The Magic of the DeLeon Business Model - the Buyer's Side

The Magic of the DeLeon Business Model - the Buyer's Side

Ken DeLeon, Esq.September 1, 2015
DeLeon Insight - September 2015

 

   Silicon Valley thrives by disrupting and improving inefficient industries, and it has created many game-changing business models along the way. Yet in the epicenter of the world’s innovation, the practice of purchasing real estate had remained relatively unchanged since the Gold Rush days. DeLeon Realty was founded with the principles of optimizing real estate from the consumers’ perspective, and this article shares the many benefits of our innovative and completely unique business model.

   Although my undergraduate training in mathematics and economics and my law degree from one of the top schools in the nation, UC Berkeley, prepared me well for a career in intellectual property law, I knew that law was not my passion. I have always loved real estate, and I decided to follow that passion when I left my associate position at Wilson Sonsini Goodrich & Rosati.

   Setting all feigned attempts at modesty aside, my rise to the top of the profession was remarkable, and unprecedented. In less than 10 years, I became the nation’s top individual Realtor®, per the REAL Trends/ Wall Street Journal rankings for 2011. What is more important to me is that my clients, many of whom are amongst the best and brightest in Silicon Valley, appreciate my ability to read and even predict the market. Many argued that I was the best Realtor® in Silicon Valley, yet I knew I was not the best I could be. Traditional real estate is based on the concept of the oneman band, and I was not the best at every instrument. Being good at more instruments than the other solo bands did not allay my feelings that there could be a better way.

   I found that better way when I founded DeLeon Realty in 2011. Along with Michael Repka, our CEO, we crafted a business plan based upon the principles of specialization, collaboration, and economies of scale, all geared towards providing the optimal client experience. 

   Our model resembles that of other esteemed professions, particularly law and medicine. In these professions, well educated employees specialize in their area of expertise. They are able to provide the highest level of insight possible through their professional training, focus, and collaboration. Our distinct model of salaried specialists, which is revolutionary in the real estate industry, addresses the major inefficiencies with buying a home and provides home-buyers with numerous
advantages.

Utilizing Salary Instead of Commission for Our Buyer Agents
   Buyers are often concerned by the traditional business model based upon commission, through which the more a buyer pays, the more commission is received by the agent. At DeLeon Realty all 45 of our employees, including our buyers specialists, are on salary. This way buyers do not have to worry about a DeLeon agent urging them to make an unwise decision, pushing either for the sale or too high of an offer. Our talented group of buyer specialists is taught to focus upon the best long-term interests of their clients, and not a quick sale. Our approach is more consultative than sales-based, and the focus is upon our agents providing insight and analysis, rather than pressure.

   The other key benefit to having salaried specialists is that it encourages collaboration. By design, there is no disincentive to bringing in another agent that specializes
in a different area if the alternative area would better suit the client’s needs. All of the agents at DeLeon Realty want the client to find the “right” house, irrespective of whether it is located in any particular agent’s area of specialization, and we often have several agents collaborating to help the same client.

Specializing On a Targeted Territory Results in Great Expertise
   One of the greatest inefficiencies in real estate is that agents do not specialize, but instead try to do everything themselves. Most agents represent clients both purchasing and listing homes for sale, and often do so in a broad area composed of many cities. Thus, agents will often give buyers 50 percent or less of their time as the rest is spent focused on obtaining and selling listings, and this limited time is divided amongst many cities, further diluting their expertise. For example, if agents spend only 50 percent of their time assisting buyers and they look in 10 cities, then those agents will only spend five percent of their time working with buyers in a particular city. Conversely, our buyer specialists focus solely upon the purchase of properties and do not spend any time listing homes. With all of their time concentrated on buyers, and only focusing upon one city, they become experts in every facet of that market. This level of specialization, coupled with me conferring with both agents and clients regarding optimal cities and neighborhoods to fit the buyers’ needs, gives a level of insight that is unparalleled. Further, I have strong relationships with many of the area’s top agents and I can add influence at the offer presentation, which can result in the buyer paying a lower price. This all comes together to provide clients with the best of all worlds - individual and focused attention from local experts plus big-picture advice from the leader of the recently-named top real estate team in the United States.

   Overall, we seek to bring the same level of expertise and integrity clients would expect at a law firm or another elite professional industry, and this is evident in our agents being amongst the best educated in the industry, with our team of 10 buyer specialists holding seven graduate degrees. This does not even count the many graduate degrees held by DeLeon personnel in supporting roles.

Solving Our Clients’ Problems
   Another fundamental flaw of the traditional real estate model is that agents do not have corporate resources and instead are loosely affiliated with a brokerage. Most brokerages are structured such that agents are independent contractors operating in silos with no incentive to collaborate with others or share resources. Consequently, individual agents do not have the in-house resources to provide a full suite of services to their clients. At DeLeon Realty, we provide our clients with one-stop service and our in-house loss-leaders at no expense, which include a construction consultant, an interior designer, a licensed contractor, and a real estate attorney. For example, if our clients purchase a fixer-upper, our construction consultant recommends a team of vetted service providers, helps obtain bids for the project, and provides the clients with feedback on the estimates. No other firm provides as many services both during and after escrow, and by doing so DeLeon Realty saves its clients both time and money.

   By fundamentally altering and improving upon the traditional real estate model, DeLeon Realty’s combination of salaried specialists, with our team of professionals available at no cost upon closing, provides buyers with a uniquely efficient and enjoyable way to purchase property in
Silicon Valley.