Alternative Brokerage Spotlight: $500 Realty

Read the series intro: Alternative Brokerages Flourishing Around Seattle

Today’s spotlight post in our in-depth series on alternative brokerages around Seattle is $500 Realty.

$500 RealtyRay Pepper has been a longtime reader and commenter here at Seattle Bubble. I’ve met him a few times, and he’s a stand-up guy. He even bought Ira and me lunch (at Claim Jumper, of course) when he lost a bet that I’d buy a home by March 2010.

I’ve reproduced Ray’s answers to the series Q&A un-edited below.

What is the single most important advantage your brokerage offers vs. using a traditional agent?

500 Realty offers the ASTUTE Buyer/Seller the largest financial incentive to participate in the transaction itself while getting compensated the MOST in the State. The “Golden Carrot” of a HUGE PAYDAY for our Agents is NON EXISTENT. A Brokerage that gets paid to produce, with large financial incentives to close, will NEVER have the BEST interests of their clients.

In 200 words or less, what factors make your brokerage different from a traditional brokerage? e.g. – Cost, services offered, agent compensation, etc.

500 Realty empowers the Buyer and Seller to assist their Agent in selling or buying their real estate investment. In return we compensate Buyers 75% of the funds paid to our Brokerage. With 75% of our funds going directly back to our client we are NEVER pressured to close a sale. 500 Realty requires Buyers to be Pre Approved, look for their own properties, and practice competent decision making. 500 Realty has a $3,900 minimum per transaction.

Who is your typical client? e.g. – Do you focus more on buyers or sellers, certain types of homes, certain price ranges, certain geographies, etc.?

Our typical clients are real estate agents who no longer hold a license, Mortgage Reps, Attorneys, Medical, Professional, Red Fin clients, and a great many investors who want the SELLERS CASH when they BUY and need to save THEIR CASH when they sell. We focus more on Buyers, any price range, anywhere in Washington State served by the NWMLS.

What is your fee structure? How much do buyers pay, how much do sellers pay?

Sellers: $200 to LIST your property on the NWMLS or $500 to LIST depending on your needs. We do NOT do Open Houses.
Buyers: Receive 75% of the selling office commission with a $3,900 minimum.

Is there anything else you would like to share about your brokerage?

If YOU or your Mortgage Rep still do NOT understand what 500 Realty does after visiting our website @ then you are most likely NOT a client for 500 Realty. In addition, we strongly urge you to find another mortgage “professional” as well. Many Mortgage Reps have VERY friendly relationships with “their” real estate agents and this will NEVER be an investment that is in your FINANCIALLY best interests.

5.00 avg. rating (90% score) - 1 vote

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 2

    Ray, you might want to LOWER YOUR VOICE! Or is it all part of the act, a lot of shouting and waving of hands like a magician, hoping that nobody sees what is really going on? Because that is when they find out that your real business is buying and selling, and $500 Realty is merely a sideshow hobby and thus not a viable, large-scale model.

    xx oo
    That Guy from Quiz Realty


  2. 3

    By ray pepper @ 1:

    Surely to be bought out by Google or AMZN.

    Pure fantasy, unless you develop a mobile app w/ social networking hooks (like Redfin announced today). Then it will a certainty, and the 500 in $500 Realty will stand for 500 Billion! ;-)

  3. 5
    The Desponder says:

    This is a fun and timely series.

    What about

    It looks to me like is slightly less expensive than $500 Realty, no?

  4. 7

    Marc in WaLaw Thread wrote: RE: Kary L. Krismer @ 15 – Well actually, based on the 2012 and 2013 PSBJ numbers Keller Williams grew volume by 37.7% while Redfin grew at 53.7%. I’ll take Redfin’s numbers every day and twice on Sunday.

    Your guess is better than mine if Keller Williams’ growth came by virtue of buying/converting existing brokerages during that time but if it did that seems no better than growing with VC money. Also, I believe Redfin has only raised something approaching “one” hundred million rather than hundreds plural.

    Smaller numbers tend to grow at faster percentages. In any case, it should be profits you’d base your decision on, not sales. As far as I know, the KW growth came from poaching agents, although some existing brokerages probably converted to KW. As far as I know, all KW offices are franchises, so KW bought none.

    As to the second point, Redfin reportedly got over $65 million just last year, so I’d be very surprised if the total number isn’t over $200,000,000. Admittedly though, that was an estimate on my part based on loose recollection of past investments in Redfin.

