Auction Services.

United Real Estate is pairing its technology with a royalty-free franchise model.

“Royalties are a broken component of the franchise model,” Duffy said.

Duffy thinks relative newcomers with an innovative take on real estate like Redfin and ZipRealty launched with innovative models but “outkicked their coverage.” The legacy brands are “lethargic,” he said.

Duffy says United Real Estate will disrupt the industry with its “freedom” model, where agents pay a flat fee for technology, marketing and lead-gen services.

United Real Estate agents keep 100 percent of their commissions. They pay their broker $65 per month for access to United Real Estate’s tech platform, and a flat fee on each transaction that’s set by the brokerage. Currently that per-transaction flat fee ranges from $295 to $895, Duffy said.

Brokers pay no royalty fees to United Real Estate, either. Instead, they pay $30 of each agent’s $65-per-month tech fee, and a $60 transaction fee to the franchisor.

“Our customer is the agent,” Duffy said.

Agents can opt-in to a United Real Estate lead program where they pay the firm a 40 percent referral fee for every deal they close from a lead fed to them by the company.

Realty One Group, the fast-growing brokerage that has built its franchise wing to 30 firms since launching it in 2012, employs a similar model.

Instead of royalties or annual fees, Realty One Group has a flat-fee agent commission model. All agents pay a flat monthly fee of $100 (their broker keeps $75) and a per-transaction fee of $200 (the broker keeps $150). Realty One Group also collects $50 for each $500,000 of a transaction.

United sees a future for auctions

When United Country Real Estate launched in 1925, less than 1 percent of rural land and property sales were done by auction, Duffy said. Now, auctions make up close to a quarter of all residential land sales, he said, thanks in part because United Country Real Estate specializes in auctions.

Duffy sees a similar opportunity in residential real estate.

Auction is promising in the urban residential space, but it hasn’t been tackled properly yet, Duffy said.

“What Google (which invested $50 million in Auction.com in March) and others are missing are real estate agents,” Duffy said. Real estate is a substantial investment, and buyers and sellers want the help of professionals in the form of real estate agents, he said.

That’s where Duffy thinks United Real Estate has a leg up. It has a long history as a brokerage and also valuable experience running auctions.

With its own auction services company and experienced auctioneers, United is an expert in the real estate auction space, Duffy said.

Residential real estate auctions are common in South Africa and Australia — Duffy says about half of home sales in Australia are completed through auctions — and he believes they will become more popular in the U.S., too.

Auctions allow sellers who may be frustrated by a property languishing in a multiple listing service with little response to generate interest and ensure a sale by a specific date, Duffy said.

Going international

This week United signed an exclusive agreement with Australia-based real estate firm PRDnationwide to further its international expansion. PRDnationwide is owned by Toronto-based FirstService Corp., which also owns the large commercial real estate firm Colliers International.

The alliance, which Duffy called a “permanent affiliation,” will bring United to China, the United Kingdom, Europe and other areas in Asia under the “United PRD International” banner.

PRDnationwide’s 115 offices will slowly transition to the “United PRD International” brand, Duffy said.

The companies have their sights set on China, Duffy said. That was the impetus for the deal, he said.

The U.S. and Australia are the most popular markets for wealthy Chinese buyers, Duffy said. The new alliance presents a compelling company for those buyers to engage with, he said.

It also presents an attractive story for the firms, which want to begin establishing their brand in China.