Trelora brings unique model to Fort Collins real estate market

According to their business model, executives for residential real estate startup Trelora say, Fort Collins will look a little like a spoke on the hub of Denver, with brokers working with clients locally while employees in Denver handle task-based functions and the technology side of the business.

But as for the brokerage firm’s broader growth strategy, the importance of Trelora’s first launch into a market outside of the Denver metro area is much greater than such a simple characterization might imply.

Trelora leaders have their eyes on national expansion, but first want to test their disruptive model in three to five key markets with varying characteristics. Fort Collins’ hot housing market and proximity to the training and support of the company’s home base made it a logical test bed. An undisclosed major metro market outside Colorado will follow Fort Collins.

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Fort Collins “gives us the opportunity to learn about how a smaller metro area functions compared to a larger one like Denver,” chief marketing officer Rett Kearbey said in a recent interview.

Trelora officials, who announced their expansion to Fort Collins last month, haven’t released a specific launch date yet, saying that it likely will happen in early 2016. Kearbey said the company’s Fort Collins office will serve Loveland and other surrounding communities as well. The Denver office, which had at one point reached all the way to Boulder, serves an area that spans from Castle Rock north to Broomfield, Northglenn and Brighton, having recently reined in its boundaries a bit to provide more focused service.

“The goal is to serve as many people over as large a geography as possible from a single office,” Kearbey said.

Trelora, a recent graduate of the Techstars Boulder startup accelerator, has made waves over the past year-plus as it has grown its model of charging a flat fee for broker services rather than the traditional percentage-based fee model.

While home sellers traditionally have paid 2.8 percent to 3 percent to both the listing and buying brokers, Trelora charges a flat fee of $3,000, whether it’s representing the buyer or the seller. If Trelora is representing the seller, the buyer’s broker then can negotiate the fee he or she will be paid with the seller and write it into the home buyer’s offer. If Trelora is representing the buyer and a seller already is offering a 3 percent commission to the buyer’s broker – say, $12,000 on a $400,000 home – Trelora accepts only the $3,000 and the rest of the cash stays with the seller, providing more negotiation room on the final purchase price for both sides.

Trelora officials assert that the model helps add some transparency to the home-buying process and makes it clearer to buyers that it’s their check that ends up paying for everything, even if it’s technically the seller who pays the broker fees.

The model has faced some pushback from the real estate industry, including earlier this year when Denver multiple listing service REcolorado forced Trelora to stop showing the fee rates sellers were offering to buying and listing brokers on specific homes.

But Trelora officials say they’re not trying to challenge the way brokers are paid so much as the number of “eyes that are on the dollars all the way to the closing table.” And while many home buyers and sellers might expect the 6 percent total brokerage fee as the standard, Kearbey said the Trelora model gives them more control over that figure in an era when many people are hand-picking the homes they want to see through websites such as Zillow rather than relying solely on their brokers. On the seller side, meanwhile, the model prevents sellers of higher-priced homes from paying exponentially more for a similar basket of services.

“Just because something’s always been done a certain way doesn’t mean people like it,” Kearbey said.

Clint Skutchan, chief executive of the Fort Collins Board of Realtors, said his organization isn’t worried about Trelora’s model as long as it’s kept between the company and its clients and not forced onto another broker’s client in a deal.

Skutchan said that level of service and integrity play a big part in the region because the Northern Colorado market is so competitive already, regardless of Trelora’s entry. He said the FCBR has more than 900 members, a large percentage of whom have joined in the past three years.

“Everybody pays attention to every detail because it’s a highly competitive market right now,” he said of Trelora’s Fort Collins launch.

Founded in 2011 by CEO Joshua Hunt as Joshua Tree Realty, the company rebranded to Trelora – an anagram for “Realtor” – in 2012 and began marketing to the public in the spring of 2013 when Kearbey and chief operating officer Dave Workman joined. The company now employs about 40 people.

Kearbey said it could take a year and a half to two years to get rolling in the key  test markets and gain the insights the company is looking for.

“That’s when the growth will feel much more rapid,” Kearbey said.

Joshua Lindenstein can be reached at 303-630-1943, 970-416-7343 or jlindenstein@bizwestmedia.com. Follow him on Twitter at @joshlindenstein