  5. 8
    The Tim says:

    By Kary L. Krismer @ 7:

    As to the second point, Redfin reportedly got over $65 million just last year, so I’d be very surprised if the total number isn’t over $200,000,000. Admittedly though, that was an estimate on my part based on loose recollection of past investments in Redfin.

    From that link:

    Redfin (, the technology-powered real estate brokerage, today announced a mezzanine investment of $50 million led by Tiger Global Management LLC

    Prior to this financing, Redfin had raised $45.7 million in venture capital.

    $50 + $45.7 < $100

  6. 9

    RE: The Tim @ 8 – I missed that, and I guess my memory sucks!

    The initial funding amounts were much smaller than I remembered.

  7. 10
    Marc says:

    By Kary L. Krismer @ 7:

    Smaller numbers tend to grow at faster percentages. In any case, it should be profits you’d base your decision on, not sales./

    Agreed. If we assume Keller Williams got 3% commission on their total sales and divide that by the 1,495 agents they reported they made $62,167 per agent in gross commissions.

    If we assume Redfin made 1.5% on its sales and divide by their 154 agents they made $78,604 per agent.

    So, the question is who has lower agent/broker combined operating costs? My guess is Redfin. Not to mention KW probably averaged less than 3% and Redfin probably more than 1.5%.

  8. 11
    Erik says:

    RE: ray pepper @ 1
    I would buy shares or invest in your company. Serious. I believe in you and I think you really know what you are doing. I am mostly interested in your flipping. If you held my hand and walked me through a remodel, I would pay you a high percentage on my sale. Or I would just give you some cash. The first time is pretty scary and getting help to streamline the process from a pro would be really nice, even if it cost me a fairly large percentage. 500 realty would get purchase commission, sales commission, plus advisors commission.

    You should consider that as a business. Have wannabe like me investing and taking all the risk. You just coach them and take a piece of the profit. Seems like a pretty good idea to me. I don’t have skills like you do though.

    If you do that or want to do it, let me know. I would agree to any reasonable terms. I mostly want to learn the process better.

  9. 13

    By Marc @ 10:

    If we assume Redfin made 1.5% on its sales and divide by their 154 agents they made $78,604 per agent.

    I’m starting to regret having made the venture capital comment, because it’s really a huge sidetrack irrelevant to consumers of real estate brokerage services. They really don’t care about whether or not the company profits or how much it profits. As to your point though I would point out that the national KW entity didn’t make that money–their agents and/or franchisees did, while Redfin did make that money, but with the overhead of paying agents salaries. Also, with “capping” the national KW entity made nothing off of some of those transactions. Redfin also directly shoulders a lot of the liability of being a brokerage, while the national KW entity has virtually none of that risk. Totally different business models. But in any case, which entity actually makes more money from the Seattle area is rather irrelevant to this discussion if the focus is on consumers.

    Getting back to the consumer focus, both entities started in this area at about the same time, but KW does a lot more in gross sales of real estate and probably a ton more in total number of transactions due to smaller transactions not being Redfin’s thing. So KW is servicing a lot more consumers. The question is why?

    Do consumers feel they need more than what Redfin currently or formerly offered? If so, is that belief correct?

    Is it a difference in advertising? KW has hundreds of agents individually advertising in a very targeted fashion.

    Is it a difference between each KW agent acting more entrepreneurial, and the Redfin agents acting more as if they were employees?

    Is it Redfin having only very limited office locations? The two companies are sort of going in opposite directions, where I think Redfin now has two local locations while KWs has been “consolidating” locations. For early growth more locations was undoubtedly better.

    Is it that the traditional brokerage model is better at adapting to changing markets? My thought there is a corporate entity making decisions might be slower at adjusting for seller and buyer markets, and we’ve certainly gone through those changes during the time these two companies have been in the area.

    Is it that mainly what KW did was siphon off existing established agents from other firms? So it’s more of a transfer of business rather than establishing a business.

    Whatever the reasons, I’m sure there are people who might be better off using Redfin who used a KW agent, and visa versa. It’s not a perfect world with perfect decision making, but the consumer having the choice is a good thing even if people sometimes make the wrong choice.

    One final issue to raise. As Ray likes to repeatedly point out, Redfin is much less an alternative broker than when it started out. Conversely, not all the agents at the more traditional brokerages charge a “full” commission or offer the same level of service. So maybe the discussion should be about some of the alternative brokers which are pushing the envelope a bit harder? Compared to your WaLaw model, Redfin is not all that much different from the more traditional firms, especially if you account for difference level of service and fees of agents at those firms.

