October 5, 2018
The road to a career in real estate started with the end of pizza. After 18 years of owning several pizza restaurants in Rhode Island, Justin Gallant said he couldn’t envision himself as a middle-aged pizza-pier.
He loved the customers, he said, but the love for the business was gone.
“I had an epiphany. I didn’t want to be 50 and working in a hot pizza kitchen,” he said.
Earlier this year, he and his wife, Eva, opened J.E. Group Properties, a real estate brokerage in South Kingstown. Before he made the move out of restaurants, Gallant obtained his real estate license, and he worked for Coldwell Banker in East Greenwich as an agent for two years.
It was enough to know how he wanted to do things differently on his own.
The typical real estate brokerage charges a percentage commission on real estate sales that is split by the agents representing the buyer and seller. The norm is 5 percent to 6 percent, with most residential sales falling at the 6 percent end of the range.
“Almost every real estate brokerage is very agent-centric,” he said. “There are new tools for the agent, training, new desks, phone lines and email. What I realized is they’re not very consumer-focused. They’re all following the exact same business model. They’re all charging 5 percent to 6 percent [commission].”
J.E. Group Properties has opted to charge a flat fee. For most sellers, it represents a significant savings, according to Gallant.
Home sellers whose properties fetch $400,000 or less pay a flat fee of $3,995. Homes between $400,000 and $1 million pay $1,000 more. Homes selling for more than $1 million pay another 1 percent on top of that.
A commission incentive for the buyer’s agent is added as well, in the range of 2 percent to 3 percent.
The company is not the only brokerage that operates with a flat fee. Redfin also has that model.
For sellers, particularly of more-expensive homes, a flat fee can be a significant incentive.
Gallant cited the case of clients in Tiverton, who sold a $1.2 million house through J.E. Group.
“For two years prior, they had been trying to sell their property. And they were going to pay a 6 percent commission,” he said. That’s a $70,000 fee under a traditional arrangement.
“We got it sold,” he said. “They saved $27,000 in commission.”
One possible downside is the perception that there is no incentive with a flat fee for the broker to try to get the highest price possible for a sale.
Gallant counters that they are advertising properties online, and through social media, and attend all open-house events and showings – employing the same sales tactics as other companies.
The negative for the two-person company is that based on lowered commissions, Gallant can’t sell two to three luxury properties a year and remain in business. “We have to sell 10 to 20 houses a year and we’re working our way there,” he said.
In the future, commercial properties may be part of the portfolio. But so far, the small company is staying the course, hoping to differentiate its business by staying focused on the consumer.
OWNER: Justin Gallant
TYPE OF BUSINESS: Real estate brokerage
LOCATION: South Kingstown, RI
YEAR ESTABLISHED: 2018
ANNUAL SALES: WND
Mary MacDonald is a staff writer for the PBN. Contact her at Macdonald@PBN.com.