Recently as I walked around the New Jersey neighbourhood where I live, a sign in a neatly kept garden caught my eye. The house was for sale by YHD Realty, a technology-backed real estate agency on the Web at www.yhd.com, the yhd standing for "your home direct".
The sign also states that interested parties can take a virtual tour of the house if they key in a number on the site.
With demand for houses exceeding supply in the New York metropolitan area, there is intense competition among many realtors (known as auctioneers in Ireland). Americans selling a property generally pay a real estate agency commission of 6 per cent of the price; that works out at $12,000 (€14,200) for a $200,000 house.
Mr Glenn Cohen, president of YHD, said he founded the company in March 2000 because people "were tired of paying 6 per cent commission. There was a pent-up demand for a service at a fair price." By offering commissions lower than the normal 6 per cent, Mr Cohen says his company has saved New Jersey homeowners $12 million.
Yhd uses the Web to enhance business with its customers. "Primarily what sells homes is exposure," Mr Cohen says. The site gets 15,000 visitors a day. It only caters to New Jersey now because the state offers the perfect market for its criteria. About 100,000 houses are sold annually in New Jersey and the average transaction is for just under $200,000. Since its inception, Yhd.com has listed 4,000 homes, sold 2,500 and has 1,000 in inventory. In May, the average house listed on the site sold for $300,000.
Yhd.com offers three plans: 2 per cent commission, 3 per cent commission and 4.3 per cent. When a seller opts for the 2 per cent plan, as 70 per cent of yhd's customers do, he is given a local real estate agent who comes to his home to vet the property and set the price.
A professional photographer comes to the house to take photos and these are put on the Web where prospective buyers can take a virtual tour. Automatic feeds are generated to about eight portal sites such as Microsoft HomeAdvisor, Homeseekers and Yahoo Real Estate.
If someone sees a home he likes, he calls yhd's contact centre, where his financial status will be checked. The agent lets the owner know the person has been approved and while the owner shows his own home, the agent negotiates the price. For 3 per cent commission, the agent will show the home and for 4.3 per cent the agent will list the home with other agencies.
After 16 months in business, yhd "has exceeded my expectations and any my investors had", Mr Cohen says. The company allows someone to go through the process of buying a home from start to finish. A buyer can get a mortgage through Yhd Mortgage, which is a licensed mortgage banker. Soon, yhd will open a title insurance service and a home services business.
Mr Frank Fitzpatrick, originally from the Bronx and now living in New Jersey, has sold two homes and bought one at a combined cost of $1.4 million over the past three months. His wife saw an advertisement for a house in the paper and took the virtual tour at yhd's site. They set up an appointment to meet with the agent who showed them the house. "We liked the property, put in an offer and it was accepted," he says. They then had to sell two houses - their primary residence and a summer house. They listed both with yhd: the summer house sold within a week and the other house in 10 weeks. In all, Mr Fitzpatrick says he saved over $34,000 in commissions by using yhd.
Each year, yhd spends $5 million advertising its brand on billboards, television and local newspapers in New Jersey. Garden signs also add to its exposure. Mr Cohen does not discount expansion to other states but he would not reveal which ones. However, a recent $20 million investment in yhd by Foxtons, a top London real estate brokerage, should help plan the next move.
Unlike the traditional world, where real estate agents generally work for themselves and create their own data, yhd has created a central database that all staff can access via an intranet or the Internet. The company has a high-tech contact centre, staffed by licensed agents, open from 8:30 a.m. to 9 p.m. seven days a week.
Any information that comes into the centre by e-mail, telephone or fax is put into the database. Yhd's 80 local agents can share and upload information to create a new account for each seller and buyer.
The technology "is really quite sophisticated", Mr Cohen says. "We're about five to seven years ahead of any real estate agency in the world." The company is investing in new technologies "to take us even further ahead", he adds.
Of yhd's 125 employees, 15 are technology personnel. Initially, the company outsourced the website but after a few months took it in-house. While Mr Cohen will not detail the technologies, he says yhd is using "a lot" of Microsoft products.
Few Internet companies have taken off, Mr Cohen says, but he believes yhd fits into "the elite category" of those that are successful like Yahoo and eBay. "Because we're a regional site, we're easy to use. We have displayed information in a simple, informative way to help someone buy or sell a home, get a mortgage, see photos or take a virtual tour. People come to our site. We have the eBay magic."
