A provocative discount brokerage based in Denver aims to crack the nation’s largest and most expensive residential market.
Trelora, a relatively young, tech-heavy brokerage with a business model that upends the traditional agent commission system, has staked a claim in the California market with recently launched operations in Los Angeles.
“There’s 40 million people in California that pay $10 billion in commissions,” said Trelora CEO Brady Miller. “That’s plenty of opportunity to be disrupted, and I think lots of consumers who are begging for an alternative.”
Trelora received its California licensing in the last couple weeks, Miller said, and now has around a dozen agents spread between Los Angeles and Sacramento, with plans to grow.
Trelora bills itself as “full-service realty for thousands less” thanks to a “fair-fee” model: instead of paying a typical 3% commission to the selling agent, a seller would pay a base fee for Trelora to list the property.
In most states where Trelora operates it charges flat listing fees of either $3,000 or $4,000, deducted after the closing. In Washington State and California, it charges a listing fee of 1% of the closing price.
The idea is to save sellers both money and headaches; Trelora says it can offer the discount prices because its proprietary technology platform makes the process more efficient. Sellers using the service also decide how much commission to offer the buying agent.
“We encourage sellers to do what’s right for them,” MIller said — sellers focused on a quick sale may opt to offer a higher buying agent commission, while others have sold houses offering just $1, Miller said.
The structure does yield significant reductions in agent costs. For a sale in California at the statewide median price of around $800,000, a typical 6 percent commission structure split by agents on both ends of the deal would cost the seller $48,000. A seller who used Trelora and paid a 3 percent commission to the buying agent and Trelora’s 1 percent fee would end up with a total cost of $32,00 – a savings of 33 percent.
Trelora also represent buyers, enticing them to use its service by offering to repay the buyer half of the Trelora agent’s commission upon closing, up to $6,000
The question for sellers is whether the lower-cost service is just as effective: One seller who used the brokerage to sell her five-bedroom home in Colorado told the L.A. Times that the company saved her $16,000 but frayed her nerves, because she had to take a more hands-on approach to items like inspection deadlines. “Be prepared to take more initiative and advocate for yourself,” she said.
Founded in 2011, Trelora’s intention all along was to shake a notoriously opaque home buying process and provide lower costs by reducing this country’s unusually high commission system, which founder Josh Hunt has called a “rip off.”
“Agents don’t give a shit about buyers and sellers,” Hunt told Inman in 2018. “All they care about is their commission.”
The company’s approach has, unsurprisingly, proved controversial within the industry.
In 2015, Trelora spurned a long-standing industry norm by publishing buying agents’ commission percentages, only to pull down the data after being threatened with penalties from the local MLS.
It has also encouraged buyers to use its website as a way to chat directly with sellers, and even encouraged buyers who might use its service to drop their agents and keep their commissions.
Buying agents have sometimes responded by refusing to show Trelora listings to their clients — “Why would I sell my buyer a home for half the commission when I can take them elsewhere,“ one wrote to the company.
Trelora has continued growing despite — or perhaps in part because of — the controversy. The company now operates in Arizona, Washington, Missouri, Georgia, North Carolina and South Carolina in addition to California and its home base of Colorado.
In recent years, a host of companies have also initiated their own data-heavy, flat-fee brokerage models, sometimes offering prices to sellers as low as $600.