Broker Bags Business By Cutting Out Realtors

Paragon Residential offers free RE services

December 28, 2005

By PATRICK CROWLEY

According to the company’s Web site, other free services include 50 free property brochures featuring the seller’s property; contract negotiation and closing assistance from licensed lawyers and real estate brokers; preferred lender financing for prospective buyers; and “sophisticated call capture technology to gather info on all prospective buyers.”

The company also hopes to broker loans for the buyers of its customer’s homes.

“We’re able to offer all of these services … free of charge because we expect to make some money from doing a loan for the person who purchases your home,” Paragon says on its Web site.

Paragon says another of its services is scrutinizing potential buyers so customers can avoid what the company calls “buyer fall-out, a potentially costly predicament for the seller.”

“Potentially, the biggest risk to selling your home for sale by owner is to negotiate a sale with a buyer and take your home off the market,” Paragon founder and President Brett Cenkus said in a statement, “only to learn later that this buyer has absolutely no ability to obtain a loan.

“In addition to the services offered through our real estate division, our mortgage division scrutinizes each potential buyer to ensure loan qualifications,” Cenkus said.

Cenkus is the former COO of Urban Realtors in Houston and has also worked in venture capital in Silicon Valley and on Wall Street, according to biographical information posted on Paragon’s Web site.

Paragon said in a statement it plans to continue its program even though Texas regulators may impose new standards that mandate real estate brokers provide a minimum level of service for clients.

“Despite the fact that the Texas Real Estate Commission is considering a minimum broker service standard that is forcing many real estate companies to reconsider their discounted commission program, Paragon Residential is rolling out a program that offers sellers services absolutely free,” the company said.

In a statement earlier this year, the Federal Trade Commission urged Texas to reject the standards, which are included in legislation passed by the Texas state senate.

Currently, Texas real estate brokers can offer the level of service that a customer wants and needs. If the Commission accepts the proposed regulation, customers will be forced to purchase additional services that they may not want or need, the agency said.

“The Commission is urging the Texas Real Estate Commission to reject the proposed rule, which would restrict the ability of limited-service real estate brokers to respond to the demands of Texas consumers,” FTC Chairman Deborah Platt Majoras said in the statement. “The likely result would be higher prices and fewer options for the state’s consumers, with no offsetting benefits.”

Paragon isn’t the only Texas broker trying to eliminate Realtors.

SmartHomeBuyersDFW.com, reportedly founded by Dallas-based mortgage broker Paul Marshall, released an announcement in September advising prospective borrowers not to use Realtor brokers listed on ‘For Sale’ yard signs, Internet home listings or newspaper ads because they represent sellers and aim to sell the home for the highest price.

Patrick Crowley is a MortgageDaily.com feature journalist and blogger, and a reporter, blogger and columnist for The Cincinnati Enquirer. e-mail Patrick at: PatCrowley@MortgageDaily.com