  10. 14

    Well, Even if a Lot of You Realtors are Flipping Repos from Auctions as Listed Homes to Finance

    At least you had the foresight to gather the cash together to make low ball bids…and then sell later as listed homes for big buck profits….

    More power to ya! LOL

  11. 15
    Erik says:

    RE: ray pepper @ 12
    I am gonna go through vestus. That is what you told me to do originally. I thought it would be worth asking for help. I am just a little nervous since I don’t really know how to assess what my sale value will be. I will jump in and hope for the best.

  12. 16
    ARDELL says:

    RE: Erik @ 15

    The person who may end up selling it for you should have some input in that, even though they would not be involved in the purchase if you buy at auction. This is very important before you start making improvements to be sure your money is being spent on the right things that will impact the eventual sold price.

    Redfin’s online valuation tool, the one where you can manipulate which properties go into the comps, can also help you get a decent ballpark.

    Another good way is to find a recently sold flipped property and divide it’s sold price by it’s AV and then multiply it by the AV of the one you are buying. That will usually give you a good max cap to aim for…and if you beat that, great. But it helps to set reasonable expectations at the time you are making the improvements.

  13. 17
    ray pepper says:

    Hmmmmmm….Tim’s Red Fin shares or my 500 Realty shares. I own 20% of this Empire! If I sold now could I buy a new Viper? maybe a vette? but if I wait I can buy Millionnaire Mikes Mansion!! Can somebody find out whatever happened to him? I forgot his name address. Come on Tim. Send me a link. Wanna see if taxes are current or short sale, foreclosure, sale fail or if he truly is still just living there and doesnt care what his home is worth.

  14. 18
    mike says:

    RE: Erik @ 15 – That bargain $699K Olympic Manor fixer I pointed out to you few weeks ago actually closed at $800K. yikes.

  15. 19
    ARDELL says:

    RE: The Desponder @ 5

    Yes, agree. They are very similar to MLS4Owners and at least equivalent as to services available from what I have seen. The cost difference as I recall is the # of photos you choose to have. The lowest cost having the fewest online photos. I think it is also a menu plan so not everyone pays the same price depending on what services they choose.

    The time I ran into them the seller was a former agent without a currently active license. So the “secret agent” was only needed for minor input service, much like MLS4Owners.

    There are a few others that appear to be missing. Most notably Findwell, who used to be an advertiser here I think. Rob Lueke’s Company that gave 75% back at time of purchase last I looked. Can’t remember the name at the moment…but I have seen them around recently.

    Perhaps there can be one post at the end where all are noted even if there is not a Q & A single post on each one of them.

  16. 20
    Erik says:

    RE: ARDELL @ 16
    Thank you Ardell. Of course I want you to help me sell when I buy at vestus. There isn’t a lot of time between when I see a property and when it goes for sale, so I will setup a spreadsheet to estimate my sale value. I want to try and get a sure thing this first time and sell in 7 months. That way I get home owner financing rates. If that works, I will speed up the process and except the higher taxes.

    I need 1 month at my job before I can get a loan. I should be approved by June. I need my spreadsheet fine tuned by then. I could probably just look at 3 comps and enter them in my calculation. I will take into account zillow and tax assessed value some how.

    Let me do a sample calculation. I will email it to you.

  17. 21
    Erik says:

    RE: mike @ 18
    I’m sure things are great in the high tier. Again, I am a low tier man. Banks don’t let me borrow that much.

  18. 22

    RE: ARDELL @ 19
    Rob Lueke’s company is Shop Prop, if I remember correctly.

  19. 23
    ARDELL says:

    RE: Erik @ 20

    I probably can’t help you next time around…because that is fraud. You can’t buy a flip project and get owner occupied rates. You need to do an investor loan. If you do an owner occupied loan all the while planning to sell as an investment project vs keeping it as a personal residence for at least a couple of years, as you did the last one, then I wouldn’t come near it with a ten foot pole. :) It’s called “lender fraud”. All things that help you “pencil out” are not legal. You should hire Craig before you even start. Though Vestus will likely be telling you the same thing.

  20. 24

    RE: ARDELL @ 19 – Ardell, it appears you can scratch “Findwell” off the list of alternative brokerages that charge less. There is no longer any indication whatsoever of any rebate on their web site (although they may still qualify as “alternative” given their relationship with their agents).

