With his soft-spoken manner and carefully coiffed silver mane, veteran real estate executive Hal Ellis hardly fits the role of industry upstart.
But the 74-year-old founder and chief executive of CataList Homes Inc. is engaged in a well-funded and sometimes caustic campaign to upend the traditional way homes are sold in California.
His strategy: Charge home sellers half what most commission-based brokerages do -- 3% of the sales price instead of the standard 5% to 6% -- without scrimping on service.
Ellis' plan bucks the established brokerage system further by paying his agents as full-time salaried employees instead of independent contractors and using the CataList website as a consumer-friendly portal for all local housing-price data that until recently had been for brokers' eyes only.
"We knew that this kind of business model would be highly disruptive and evoke a response," said Ellis, who in 1958 co-founded Grubb & Ellis Co., a Bay Area commercial property management firm that grew into one of the nation's largest publicly traded commercial real estate services firms.
Ellis' goal is to make Hermosa Beach-based CataList a leading lower-priced, full-service alternative in California.
He says it is only a matter of time before the market forces down the cost of residential real estate transactions, as it did with securities trading and travel reservations. Ellis also is banking on pure pocketbook economics: As the housing market slows down and values stop rising as fast, home sellers may think twice about forking over a big chunk of their equity to a real estate agent.
But success will not come easily. Some competing agents are balking at showing CataList homes to potential buyers, and many home sellers continue to seek out better-known brokerages. With its lower commissions, CataList needs a large number of sales to turn a profit, , and it has had to spend a lot on marketing. Although CataList says it is profitable, it has declined to provide specifics.
The company has sold about 700 homes, mostly in the South Bay and Orange County, since opening its first office in Hermosa Beach in 2001. That is a fraction of the approximately 300,000 residential sales completed each year in Southern California. But CataList is gradually rolling out new office locations, with 10 in the Southland and plans for 40 more, including its first Northern California location, in the next two years.