    And thanks for the referral in No. 23. I appreciate it…

  21. 25
    mike says:

    RE: Erik @ 20 – Actually I’m a bit surprised by this one. When I first started looking for a home in this area you could occasionally find places in Olympic Manor for low-mid 400’s. I wish I’d been in the market then, but I was still living on the East Coast at the time.

  22. 26
    Erik says:

    RE: ARDELL @ 23
    I am not trying to do anything ilegal here. I will do more research on it. I am sure Craig is good, but I already know how great you are. Let me figure this out… The loan guy at vestus told me 7 months was enough to get a bridge loan and refi into owner occupied with no problems. He said less then 7 months is breaking the rules. I will look it up, but I didn’t think I was breaking a rule. I will occupy the house 7 months.

  23. 27
    Jonness says:

    I used Nick from $500 Realty. Since he wrote multiple contracts, the fee returned was 60% instead of 75%. IOW, if your first written offer is accepted, you get 75% of the buying agent’s commission. Otherwise you get 60%.

    The refund was more than fair. At close, I was handed a check for $10,000.00. Amazing!

  24. 28
    Marc says:

    RE: Craig Blackmon @ 24 – Good catch Craig. I wonder how recently they changed this policy. I see that they’ve got ads on craigslist for a salaried agent and transaction coordinator so things must be going well for them to drop the rebate. I’m sorry to see they went full blown traditional but can’t fault them if they think it’s the right path.

    As you know, I’ve been predicting for quite a while that Redfin will do likewise. This just further makes me believe that.

  25. 29
    The Tim says:

    By Craig Blackmon @ 24:

    It appears you can scratch “Findwell” off the list of alternative brokerages that charge less. There is no longer any indication whatsoever of any rebate on their web site (although they may still qualify as “alternative” given their relationship with their agents).

    I reached out to Kevin for this series but he never got back to me with answers to the Q&A, so I assume that you’re right.

  26. 30

    RE: Jonness @ 27 – “Handed a check for $10k”? I’m curious, did you use a commercial lender? Or were you all cash and/or “hard money”?

  27. 31
    Blurtman says:

    RE: Erik @ 26 – Is financial fraud still prosecuted? I heard even money laundering for drug gangs is OK.

  28. 32
    Jonness says:

    By Craig Blackmon @ 30:

    RE: Jonness @ 27 – “Handed a check for $10k”? I’m curious, did you use a commercial lender? Or were you all cash and/or “hard money”?

    I used a discount lender and put about a third down. The title company issued me the refund in the form of a check, which I cashed at my bank. It seems like I had to get permission from the lender to do that, but I don’t remember the details very well. I was later surprised to learn at tax time that the refund was tax free money. :)

    Actually, that was the first place I bought through 500 Realty. I made a second all-cash transaction through them a few months later. If I remember correctly, the refund was put directly toward the cost of the purchase, so there was no need to issue a check.

    I could have put the $10K from the first transaction toward the cost as well, but chose to keep the money on hand as I figured having a 3% loan a decade or so from now won’t be such a bad deal. That being said, inflation appears to be nowhere in sight.

  29. 33
    whatsmyname says:

    RE: Jonness @ 32
    Two houses over a few months. Pretty good.
    I wonder, Are there any bears left on this site who haven’t bought a house?

  30. 34

    RE: Jonness @ 32 – Yes, if you got permission from your lender, and if the cash back was disclosed on the HUD-1, then you’re in fine shape. If neither was the case, that’s bank fraud.

    While not unheard of, most lenders won’t approve actual “cash back” at closing. Rather, the funds must be consumed by pre-paids and closing costs. If funds remain, that amount must – per Fannie/Freddie regulations – be applied to the sale price with a corresponding reduction in the LTV. Or something like that, I’m working from memory here, my rebates are almost always consumed at closing. For your cash sale, it’s your money and you can do what you want, no concerns there.

  31. 35
    Jonness says:

    By Craig Blackmon @ 34:

    Yes, if you got permission from your lender, and if the cash back was disclosed on the HUD-1, then you’re in fine shape. If neither was the case, that’s bank fraud.

    IMHO, a title company has nothing to gain by committing bank fraud and everything to lose. I can’t imagine a scenario where they would willingly not disclose a refund on the HUD-1. Thus, there’s really no way to hide it from the lender.

    My loan went through William Doom of Columbia Mortgage in Gig Harbor. Despite William having the cheapest rates in the nation, getting a refund at close didn’t represent a problem. I suspect this is due to my having put a relatively large amount of cash down at close in addition to having paid all closing costs out of pocket. At any rate, William is a first rate mortgage broker and took excellent care of me throughout the process.

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